Lessons from Europe: ‘crypto was never about institutions’

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Jayson Derrick

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Jayson Derrick

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August 23, 2023 13:17 EDT

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The European Parliament launched earlier this year a bill that allows member banks to hold up to two percent of their capital in bitcoin or any of the other top crypto assets. While this is a clear sign that the regulatory environment across the world is improving, one crypto expert remains less enthusiastic about the direction of progress.

Institutions have the ‘upper hand’

Bitcoin and crypto enthusiasts will naturally look at the recently passed bill and conclude it is a positive catalyst for the sector. And why wouldn’t it be? Banks are given the green light to essentially accumulate bitcoin should they choose to do so once the bill comes into power in January 2025. 

But according to Stefan Rust, the former CEO of Bitcoin.com and current CEO of Truflation, institutions hold the “upper hand” and retail investors are left behind. He said in a statement obtained by cryptonews.com:

Crypto was never about institutions. In fact, bitcoin was first created as a counterbalance to the dominant economic system that failed investors in 2008. It’s not banks and institutions that will build the Web3 ecosystem – it’s the everyday man finally gaining control of his own financial freedom. This latest news from Europe does nothing to support this paradigm.

Rust further explained in comments to Cryptonews that institutions possess a competitive edge over retail investors, making it significantly challenging for the latter to “own a single coin.” He elaborated:

This will play in the favor of ETF managers that need to back their ETF by bitcoin, or any other crypto for that matter. To run these funds they need to have the means to purchase the underlying assets, find a custodian, and then be able to match that to the product and the market cap of that ETF. This requires large amounts of capital.

Discouraging to see the SEC ‘drag its heels’

The Jacobi FT Wilshere Bitcoin ETF launch that went live last week on the Euronext Amsterdam exchange represents a “more positive development” for crypto, Rust added. But further approvals worldwide are needed for bitcoin and the general crypto industry to not only reach the masses but “remain true to its spirit” as a decentralized currency that is meant to be accumulated by all.

Nevertheless, there are some encouraging developments in the regulatory front. This includes Coinbase’s approval to sell crypto futures while an ETH futures ETF approval is expected before the end of the year.

However, market reaction to these developments has been tame as investors haven’t reacted positively to the news.  Rust notes:

While the growing global acceptance of crypto by regulators is a step in the right direction, we need to see more opportunities for retail investors. This – not more access for banks – is what’s needed to drive the next crypto boom.”