The lines between traditional finance and cryptocurrencies will blur
According to research by Xangle and Hanhwa, this year will see the convergence of traditional finance and cryptocurrency markets. This will primarily manifest itself in the integration of digital currencies into the banking system. According to Xangle analysts, banks will start creating cryptocurrency-enabled custodial wallets as early as 2021 to provide users with simultaneous access to both digital assets and fiat money.
To ensure the safety of users’ data, as well as to control the circulation of cryptocurrency in the world, banks and cryptocurrency companies will tighten requirements for users in terms of identification.
More and more cryptocurrency exchanges, exchanges and P2P platforms will require customers to go through KYC (know your customer) procedure. Traditional banks will follow the same path, as it is through them that most of the money stolen in the world is laundered.
Also this year, blockchain companies will develop analytical services to track transactions by traditional banks in order to avoid money laundering. According to CipherTrace research, most banks operating in the world do not understand the nature of cryptocurrency transactions and therefore cannot adequately analyze and block them.
It should be noted that Ukraine is already following this path. As far back as last year, the Ministry of Finance and Blockchain Crystal signed a Memorandum of Cooperation, under which they will work on the creation and implementation of analytical tools that will allow to control and block suspicious transactions.
Institutional investors will invest in bitcoin
Researchers believe large corporate and institutional investors will invest in bitcoin in 2021. Microstrategy, Grayscale and Tesla set an example that other corporations will take advantage of. It should be noted that not everyone shares this view. For example, the editors of BeInCrypto previously reported that JP Morgan does not believe in the bitcoin craze due to its volatility.
The activity of institutional investors will lead to the fact that the U.S. Securities and Exchange Commission (SEC) is likely to go along and give permission to register the first ETFs in America. Note that in 2020, the SEC refused the financial firm Wilshire Phoenix to launch a bitcoin exchange traded fund (ETF), citing problems with fraud and market manipulation.
For now, large institutional and corporate investors can only invest in cryptocurrencies through trusts that are set up by companies such as Grayscale. Last year, the organization launched more than a dozen trusts that allow investment in bitcoin, ether, Litecoin, Chainlink and a number of DeFi tokens.
Xangle analysts predict that institutional investments in cryptocurrencies will increase by 30% in 2021, pushing the bitcoin price up to new highs.