During the last crypto boom, much was made of the influx of institutional investors and high net worth individuals (HNWIs) into crypto.
But for the most part, those investors focused on Bitcoin, the most mainstream—if any cryptocurrency can be called mainstream—crypto asset.
Now, institutional investors are turning their attention to more sophisticated crypto assets and applications, such as the opportunities presented by decentralized finance (DeFi). In late 2021, Brett Tejpaul, head of institutional sales at crypto exchange Coinbase, hailed the “light-bulb-on moment for institutions,” adding that, “one thing I’ll say is it’s not all about Bitcoin.”
“There’s definitely a rise in activity in the DeFi sector,” Tavia Wong, director of marketing and business development at institutional crypto custodian platform Cobo, told Decrypt, as “institutional investors move towards activities that accentuate their investing edge.”
Singapore-based Cobo is building and deploying tools and infrastructure to help those investors embrace the long-term opportunity presented by crypto and DeFi, offering a standard set of SaaS-like services to help institutions and high net worth individuals (HNWI) easily and securely invest in decentralized finance products.
And despite the crypto crash of 2022, the appetite for DeFi among institutional investors is “very much still there,” Changhao Jiang, CTO and co-founder of Cobo, told Decrypt. But following the collapse of high-profile DeFi projects like Terra, “they have a better understanding of the risks,” he said. “They’re more rational than before.”
Being more careful—going in with both eyes open—is not a bad thing, said Jiang. Institutional investors may be wary, he added, but they’re still ready to explore DeFi—and looking for tools to help them navigate the complexity of diving into DeFi.
“It helps to align yourself with tools and companies that aren’t focused on things like minor price changes in the short term,” said Jiang.
Meeting institutional needs
Institutional investors have three primary needs—essential boxes that must be ticked—before they can take the leap into DeFi: security, compliance and ease of use.
Although most institutional investors “think of DeFi as a high-yield solution and are still very curious,” said Lily Z. King, Cobo’s chief operating officer. “After this recent market collapse, they’ve realized that there are unique internal and external risks associated with this space.”
“What we allow them to do is to test their curiosity with minimal risks,” she said.
Argus never sleeps
To facilitate this, Cobo has introduced Cobo Argus, a platform that complements insitutionals’ internal control framework and provides secure custody architecture for crypto assets.
Named for a hundred-eyed giant from Greek mythology, Argus is designed to be a vigilant…
Read More: decrypt.co