🏢 [Analysis] The 4th era of crypto: Crypto-institutionalization - Yaniv Feldman

Every crypto era has its driving force. The first was Bitcoin ($BTC), then came Altcoins, then the utility tokens and platforms. Following the demise of ICOs, alongside the rise of traditional financial solutions like ETFs, stable coins, and new instruments like Citigroup's DAR we see signs of a new crypto era according to Yaniv Feldman. Exchange traded funds, or ETFs for short, are financial instruments that generally track a commodity or a larger basket of assets, like stocks or bonds. All attempts to win SEC approval for Bitcoin ETF have been denied, save for one that is currently awaiting approval. This is mainly due to immature infrastructure and concerns around regulating the underlying market. Despite the hype, there have been other solutions, like mutual funds, ETNs, and futures available to institutional investors for years, leaving the necessity of an ETF up for debate. Stable coins are another emerging crypto product aimed at maintaining a stable value. At the start of 2018, there were five stable coin projects, a number that has grown to 30 in just nine months. Some have raised substantial amounts of money from respected investors, such as Basis which received $133 million and Terra Money which recently raised $32 million. Currently, four models dominate the market:

• Asset-backed: Every token is backed by a physical asset like fiat currency, precious metals, etc.
• Crypto-collateralized: Each token is backed by another, more significant, cryptoasset like Ethereum ($ETH)
• Mechanism design: A "central bank" mechanism controls the token's price stability similar to existing central banks
• Hybrid: A combination of two or more of the above models, such as an asset-backed approach combined with a central bank. While stable coins promise to bring stability to the volatile world of cryptoassets pegging them to things like fiat currencies can potentially give back controls to governments and expose them to issues like inflation.

Finally, digital asset receipts (DARs) are a recently announced innovation from Citigroup that act similar to an American depository receipt (ADR). Under this structure, a custodian would hold a cryptoasset and a receipt would be issued to the investor. These new instruments may be beneficial to many investors that do not want to risk holding their own Bitcoin but remove the foundational control that many have sought in cryptoassets. Institutionalization is coming, whether you like it or not. What we don't know is how it will impact Bitcoin and cryptoassets as we know them today.