The Institutions are Already Here

Introduction

In cryptocurrency and blockchain, the buzzword "institutional adoption" has been circulating for years. However, the real essence of institutional adoption transcends mere investment in popular tokens like Bitcoin and Ethereum. It's about large-scale organizations not just investing, but actively utilizing blockchain networks and embracing the concept of tokenization.

The Current State of Institutional Adoption

Institutional adoption is no longer a future prospect; it's our present reality. Major corporations like Visa, PayPal, and Shopify are not just investing in cryptocurrencies but are integrating the use of stable coins like USDC into their transactional processes. PayPal is developing its own stable coin, while Visa and Shopify are utilizing USDC, thereby enabling their users to transact using stable coins on-chain.

Moreover, financial giants like BlackRock and Citigroup are exploring the tokenization of assets and deposits, respectively, indicating a shift towards a more comprehensive adoption of blockchain technology. Deutsche Bank is also delving into tokenization and exploring ways to custody crypto assets.

Adoption Beyond Price Pumping

While some financial professionals might be awaiting the moment institutions devote substantial funds to purchase cryptocurrencies, thereby inflating their prices, this isn’t the most significant aspect of institutional adoption. Investing in cryptocurrencies like Ether or Bitcoin might temporarily boost their prices, but it doesn’t necessarily translate to widespread adoption or future asset value.

For instance, a substantial investment in Apple stock by a company doesn’t inherently mean that the organization will adopt the use of Apple products. Similarly, institutional adoption in the crypto world means entities are not just investing but are utilizing the technology, believing in its potential to enhance operational efficiency, irrespective of the current market prices.

The Future Value of Crypto Assets

The ongoing adoption of blockchain and crypto infrastructure by large banks, payment providers, and corporations is what will likely drive the future value of crypto assets. Companies like Nike and Starbucks, and even airlines, are utilizing NFTs for various purposes, including loyalty programs.

This widespread institutional adoption of blockchain infrastructure is not merely a strategy to boost asset prices but a testament to the belief in the technology’s potential and its capability to revolutionize financial transactions and asset management.

Conclusion - For financial advisors and CPAs

Understanding the depth and breadth of institutional adoption is crucial. It's not merely about tracking investments in cryptocurrencies but understanding and navigating the utilization of blockchain technology and tokenization by major institutions. This adoption, which is already unfolding before us, is not just a strategy for price inflation but a robust indication of the belief in the technology's future relevance and efficiency in the financial landscape.