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Crypto Asset Management Industry Could Reach $650B in Five Years, Up From $50B Today: Report

Analysts at Bernstein Research forecast a tremendous surge in the crypto asset management domain in the upcoming years.

Under the guidance of Gautam Chhugani, the analysts project that the valuation of crypto funds could soar to an impressive range of $500 billion to $650 billion over the next half-decade. This anticipated growth would be monumental when compared to the present worth, which hovers around $50 billion.

In a recent report released on Monday, the experts highlighted multiple core drivers behind this expected escalation.

Among the pivotal influencers, the potential sanctioning of a spot Bitcoin (BTC) exchange-traded fund (ETF) stands out as a significant catalyst.

In a recent development, the US Court of Appeals for the District of Columbia Circuit sided with Grayscale, instructing the SEC to reconsider its prior denial of Grayscale’s application for a spot Bitcoin ETF.

The court’s decision emphasized the inconsistency in the SEC’s approach, questioning its rationale for greenlighting Bitcoin futures-centric ETFs while simultaneously refusing spot Bitcoin ETFs.

The SEC has been given a timeframe extending to mid-October to challenge this judgment. This timeline aligns with the agency’s pending decisions on applications from other financial entities eager to introduce their Bitcoin-centric products.

Crypto Funds Could Be Available By 2024

If the SEC decides to relent in its opposition, it’s possible that Bitcoin-centric funds could emerge in the market by the upcoming year.

The team at Bernstein anticipates that ETFs might account for around 10% of the market capitalizations of both Bitcoin and Ether, which ranks as the second most prominent cryptocurrency.

The Bernstein analysts noted, “Crypto financial adoption is characterized by waves of heightened interest, and we’re anticipating a sharp upturn in adoption, earmarking 2024 as the pivotal year for regulatory greenlighting of ETFs.”

Beyond Grayscale, other heavyweight financial players like BlackRock, Fidelity, WisdomTree, and Invesco have also thrown their hats in the ring with applications to roll out Bitcoin ETFs.

Several fund firms are delving into products that focus on spot Ethereum (ETH) or futures tied to Ethereum.

Moreover, titans in the industry like PayPal Holdings and Visa are intensifying their foray into the cryptocurrency domain, either by launching proprietary tokens or forging strategic collaborations.

Notably, PayPal has unveiled its plans to introduce its PYUSD stablecoin in the near future.

This stablecoin, which maintains parity with the dollar, is issued by Paxos, a prominent blockchain infrastructure entity that was previously the issuer of the Binance USD (BUSD) stablecoin.

In another development, Visa has successfully conducted preliminary tests, pioneering a mechanism that permits users to settle their on-chain gas expenses directly in traditional currency using Visa card transactions.

Regulatory Hurdles Continue to Slow Crypto Adoption

Yet, the path to wider institutional acceptance is littered with regulatory obstacles.

SEC’s leader, Gary Gensler, remains steadfast in his critique of the crypto sector, even in the face of the agency’s legal challenges. He contends that the crypto domain is riddled with fraudulent activities and systematic non-adherence to securities regulations.

Speaking at a recent conference, Gensler asserted that the world of cryptocurrency has adversely affected countless investors, leading many to endure significant financial setbacks.

Gensler further expanded on his concerns, suggesting that the ramifications of the crypto sector might not be confined to individual investors but could permeate the wider financial ecosystem.

He stated, “While the direct repercussions are felt by individual investors, the ripple effects can potentially compromise the broader economy. The foundation of finance is trust, and if investor confidence is shaken, it can undermine this very trust.”

However, even with the lack of a holistic regulatory framework, the analysts at Bernstein are optimistic about the road ahead. They postulate that the era of heightened regulatory actions is nearing its conclusion.

In their words, “We’ve likely weathered the harshest phase of regulatory pushback, and the impending Coinbase case should bring added clarity to the landscape.”

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What we write about

I want to save money. Will cryptocurrency work?

Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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