Introduction

Cryptocurrencies are becoming more attractive and spreading to the masses every day for many reasons. They provide an incentive structure and a mechanism for transferring value. The fact that they are traded globally, scarce, portable, and instantly predictable are some of the features that make them attractive. This proliferation is also growing institutionally, and this report focuses on the increasing crypto adoption of institutional investors compared to previous years, the reasons for this upward trend, and the challenges awaiting institutions in this journey.

Adoption of Cryptocurrencies

The crypto industry is gaining popularity day by day with the developments in the market and technology. Despite the volatility of the market in 2021, the crypto industry as a whole has been performing positively. There is also an increase in the number of private investment funds trying to capitalise on the rising market returns of the crypto industry every year. According to Kraken Intelligence, the assets under management of private crypto investment funds (AUM) increased from $36.25 billionin January 2021 to $59.6 billion in October 2021,an increase of 64.4%. Kraken Intelligence noted that much of this jump from AUM year to year was due to legacy financial institutions and investors investing directly in crypto funds. In 2021, NYDIG raised $100 million from Liberty Mutual Insurance, the third largest insurance provider in the United States, and a number of other institutions. Fidelity Investments took a $20 million stake in Marathon Digital Holdings, the leading U.S. institutional bitcoin miner...

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