Michael Casey, senior advisor at the Digital Currency Initiative from MIT Media Lab, stated in an interview that big banks might not be convinced about the cryptocurrency craze yet. But on the other hand institutional investors will not resist investing in cryptocurrencies this year.
“I think there is caution but it depends on which sort of institutions you’re talking about […] I think the more aggressive investors, hedge funds, private equity funds, others that are really starting to push the edges here,” he told CNBC.
He went on and said that these types of investors are chasing cryptocurrencies like bitcoin, ethereum and ripple because they are inherently attractive.
“Those guys, yeah, I think it’s just inherently attractive, something as volatile as this […] That’s a different story than saying you’re going to invest in the technology and everything else underlying it […] There’s a play that people have on this volatility and I think you have certain hedge funds, and obviously venture capitalists and other who are doing this,” said Casey.
The Banks Will Become More Aware
He also warned that the large banks will start to be more and more cautious with cryptocurrencies. Although many banks have started to research the evolution and also the technologies behind digital currencies, many of them are still skeptical. The Central Bank of London announced that it has no interest for the moment to launch a crypto equivalent of the sterling pound.
“But big banks like UBS and others I think are necessarily going to move more cautiously,” said Casey.
One of the cryptocurrencies that are starting to get bank’s attention is Ripple (XRP) which could be used to send money across the world in real time. In comparison with other cryptocurrencies, Ripple doesn’t hold a high level of anonymity and recently has attracted investments of hundreds of millions of dollars.
According to Brad Garlinghouse, the CEO of Ripple, the company is working with more than 100 banks in the present.
“I think the vast majority of banks, like 99.9 percent of banks actually are paying other banks, the global money sender banks like JP Morgan or Citibank to make those settlements […] A lot of the banks are very excited about democratizing how these global payments flow.”
The XRP cryptocurrency hit an all-time high of $3.80 last Wednesday, and now is trading at 2.29 with a 33% loss in the last 24 hours.
According to Reuters, the reason behind bitcoin’s fall on Monday is South Korea. The financial regulator from South Korea started to inspect six local banks that offer digital currency accounts to institutions. Bitcoin fell almost 13 % in the last 24h an is now trading at around $14,600.