Originally published on: June 17, 2024
Despite the recent regulatory approval of the first spot Bitcoin exchange-traded funds (ETFs) marking a milestone for the cryptocurrency industry, corporate adoption and trust in digital assets still remain in their early stages.
According to Marc Degen, the co-founder and chairman of Trust Square, a blockchain-focused technology hub, corporate adoption is currently in the “amateur league.” During his speech at the Web3 Corporate Innovation Day, Degen highlighted the disparity between the inflows of spot Bitcoin ETFs and those in the traditional finance sector.
While the U.S.-based spot Bitcoin ETFs have accumulated $58.4 billion in total onchain holdings since their launch, wealth management giant JPMorgan alone has attracted over $489 billion in net new client inflows in 2023, showcasing the vast difference in adoption rates.
The primary barrier to widespread adoption of digital assets is the lack of mainstream trust in the crypto industry. A study by the Pew Research Center revealed that approximately 75% of those familiar with cryptocurrencies lack confidence in the reliability and safety of digital assets.
Degen emphasized the role of corporations in building trust among mainstream users, noting that new crypto adopters often rely on corporate-backed centralized exchanges (CEXs) over decentralized exchanges (DEXs). The trading volume on CEXs like Binance far outweighs that of DEXs, further underscoring the dominance of corporate-backed platforms in the market.
While the cumulative inflows of Bitcoin ETFs provide insight into institutional adoption trends, it is important to consider factors such as the impact of Grayscale’s Bitcoin Trust ETF (GBTC) on total outflows. GBTC has sold a significant amount of BTC, affecting the overall inflow numbers recorded by ETFs.
In conclusion, while Bitcoin ETFs are gaining traction in the market, there is still a long way to go in terms of corporate adoption and building trust in the cryptocurrency industry. It is essential for businesses to play a pivotal role in fostering mainstream confidence in digital assets to drive widespread adoption.