Despite the financial volatility that has engulfed the global economic landscape for the past month, the growth of the cryptocurrency market, especially the nonfungible token (NFT) sector, seems unstoppable. This growth is emphasized by the fact that the total market cap of crypto increased from about $800 billion to $1.8 trillion as of early 2021.
Furthermore, a report from NonFungible.com was released at the end of last month reveals that sales related to the NFT market exploded to a record high of $17.6 billion in 2021, representing a 21,000% increase from 2020.
The report further suggests that individuals who invested in the NFT market reap monumental profits totaling $5.4 billion last year. So it’s no surprise that a growing list of mainstream entities has continued to make their way into the crypto space.
Mainstream companies are exploring crypto technology
On March 2, Nomura Holdings – one of Japan’s largest financial companies, with approximately 70 trillion yen ($593 billion) in assets under management – announced that it would launch a new digital asset wing to explore the opportunities of the crypto market. , especially NFTs and to help its clients increase their exposure and use of digital currencies and other related services. The company — which trades in retail, wholesale and investment businesses — announced it would restructure its Future Innovation Company and begin updated operations in April.
Several major companies have taken similar steps in recent months, including e-commerce giant Rakuten, which announced the launch of its own NFT trading platform called Rakuten NFT. Japan’s largest financial conglomerate, Mitsubishi UFJ Financial Group, also revealed it would be scrapping its blockchain payments project to focus on the burgeoning stablecoin market.
Bank of Tokyo-Mitsubishi UFJ headquarters in Chiyoda-ku, Tokyo. Source: kakidai
Specialized crypto wings are quickly becoming the norm
Christopher Temme, chief financial officer of cryptocurrency exchange bitFlyer USA, spoke to Coin-Crypto about whether the trend of mainstream companies creating dedicated crypto departments will continue in the future.
It comes as no surprise, he says, that companies like Nomura, which create digital asset-focused business units, are pushing for this kind of exposure, as most multinationals’ clients are pushing for this kind of exposure, adding:
“What’s more interesting is that Nomura specifically researches NFTs. Their rapid growth and adoption in the creative/collectibles space has been the perfect testing ground to amplify technology to prepare for digital ownership of ‘real’ real estate, and the communities it will shape.”
Temme also noted that while Japanese financial institutions have traditionally been quite conservative in their financial outlook, the fact that Nomura is exploring the crypto sector through a dedicated wing is a strong indicator of what’s to come in the near future.
Similarly, Takaaki Kato, head of global sales and commerce at bitFlyer, told Coin-Crypto that, as a general rule of thumb, mainstream businesses tend to follow a herd mentality — meaning when a major player sets up a division to explore crypto, it’s only a matter of time before others follow.
Temme and Kato’s views were also shared by Jimmy Yin, founder of iZUMi Finance – a platform that provides liquidity as a service – who told Coin-Crypto that creating dedicated crypto wings will likely become a norm as we enter an increasingly decentralized future. enter. However, he noted that there are certain things companies should consider before taking major steps in this direction:
“We have seen tremendous growth in the past year in NFTs and crypto asset users in general. That said, multiple factors need to be considered, including legalization, especially when it comes to advertising to mass citizens. With the current geopolitical chaos going on, crypto is seen as challenging what is considered stable.
According to Yin, the trend will gain momentum as the social adoption of crypto continues to grow, especially as a holistic technology that offers a myriad of benefits – not just as a payment tool. “Whether crypto is adopted as a social norm is not up to these corporate giants, but in the common interest of the citizens,” he said.
The numbers don’t lie
In mid-2021, Bank of America established a specialized team focused on crypto and digital asset strategy, citing growing customer demand and other related factors for the move. In a study released by the company later that year, analysts noted that the digital asset market had grown too big for a forward-looking company to ignore, with crypto reaching a $2 trillion market cap by 2021 — and growing by more. than 200 million users.
The researchers further noted that crypto-based digital assets could form an entirely new asset class in the coming months and years. Not only that, they acknowledged that the digital asset ecosystem had expanded into unimaginable realms in recent years – including decentralized finance, stablecoins, central bank digital currencies (CBDCs) and NFTs – meaning more and more traditional players will soon be entering the market. conflict.
From a purely numerical standpoint, venture capital-related investments in digital assets and blockchain reached more than $17 billion in the first and second quarters of 2021 alone, dwarfing the combined total of $5.5 billion from the previous year.
Finally, as more companies begin to realize the potential crypto has in various sectors – including finance, supply chains, gaming and social media – the arrival of dedicated crypto research teams no longer seems like a far-fetched idea. Samiar Tehrani, co-founder of Ratio Finance – a Solana-based collateralised debt platform – told Coin-Crypto that digital assets provide tangible, turn-key cases that meet many of the challenges of the world of traditional finance, adding:
“Even after undergoing several major corrections recently, the current market cap of the crypto sector still stands at $1.8 trillion, which is more than the GDP of many major countries. That tells you everything you need to know about how big this space has become and whether companies are really taking this market seriously. I believe most companies already have dedicated teams working overtime to explore this space so as not to be left behind.”
Most traditional companies see a lot of value in crypto
Like Bank of America, many other financial juggernauts have recently jumped into the crypto market. For example, late last year Morgan Stanley launched a cryptocurrency research team led by Sheena Shah, the company’s chief analyst for digital assets, alongside Adam Wood and James Faucette, who lead the bank’s fintech and payments research team in Europe and the United States, respectively. States. †
It’s also worth noting that Morgan Stanley was one of the first major investment banks to fully embrace digital currencies, with the company rolling out a total of 15 crypto-related mutual funds to its clients in the past 18 months.
In addition, State Street, the second-oldest continuously operating bank in the United States, launched a dedicated digital finance division in June 2021, pointing out that it should focus on forward-looking technologies such as cryptocurrency, blockchain, CBDCs, and tokenization to create equal opportunities. keep up with the ever-changing global financial landscape.
So as the world becomes more and more accustomed to digital assets, it is obvious that more and more companies will be looking intently at various offerings related to the space. In this regard, it seems that many companies see creating teams that specialize in this financial niche as the best way to do this.