FTX turmoil increases industry scrutiny, something institutional investors have been waiting for

Hedge funds and asset managers are rolling out digital asset teams, but a lack of regulatory clarity is holding them back.

The recent liquidity crisis at FTX will increase regulatory oversight in the crypto industry, which is something institutional investors are looking for, a number of sources told Cointelegraph on Nov. 10.

"This event will be used as a cornerstone to trigger new crypto regulations, which is good for the healthy development of the industry. A more comprehensive regulatory framework has the potential to protect long-term investors from fraud and other risks,” said Cake DeFi co-founder and CEO Julian Hosp.

October was actually a big month for crypto adoption, as big players in traditional finance announced their entry into the digital asset space.

BNY Mellon, America's oldest bank, has unveiled its digital custody platform to protect Ether (ETH) and Bitcoin (BTC) from certain institutional clients. Additionally, French bank Societe Generale has received regulatory approval as a digital asset service provider. Finally, Fidelity has expanded retail access to commission-free cryptocurrency trading services.

The developments of established global players are not a coincidence, but rather illustrate a scenario in which digital assets are a reality for financial institutions. “It takes deep conviction and significant buy-in for a well-established incumbent to enter an emerging asset class in market conditions like the ones we experienced in 2022,” said Sébastien Davies, director of the provider of Aquanow digital asset infrastructure.

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