Ripple’s CTO David Schwarz is joined by Ripple’s colleague Breanne Madigan for the latest episode of Block Stars. Breanne – VP, Head of Global Institutional Markets at Ripple – is being strengthened by the growing institutional interest in blockchain and cryptocurrencies despite the current Covid-19 climate.
In fact, she believes that the risk of spike in inflation that could arise from ongoing government incentives to stabilize and revive the post-pandemic economy makes decentralized digital assets more attractive to investors.
“You are now being recommended by financial analysts [digital assets as] a hedge against the fiat currency manipulated by the central bank, ”she states. “Coinbase and Gemini have approved their accounts with JP Morgan Chase. [Hedge fund manager] Paul Tudor Jones announced that nearly 2% of him [fund’s] Assets are in bitcoin. We have had a particularly significant series of headlines that will drive institutional adoption. “
However, Breanne admits that a true institutional takeover of digital assets by the mainstream will require greater liquidity. It outlines four main characteristics of liquidity, including the tightness of the cost between buying and selling, resilience to market shocks, the breadth of trading instruments and the depth of the order book.
High liquidity assets “tend to be traded more frequently and it is easier for investors to overcome the hurdle of taking liquidity risk,” said Breanne. Having a real world use case greatly improves liquidity, as does improving accessibility by creating more opportunities to trade assets to support the use case.
The creation of enough new institutional-class products and tools requires global regulation as the current lack of clarity and coherence threatens further innovation. While Breanne believes more regulatory guidance will help the industry, it also requires flexibility.
“Flexibility will be the key to accommodating the different products and also the changing technologies,” she says. “We need clarity from [regulators] but then we don’t want it to be too precise and specific to stifle innovation. A number of global jurisdictions have positively begun to take the lead in setting frameworks. That was very helpful [but] We need a consistent approach around the world. “
Not only will global standards help the industry, but they will also ensure that countries that have been slow to legislate don’t miss out on the benefits of blockchain.
“If the US is not fast enough to develop constructive policies,” warns Breanne, “you can see that … strong innovators and leaders in this field … are doing business in other countries.”
Now listen to Episode 5 of Block Stars to learn more about Breanne’s thoughts on the future of institutional investing in digital assets, including why security token offerings can be the main entry point for traditional financing and whether we end up with everything from real estate to Racehorses are moving towards token token.