The next crypto boom: unlocking opportunities in institutional adoption

The digital asset industry moves fast – and is becoming increasingly expansive in the ground it covers. Taking the stage at the 2023 London Blockchain Finance Summit, Zumo Marketing Director Amelie Arras provided her perspective on the driving forces behind the ongoing mainstreaming of digital assets, and some of the current challenges and opportunities facing the nascent digital asset sector.

A pivotal moment

The digital asset industry finds itself at a point of crossroads, with early movement and strategic positioning pointing to the forthcoming institutional era in the cryptocurrency landscape. This transformation marks a pivotal moment, as the institutional realm embraces digital assets in a way that extends ‘crypto’ once and for all beyond crypto-native businesses to encompass enterprises and businesses across sectors, and government-level scrutiny.

Regulation and sustainability: the pillars of crypto’s future

As this evolution plays out, we see two vital tenets – regulation and sustainability – that will be at the cornerstone of future-proofed crypto solutions. Regulation in the digital asset sphere is no longer an abstract concept; it’s a tangible reality that businesses must address. And likewise, sustainable solutions are not just an ideal; they are a necessity. It’s an area that has occupied a great deal of Zumo focus in recent times as we’ve worked to implement UK travel rule and financial promotions compliance requirements, and also to offer targeted sustainability-focused solutions. 

The financial promotions perspective: a UK paradigm shift

Nowhere is this more evident than in the recent publicity around the entry into force of the UK financial promotions regime extending promotions rules to cryptoassets. This is a shift in the UK regulatory landscape with global ramifications in terms of any business that sells in to UK consumers. As such, it demands attention, and we’re proud to be one of the earliest businesses to have integrated tech based requirements of the new regime. If you’re still looking to get up to speed on the subject, I highly encourage you to take a look at our finproms FAQs from our Head of Compliance Michael Johnson. 

Unfolding developments: the foundations of the next crypto boom

Looking past current developments to the unknown of the future, it seems to me that we could consider the unfolding digital asset landscape as a combination of developing avenues that may, over time, layer together to provide a new scale of digital asset opportunity. These potential developments can be dissected into four key areas.

1. Crypto Invest: expanding entry points

In the early days of crypto, consumer entry points were limited, primarily involving dedicated exchanges or self-custody solutions. Today, however, the landscape offers a diverse array of emerging options. Increasingly, individuals may enter the crypto sphere through traditional banks, existing brokerages, dedicated investment funds, fintech providers, or via web3 applications. Zumo’s Crypto Invest offering for enterprise acknowledges this increasing diversity of entry points, including through the route of familiar and established providers. In the process, it empowers enterprise clients to explore the world of digital assets, taking their first steps and harnessing the possibilities of digital assets for themselves in their own business.

2. Institutionally driven investment: the rise of digital asset investment products

The increase in institutional engagement in crypto trading has been accompanied by growing interest in the development of investment products such as exchange-traded funds (ETFs). While still to hit the market at scale, these products hold the potential to make crypto accessible to a broader audience, with an emphasis on simplicity and convenience. In 2023, the United States has witnessed a surge in filings for spot Bitcoin ETFs, opening up potential avenues for everyday individuals to gain closely tracked price exposure without needing extensive knowledge of the technology, and within the convenient and advantageous wrapper of an ETF product. Zumo collaborates with asset managers to ensure these investment products, often starting with Bitcoin, adhere to environmental, social, and governance (ESG) standards. This is facilitated through our Oxygen product, which matches the electricity consumption of fund digital asset holdings with verified Renewable Energy Certificates (RECs).

3. Payments and web3: how applications and utility feed into crypto adoption

Stablecoins have gained significant traction in recent years as a potentially fast, efficient payment method (albeit the supporting regulatory framework continues to be developed, and operations have not always been without their shortcomings). Beyond this, crypto and blockchain’s hypothetical potential extends to various utility-focused applications, ranging from NFTs to gaming, entertainment, social media, and identity verification. While such applications remain at the earliest stage of their development, they do depend on the supporting infrastructure of secure, self-custody digital asset wallets. At Zumo, we recognise the role self-custody wallets serve as the potential gateways to a multitude of applications that may emerge in the future. This is why Zumo has invested in its Zumo Infinite non-custodial wallet offering, which aims to lay a secure and trusted foundation to support the next wave of adoption and use cases.

4. New blockchain use cases: sustainability and tokenisation

The landscape of applied blockchain use cases is vast, spanning from multi-trillion-dollar financial market infrastructure applications to supply chain management in the manufacturing and logistics sectors. One noteworthy area receiving substantial attention, and where Zumo has focused its efforts, is the intersection of blockchain and environmental, social, and governance (ESG) considerations. From corporate sustainability reporting to the procurement of offsets, significant improvements can still be made. Through partnership, Zumo is actively exploring these areas and looking for ways to utilise blockchain as a “digital enabler” for advancing environmental use cases. Our recent partnership with GMEX, for example, explores how corporations can leverage blockchain technology for carbon accounting and offsetting, potentially taking advantage of tokenisation and other blockchain-native advantages in the process.

In conclusion

Zumo’s thesis for the next cycle in digital asset adoption is that enterprise opportunities abound in all four of these areas: in ‘crypto’ for fintechs, banks and other institutions to get hands on with crypto solutions; in digital assets to cater to the big demand there is from institutions to offer new types of digital asset investment product; in web3 for retail brands to capitalise on new consumer engagement opportunities; and in blockchain/DLT to realise massive financial market infrastructure and industry use cases. Taken combined, these avenues set the stage for a fascinating evolution in the years ahead.