Analysts are still struggling to make sense of the situation surrounding both cryptocurrency and the presence of institutional traders.
Institutional Traders May Not Have to List All Their Assets
The good news is that more institutional players have become involved with crypto in recent years. New evidence from the likes of companies such as Grayscale suggest that, considering the platform has recorded more than $1 billion in BTC investments for its third quarter. This means that more than $300 million in BTC was invested each month for a period of three months.
Institutional traders are long sought after by cryptocurrency advocates who hope their assets can become more legitimate and mainstream. This cannot happen without the presence and assistance of professional traders. As many as 20 separate hedge funds and institutions including Ark Invest and Horizon Kinetic have invested funds with Grayscale. There have also been several new companies including Rothschild Investment Corporation and Addison Capital.
Ark Invest crypto analyst Yassine Elmandjra stated in an interview:
It’s very difficult to have a clean one-to-one signal on who’s entering and exiting the space, but there are some very interesting proxies that can gauge institutional interest.
At the time of writing, the issue is not the institutional traders themselves or how many are involved – or not involved – in the crypto arena. Instead, the issue is that the Securities and Exchange Commission (SEC) is looking to have companies only file 13F documents granted they make over $3.5 billion. Prior, they would need to make over $100 million to file 13F, a massive difference between the two figures.
While this won’t necessarily stop companies from investing in crypto, they will no longer have to list the crypto they invest in granted they don’t earn the required income. This will prevent them from being transparent with their assets, potentially creating a disproportionate environment for crypto and the companies that seek to own stakes in it.
As it stands, only nine companies make the required amount to file, one of which is Grayscale. The company’s managing director Michael Sonnenshein explained that he’s not too worried about the change should it happen. He states:
The model we have is working. It also continues to hold our team to an even higher standard in how we operate our business and can really serve as a model for other asset managers.
As it stands, companies have 60 days to publicly comment on the proposal. Granted there is enough positive feedback regarding the potential change, users can expect to see only the largest of companies having to list their assets.
An Unnecessary Change?
Daniel Collins – founder of Whale Wisdom – doesn’t want any such change to occur, mentioning:
You lose a lot of transparency in the market. That’s why people look to the U.S. market – to establish confidence for potential foreign investors. Suddenly, you’re hiding all these assets every quarter that used to be disclosed.