Institutional crypto adoption: The time to build fairer markets

  • 2022 was a setback for digital assets, slowing the pace of institutional adoption 
  • Albeit now with a longer time horizon, institutions remain committed to their investment and involvement in the industry  
  • For this to happen, 2023 must act as a reset, underpinned by corporate governance, effective risk management and regulation, so companies can continue to innovate, and adoption can gain momentum back over time 

2022 will be remembered more for scandal and market turbulence in digital assets than for the progress this nascent asset class has seen since inception. It’s a setback.  

Yet despite last year’s market events, large financial institutions have continued to invest in the digital assets and blockchain space. We expect a more muted approach to investment this year, certainly in the first half. Zoom out and consider that the major banks have invested $20 billion in blockchain technology and blockchain companies over the last three years, whilst it’s hard to assign a new figure, it is not going to zero. 

For investment and broader adoption to continue, 2023 must be a year which sees the industry reset, push for regulation, and maintain relevance with the institutional community through product innovation and self-regulatory, quality corporate governance and risk management.    

Actions speak louder 

As we have argued before, what the industry needs most now is to come together and put solid foundations in place to rebuild confidence. Regulation protects consumers, creates stability, and ultimately harvests innovation. Regulators around the world are focusing their attention on crypto like never before – be it rightly cracking down on violations around insider trading and fraud, or imposing standards to protect consumers and reduce market fragmentation.  

This progress is encouraging. Still, we would like to see policymakers working with the industry to ensure frameworks are robust, effective, and under the supervision of respected regulatory bodies. 

However, regulation takes time. In the meantime, it is the responsibility of all blockchain and crypto companies to act now, adopt best practices and behave as if they are already regulated. As a longstanding operator of FX exchanges, we have applied robust risk and governance controls to our crypto currency business from the outset. We straddle both camps and recognise where TradFi can provide guidance and act as a conductor of change. In establishing new regulation, it’s time to take a considered approach. This is not at odds with being innovative. 


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The decade of market digitisation  

Crypto and digital assets more broadly, have the potential to change the velocity of money and despite the setbacks faced, we are without doubt in the decade of market digitisation. It is therefore important that we allow innovation to grow and keep moving forward. This year we are looking at product extensions and continuing to expand our global team. We will do this whilst maintaining our focus on building more fair and accessible markets for all participants, upholding our longstanding principles of openness, transparency, and accountability. 

LMAX Digital is part of the LMAX Group, an independent operator of multiple institutional execution venues for FX & crypto currency trading.      

We've been at the forefront of the institutionalisation of crypto trading since 2018 - with a 100% exchange uptime - ensuring orderly markets during times of the highest volatility.     

Keep up to date with LMAX Digital, sign-up for the LMAX Digital News Bulletin    

This post is commissioned by LMAX Digital and does not serve as a testimonial or endorsement by The Block. This post is for informational purposes only and should not be relied upon as a basis for investment, tax, legal or other advice. You should conduct your own research and consult independent counsel and advisors on the matters discussed within this post. Past performance of any asset is not indicative of future results.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.