Galaxy Digital has been suffering from a series of tough months when it comes to its financial performance. That's a fact that anyone that's been keeping an eye on the banking scene will be acutely aware of.
One of the contributing factors being that, just months ago, it sought to make itself more coherent with its appearance on the Toronto Stock Exchange, the company was obligated to divulge its Q1 balance sheet. And while it was an act of good intentions, the balance sheet didn't exactly make for good reading, to say the very least.
While it did them little to no favors with prospective investors, Galaxy's more senior individuals remain relatively steadfast in comparison. Instead, they've set their collective sights on new sectors within the cryptocurrency world in order to get a stronger grasp of its hegemony.
Novogratz’s Galaxy Digital Sets Its Collective Sights On Wall Street
It was recently reported that the institutionally-sourced capital has continued to steadily flow into the industry's revenue stream by a large margin. This is in spite of the cryptocurrency market's ongoing downturn, which has put off only the most resolute of investors. The renowned and reputable market researcher, Alex Kruger, has previously stated that $5.9 billion of capital off of Wall Street has directly entered the realm of digital assets.
Overall, this amount made for a total of 2.8% of the aggregate value of all cryptocurrencies. Alongside this, according to an exclusive report, it was made increasingly apparent that this increasing subset of investors hasn't gone under the radar for many, with Mike Novogratz's Galaxy Digital having recently undergone a dramatic shift in appeal to institutions.
According to a public statement made by the Galaxy Digital team, it revealed that two of its widely known names would be leaving the company, which also coincides with the broader shutdown of its Vancouver office. According to a news outlet, this claim was corroborated, along with some more revealing insider sources which reveal that a further three executives have since announced their departure from Galaxy.
There have been a great many which have been otherwise perturbed by this very sudden alteration, what went under the noses of many was the following segment of the announcement made by Galaxy:
“The Company is adapting to the regulatory framework and the opportunities it is currently seeing, and therefore repositioning its Advisory business from focusing on small ICO advisory and blockchain consulting to instead serve larger, more institutional clients in the space.”
Now, this is a highly interesting line, and comes into alignment with previous reports and the public's sentiment on existing landscape which is the state of Initial Coin Offerings (ICOs). One report goes on to claim that a meager 19% of TGE survey respondents were otherwise confident about the world of ICOs.
It's quite likely that the company is doing a certain degree of research on the subject of ICO themselves. It's otherwise likely that, as the ICO market depreciates, and the non-retail crypto-space increases in scale, Galaxy Digital has thought it quite beneficial to tempt and draw its institutional clients in.
However, while its transition to target institutions was made quite abundantly clear, it has yet to be seen what measure the company will enlist to allow itself to flourish.
Institutional Investors – Cryptocurrency's Holy Grail Market?
So, what is the ambition of Galaxy Digital by doing this? It's to target institutions which underscore an otherwise rapidly growing theme in this industry. And that's the establishment of a range of products, services and platforms which are otherwise taking aim at the hotshots of Wall Street, along with any individuals that boast a high net-worth.
This overall shift, as was previously alluded to, has been further sped up by a rising number of institutions and corporations that are expressing interest in the space. Along with this, there are a number of industry insiders that have even become solidly convinced that institutional investors have become the holy grail of the crypto world overall, which is resulting in more startups taking aim at Wall Street for their own shot.
During Mid-October, the Boston-based company Fidelity Investments, which is one of the largest financial bodies operating out of the United States revealed that it will officially be launching a crypto subsidiary. This news comes after a number of years in which Fidelity had dabbled with the industry. The company has since referred to this subsidiary as ‘Fidelity Digital Asset Services,' and currently has ambitions to launch a top-notch cryptocurrency custody system, along with trade execution services for its 13,000 institutional clients.
Speaking about his excitement for Fidelity's walk into the crypto world, and its proposed custody solution, Novogratz informed Bloomberg:
“One of the things that will get institutional investors involved in crypto is custody solutions… And Fidelity is coming out with a world-class custody solution that is aimed at institutions, so that’s a box that gets checked and [that is] something that gets taken [an institution’s] list.”
While this is promising news, we are months away from Fidelity implementing this digital asset focused service, so as of right now, eyes are currently trained on Bakkt and its December 12th launch date, which sees one of the first physically-backed Bitcoin (BTC) futures contract go live.
However, despite the aforementioned strides, some remain unconvinced that institutions will be in this nascent industry’s future.
Speaking at the Web Summit 2018 in Lisbon, the CEO of Revolut, Nikolay Storonsky elaborated that there's a theorized interest from ‘big institutional investors,' that just doesn't meet with reality. Continuing on with his narrative, he claimed that banks will otherwise be doubtful when it comes to any kind of foray into that space, going on to add that these players will not be the driving force behind crypto's next upside move.
Dogecoin's founder, Jackson Palmer, went on to echo Storonsky with his own brand of reserved skepticism when it comes to institutional involvement, issuing an otherwise insightful op-ed piece and accompanying video which was entitled “Why ‘the institutionalization of cryptocurrency’ is a paradox.”
In this piece and video, Palmer argued against the arrival of this previously mentioned class of investor to the crypto world. Palmer, who is also a prominent software developer at Adobe, argued that crypto's newest startups like Bakkt or FDAS, may only serve to undermine the strong industrial rhetoric of pure decentralization, anti-censorship, and anti-government.
Regardless of the viewpoints, no matter what the future holds for what is the markets dynamic, a great number of pundits will remain solidly convinced that crypto-assets and decentralized networks they are based upon will succeed in the decades to come.