FTX debacle: End of the bromance between institutional investors and crypto? 

CRYPTOCURRENCIES have long been derided as a Wild West frontier: One enters at one’s own risk. The FTX debacle has given more ammunition to the critics and brought about a crisis of confidence about the industry itself. The massive failure also raises many legal and policy issues, including the need for regulation, the dangers of regulatory capture, the role of offshore finance havens (or so-called permissive jurisdictions), and how to best enhance retail investor protections.

But there is also another important dimension that warrants examination: Institutional investors’ embrace of crypto.

Main street financial institutions have been warming up to cryptocurrencies and started dipping their toes into the crypto creek. For example, Fidelity Investments has begun to offer crypto trading to US retail investors. BNY Mellon offers custodial services for cryptocurrencies Bitcoin and Ether. State Street and the Nasdaq have made similar plans. Even BlackRock, whose chief executive officer Larry Fink has publicly criticised crypto and questioned its utility, has partnered with Coinbase to let its clients trade bitcoin.