The crypto market landscape is a mixed bag of adoption and skepticism according to a new research report initiated by the illustrious World Federation of Exchanges (WFE). In a recent survey, it was identified that 41% of participants, consisting of 12 firms, have already begun to offer crypto-related services such as trading and asset management to their clients, with seven more firms planning to follow suit.
In an intriguing twist, a third of the respondents declared a diametrically opposite stance, indicating absolutely no intent of offering any form of crypto-related services, now or in the future. The rationale behind this resistant posture sprouts mainly from regulatory concerns and the trepidation of potentially exposing their users to fraudulent crypto startups.
The research unfolded a few weeks aftermath of the fall of the Terra ecosystem, an incident that resulted in billions evaporating from the market. This setback is perceived to have triggered an impetus for tighter regulations in the crypto sector. Add to this, a calculated growth projection of the digital assets market by 26% of participants, riding on the back of the potential approval of a spot Bitcoin (BTC) ETF in the United States, the looming concern for stability in this volatile market can hardly be overstated.
Keeping a pulse on the demand, participants observed that while retail clients are keen on stablecoins and non-fungible tokens, institutional investors demand custody and security-backed assets. The dynamics between centralized and decentralized exchanges were also highlighted as crucial determinants in the trading decision-making process, with factors like asset custody, prices, and liquidity forming the core of the considerations.
Diving into the technical aspects, it is reported that out of 500 digital asset exchanges, 40% are decentralized utilizing blockchain technology. On the other hand, a segment of centralized crypto exchanges, while leveraging blockchain technology for settlement and custody, refrain from handling trades directly on the blockchain, aiming to curb transaction costs.
The critical component of liquidity stood out in the surveys with central exchanges recording higher transaction volumes despite imposing higher transaction fees as compared to decentralized exchanges. This triggers an evident skepticism among investors and traditional firms, as the lack of consistency in digital asset regulations induces market instability.
The urgent need for a uniform framework of laws emerges as a predominant need, aimed at streamlining investment practices which seems to be echoed by many crypto executives. The gap in legislation has led to inconsistent implementation of the know-your-customer (KYC) requirements across both centralized and decentralized exchanges, pushing potential investors onto the fence of decision making. As the crypto realm continues to evolve, the role of regulatory systems becomes incredibly critical in shaping the future trajectory of this revolutionizing technology.
Source: Cryptonews
