The ‘Big Four’ accounting firm KPMG believes Crypto trading might become standard earlier than we expected. He says, looking at the current state of cryptocurrencies it might not seem to be a primary mode of trade currently, but we are moving forward towards a new world order of digital currencies and transactions. The firm says,
“a new world of finance is emerging in which transacting in crypto assets may become standard procedure. To drive the space towards this new world, institutionalization is necessary in order to build trust, facilitate scale, increase accessibility, and drive growth.”
In a newly published paper Institutionalization of Cryptocurrencies, the firm talks about challenges faced by cryptocurrency industry and what steps are required to make it acceptable by the world’s largest financial institutions. The institutionalization is defined as at-scale participation in the cryptocurrency market of banks, broker-dealers, exchanges, payment providers, fintech companies, and other entities in the global financial services ecosystem.
According to KPMG.
“New tokens and assets are one thing, but new business models and market participants may redefine the space significantly over the next few years.”
KPMG has laid out three-point criteria for cryptocurrencies to become a mainstream form of exchange.
- Being used as a unit of account
- A store of Value
- A unit of exchange
The chief economist of the company Mr. Hunter believes, while the digital currency might become a unit of account, its volatile trading pattern and prices, clearly resist the store of value. The value is too unstable to be taken a risk with, he says;
In order to be a medium of exchange, a crypto must be a store of value. In order to be a store of value, the speculative nature of crypto must dissipate. Until at least one crypto meets all three criteria, they cannot be considered full currencies.”
The institutionalization of the crypto world is not the first attempt by KPMG, the issue here is instability. Whichever brand has tried to institutionalize the Crypto has faced a severe backlash. So, it remains a topic of debate whether the institutionalization is the path to make Crypto mainstream.