On The Failed Promise

“The Failed Promise of Unregulated Crypto” is our lead story today in Exchange Invest - “the exchange of information” - as ICE’s Chief Development Officer Chris Edmonds succinctly lances the fallacy that there’s an institutional crypto wave coming soon. Spoiler alert (if you have been reading Exchange Invest / Bitcarnage this will come as no surprise:) the institutional crypto wave isn’t happening until crypto V1.0 gives way to something a lot less sleazy and unregulated. When the wild west becomes more urban civilised then there’s a chance of an institutional wave.

The analysis is as simple as it is withering, “Four years ago, ICE created a fully-regulated, physically-delivered crypto futures market, with institutional-grade custody provided by ICE’s then-subsidiary, Bakkt.”

For those who adhere to that old mantra “build it and they will come” you would have been sorely disappointed…

Therein lies a huge problem for crypto and those who think somehow crypto V1.0 can move on to crypto V2.0 without a lot of soul searching (and innumerable further insolvencies). The simple fact is crypto looks dubious if not downright sleazy. Many would argue it looks a lot worse.

There is a remarkable ‘crypto industrial complex’ from media through developers to exchanges, markets, investors et al and that can skew the argument. There are many folk in institutions who already have crypto related jobs so they have a vested interest to suggest institutions are in / or about to enter the crypto market. However firm evidence is sparse. When we see a clear opinion from somebody who knows the exchange market inside out like Chris Edmonds eschewing the notion an institutional crypto market is coming soon - it’s a huge wake up call.

Will the crypto parish listen? Frankly I doubt it.

However, given the experienced Judge Jed Rakoff yesterday delivered a stinging rebuke of the recent Ripple decision in a separate case judgement, it has been another rough 24 hours for the nascent crypto marketplaces and all those securities within its domain. While arguments for crypto exceptionalism may remain, the simple realpolitik is that financial institutions have proven reluctant to embrace the ‘new new’ thing and unless or until it becomes regulated like the existing securities markets, it is truly difficult to see institutional crypto trading taking off… no matter what a multitude of VP crypto something or other may proclaim within a few institutions who have been investigating the concepts of crypto…