In an official communication, Paul Brody, the head of blockchain at Ernst & Young (EY), observed the changes in demand for Bitcoin among institutional clients. Addressing the CNBC team on Monday, October 23, the executive stated that institutional clients have been reluctant to invest in Bitcoin.
Brody noted that the delays in approving the Bitcoin exchange-traded funds (EFTs) restricted the institutional clients in investing in crypto assets.
Significance of Bitcoin ETF Approval Among Institutional Investors
The executive blamed the US Securities and Exchange Commission (SEC) for delaying the approval of the Bitcoin ETFs. Brody remains optimistic that institutional investors will invest in more crypto assets after the approval of the Bitcoin ETFs.
He anticipates that institutional clients will invest trillions of dollars in BTC after the approval of the Bitcoin ETFs. Brody underlined that institutional investors will only be willing to venture into crypto assets if the SEC greenlights the pending ETF approval or revises the existing regulation on crypto assets.
A close examination of the current crypto adoption, Brody argued that most investors acquire Bitcoin as an asset. In contrast, crypto entrepreneurs invest in Ethereum as a computing platform for businesses and decentralized finance (DeFi). Brody argued that with the changes in the crypto market most investors are not purchasing Bitcoin as a payment tool.
In the interview, one of the hosts requested Brody to comment on the market performance of crypto assets, including the risks and the volatility of the tokens. Responding to the query, Brody confirmed that crypto assets differ from gold.
The executive stated that the price of Bitcoin has unique features compared to other digital assets. Brody noted the supply declines as the price of BTC increases. The executive describes the Bitcoin price movement as inelastic in nature.
Despite the exciting growth of the crypto industry, Brody believes that fiat currency will retain its high usage. The executive anticipates that the financial sector will expand exponentially to accommodate central bank digital currency (CBDC) and stablecoin payments in future.
Institutional Investors Demands for Clear Crypto Regulation
In his address, Brody expressed his positive stance on immenent approval of the Bitcoin EFTs by the SEC. Even though the SEC has not provided further details concerning the pending application, the investors are speculative about the existing crypto regulations.
In the meantime, high profile asset managers such as Grayscale, BlackRock, Fidelity, and ARK Investment have already submitted their Bitcoin ETF applications. The slew of applications submitted to the SEC signals a growing appetite for Bitcoin EFTs among the retail and instititional clients.
In an earlier post, the SEC chair Gary Gensler confirmed the recipient of the Bitcoin EFTs application from multiple financial instititions. Gensler brief remarks on the Bitcoin EFTs rule-making process created an enigma among the crypto investors.
In August, the court ordered the SEC to review Grayscale Bitcoin ETF. The court ruling obliged Grayscale to submit an S-3 form to the regulators to allow the SEC to reconsider its Bitcoin Trust (GBTC). The Grayscale procedural move challenged the ARK Invest and 21Shares to revise its application.
