Digital assets offer several opportunities for organizations and businesses of all sizes to participate. The world’s largest asset management recently partnered with Coinbase to provide digital asset services to its institutional clients. To meet the demand, SoFi and Grayscale have launched alternative funds.
As new funds emerge and more financial institutions begin to accept the asset class, there is a clear need for institutions wishing to enter the digital asset industry.
Institutional Interest in Digital Assets
The first digital asset-related fund open to institutional investors in the United States was GBTC. Grayscale, the developer behind the ETF, aimed to provide exposure to digital assets at a time when they were extremely unpopular. Since then, BlackRock and others have launched institutional digital asset funds.
Ankr, a blockchain startup, recently announced agreements with Mastercard and the Sacramento Kings NBA franchise. Mastercard’s involvement in the blockchain arena is only the most recent financial institution to do so.
With over 10 trillion dollars under administration, BlackRock is the world’s largest asset manager. Following the announcement of a relationship with Coinbase, the major US cryptocurrency exchange, the fund stated that it would provide Bitcoin services to institutional and accredited investors.
SoFi, one of America’s fastest-growing financial institutions, has begun to offer digital asset services such as trading and education. Due to the strong demand, large and established funds for institutional investors have all begun to offer digital asset services to their clients. When investing in unregulated assets, accredited and institutional investors must exercise greater caution. The funds make it simple to get active while simultaneously staying out of trouble.
These new funds serve to give digital assets legitimacy and acceptance. Credibility comes from the world’s most prominent asset managers and money managers, who have integrated digital assets and recognized the demand. Every financial media site has announced that the wealthy may now readily invest in cryptocurrency, which has enhanced its popularity.
Staking, lending, and liquidity all provide new options for anyone in the digital asset market. DeFi refers to blockchain-based decentralized applications (dApps) that are commonly utilized for financial services or products. Excellent opportunities for extra income and even greater opportunities for businesses to participate.
Staking is the process of locking up cryptocurrencies for a set amount of time in exchange for a set interest rate. The interest rate is frequently derived from gas or network fees, and staking can aid in network security or transaction validation. Users can supply liquidity, often to a decentralized exchange or marketplace, and be compensated in a similar way.
Lending and borrowing are also becoming more popular on DeFI platforms, allowing users to utilize their tokens as collateral and access funds without having to sell the assets. The lender is compensated with a fixed interest rate from the borrower, which is made possible via the DeFi platform. The borrower must repay the loan plus interest and is rewarded with a loan that is exceptionally quick and easy to get.
The prospects for retail and commercial investors to make additional revenue in DeFi are enormous. Some platforms provide double-digit APY, which is far more than the average savings account.
Institutions Exploring Digital Assets
Over the last two years, Sandbox (by Animoca Brands) and Decentraland participants have included Netflix, Dolce & Gabanna, Tommy Hilfiger, TIME, Binance, LooksRare, Rarible, FTX, Gemini, the Smurfs, and many more. Both Tommy Hilfiger and Dolce & Gabanna attended Decentraland’s first metaverse fashion week. Netflix entered the Decentraland metaverse to promote the debut of a new film, and Samsung established its own Decentraland metaverse.
TIME has dropped its NFT collections and jumped headfirst into the blockchain sector. TIME magazine, Binance, FTX, LooksRare, Rarible, Gemini, the Smurfs, and many other companies have purchased sandbox land. Sandbox land, like Decentraland, can be purchased, sold, or constructed on and rented. Many businesses are buying land and providing free virtual experiences.
Budweiser, Tiffany’s, and Nike have all launched full-fledged digital asset campaigns. Budweiser first released various collections centered on their infamous beverage. One such collection even included a live BBQ event hosted by Budweiser. The NFT ticket included access to meet the Clydesdale horses, live music, a brewery tour, and more.
Tiffany & Co. recently sold NFTs in addition to personalized diamond pendants. These were offered for 30ETH and may be burnt in exchange for the real jewelry. These pendants, which were restricted to CryptoPunk holders only, sold out immediately and were the first large NFT/physical pairing of a product.
Nike has made NFTs and even purchased an NFT metaverse shoe firm. Between main and secondary transactions, the business made about $200 million. Secondary sales are generated by license payments on sneakers traded on the secondary market, which firms previously had no control over.
Mining businesses like Hut8 now hold cryptocurrencies, as do cryptocurrency exchanges like Coinbase and disruptive thinkers like Micael Saylor and Microstrategy. Each of these publicly traded corporations owns Bitcoin and maybe other digital assets. The fact that public corporations own digital assets bodes well for the industry’s future.
Blockchain technology is gaining traction faster than anyone could have predicted. Adoption may occur silently while regulation is awaited, but this does not prevent it from occurring swiftly. Brands and prospects like these have far too many advantages to not investigate and apply the technology. These businesses are demonstrating business applications for breakthrough technologies.
DeFi and digital assets in general provide ample motivation for businesses to investigate potential use cases. Many organizations are planning for the day when government regulation and clarity for blockchain-based investments and operations become available.
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