Banks are more interested than ever in crypto: CF Benchmarks CEO

Sui Chung, the CEO of Benchmarks, recently told Blockworks in an interview that institutional interest in cryptocurrency is at an all-time high.

This is primarily due to the increasing institutional adoption of Bitcoin, which has been driven by a number of factors. Including macroeconomic uncertainty, the search for yield, and increased interest from high-profile investors.

Chung also noted that Ethereum is beginning to see similar interest from institutions. And that CF Benchmarks is seeing an increase in demand for Ethereum products as a result.

Kraken is the parent company of CF Benchmarks. The firm is a market indexer that aims to fill product gaps in the market for DeFi, DAOs, and smart contract functionality.

When he was asked about institutional interest in cryptocurrency, Chung states that;

“Although it’s winter, we’re still getting a lot of calls from traditional banks who are either thinking about creating a product in this area or have already decided to do so — and they want to talk about licensing our indices and applying our approaches. We’ve noticed that the organizations we communicate with have a method for thinking about things, and they want to know if we share their perspective. So, that’s new.”

Chung mentioned about BlackRock’s recent collaboration with Coinbase, noting that it is a significant step forward for the wider cryptocurrency market. He says;

“It’s readily apparent that it’s significant. It’s not difficult to connect those two pipes for $40 trillion worth of assets. However, I would temper this by noting that it is still simply plumbing in the end. Are [portfolio managers] and CIOs racing to allocate their funds? No, they are not. But a major source of agony has been eliminated. The BlackRock and Coinbase hookup primarily means that a large number of asset managers no longer need to waste time on vendor onboarding and connecting, which can be quite tedious. So, I believe the greater potential impact is not necessarily that more investors will allocate funds. It’s that more asset managers can create products faster.”

Despite the ongoing bear market, interest in cryptocurrencies has not decreased. BTC and other major cryptocurrencies have dropped more than 60% from their peak late last year.

The total value of the market has shrunk from $830 billion to $250 billion. While this is a significant drop, it is still higher than where the market was trading at the beginning of 2017. This renewed interest from financial institutions comes after a long period of skepticism and outright hostility.

In 2014, JPMorgan CEO Jamie Dimon called Bitcoin a “fraud” that would eventually blow up. He has since softened his stance, but he remains wary of the asset class. Other financial institutions have been more open to cryptocurrencies.

Goldman Sachs announced plans to set up a cryptocurrency trading desk in 2018, though it has yet to launch any products. BlackRock, the world’s largest asset manager, revealed in October that it had set up a working group to study cryptocurrencies.

CF Benchmarks CEO Sui Chung says that the institutional interest has been driven by the rise of digital assets like Bitcoin. Which have outperformed traditional asset classes over the past year.

“What we’re seeing now is an increase in interest from financial institutions,” he told CNBC. “I think what’s driving that is the performance of digital assets.

About CF Benchmarks

CF Benchmarks is the provider of Cryptocurrency Benchmark Indices (CRIX). Which is a family of indices designed to track the performance of major digital assets.

The company also operates the Real-Time Indices service, which offers live spot price data for bitcoin, ether and other digital assets.

Do you agree with Sui Chung on this? Let us know what you think in the comment section!