With the completion of the Merge last week, Ethereum is attracting more and more attention from institutions that seek to implement blockchain technologies into their solutions.
But some institutions are still wary of the potential downfall of blockchain. Regulatory uncertainty remains one of the biggest obstacles to general adoption.
U.S. Securities and Exchange Commission Chair Gary Gensler recently said that proof-of-stake cryptocurrencies may be subject to federal securities regulations, repeating a pro-oversight and customer pragmatic attitude.
Meanwhile, the Crypto Winter is prompting crypto investors to move away from Bitcoin to Ether. But Ether’s price took a hit on Thursday. On September 15, Ether was trading for roughly 0.0817 BTC on Binance but it continued falling after fifteen hours at 0.0746 BTC.
The rising interest of institutional investors could be seen in the spot market.“In terms of the volume increase in ETH this week, it was actually led by institutions, and that’s a significant part of our exchange business… There was “about 56% increase in volume from institutions versus, I think, 35% increase in volume from retail users.” Bitstamp USA CEO Bobby Zagotta said optimistically.
Traditionally, large investors like pension funds and insurance companies are the most hesitant to enter the industry as they have the most stringent screens for what they can invest in.
Private banks and mid-sized wealth managers are seeking to distinguish themselves from the pack by expanding their portfolios to alternatives like digital assets.
In general, institutions with Environmental, Social and Governance (ESG) Considerations are jumping on the bandwagon since the Ethereum Foundation estimates that the blockchain’s energy consumption is likely to be a negligible 0.1% post-Merge.
Ben Dean, director of digital assets at Wisdom Tree said that “the prospect of Ethereum moving to Proof-of-Stake completely changes the investment case for Ether.”
“We’re certainly seeing more interest than we have in the past with folks turning up and asking questions around staking yields, around ether, around the different technical specifications, but most importantly the investment case.”