KPMG’s Positive Outlook on Crypto Assets

What lies ahead for the crypto market? This is probably the question that people have in mind. Considering the fluctuation last week that dropped Bitcoin and other altcoins, could it be possible that these digital assets bounce back?

Though 2018 was filled with regulatory changes, many are still waiting for institutional investors to enter the picture. At this point, institutions are tiptoeing whether or not they should enter now. Mike Novogratz even thought that Bitcoin found its bottom at around $6,200 to $6,500. Unfortunately, Bitcoin dropped to its lowest of the year.

Big Foud Auditor KPMG released a 42-page report discussing on the next phase for cryptocurrencies. The report was entitled “Institutionalization of Cryptoassets”. The good news is that the report was bullish on the future of cryptos. However, the report mentioned that “Cryptoassets have potential. But for them to realize this potential, institutionalization is needed”. The report also added that “Institutionalization is the at-scale participation in the crypto market of banks, broker dealers, exchanges, payment providers, fintechs, and other entities in the global financial services ecosystem. We believe this is a necessary next step for crypto to create trust and scale”.

KPMG has been focused on risk management of blockchain tech. Though their report has been quite positive, there were separate reports by European Central bank and Bank of International Settlements that had a different opinion regarding the crypto assets. But for KPMG, cryptocurrencies are a “big deal” and are “worth paying attention to”.

Tokenization is Key?

Adoption is quite a long way to go. The likes of Ripple has been looking to partner with banks in order to make XRP useful.

For KPMG, they believe that tokenization is going to play a key role. It mentioned in its report that “In the case of Bitcoin, we believe what has been tokenized is an intangible asset (a specific number of units of Bitcoin), because ownership does not come with any other rights and obligation. In contrast, other cryptoassets, such as tokens or coins in an initial coin offering, may convey special utility or financial characteristics, such as rights to goods or services or a share of profits of a company or project”.

It added that “tokenization of traditional assets could also help increase liquidity, codify rules and regulations, and increase transparency throughout the asset lifecycle”.

Challenges of the Industry

However, there are a number of challenges before cryptos could get institutionalized. For one, regulators are worried about the possibility of price manipulation. Pump and dump schemes, and even the news that
Tether was involved in manipulating Bitcoin’s price, this is the reason why Bitcoin ETF applications were denied by the US Securities and Exchange Commission.

In fact, the Securities and Exchange Agency has been hunting down on ICOs that are selling unregistered securities. And not only that, even those exchanges that listed these tokens are now under scrutiny. Given these issues, does it mean that the market is going to mature any time soon? Could it be possible that we are going to see a bull run caused by the institutional investors participating in the market?