Regulated financial exchanges are contemplating ways to tap into the growing interest in cryptocurrencies, according to a report by the World Federation of Exchanges (WFE), an industry group. However, the survey revealed that one-third of respondents have no plans to offer cryptocurrency as an asset class.
The report, issued by the London-based WFE, outlined the concerns expressed by financial exchanges regarding the adoption of cryptocurrencies. These concerns include the lack of uniform regulatory standards, market volatility, and the potential cybersecurity risks associated with cryptocurrency assets.
Among the 29 exchanges that participated in the WFE survey, 12 currently offer cryptocurrency-related products or services, while 17 do not. The report did not disclose the identities of the respondents.
Interestingly, of the exchanges not currently offering cryptocurrency-related services, only seven indicated plans to introduce such services in the future, leaving 10 with no immediate intentions to do so.
The year 2022 witnessed a significant drop in cryptocurrency prices following a series of collapses at prominent cryptocurrency firms, including FTX. These incidents resulted in substantial losses for investors and led to heightened calls for cryptocurrency regulation by lawmakers.
Approximately 38% of the surveyed exchanges have already established, or intend to establish, working groups dedicated to exploring cryptocurrency-related assets or services.
Blockchain and Mainstream Financial Institutions
The report also highlighted that slightly more than a quarter of the respondents believe that cryptocurrency assets will become mainstream in the near future.
Nandini Sukumar, CEO of the WFE, stated, “Crypto is at the forefront of all of our members’ minds, and we are in constant dialogue with them about how to capitalize on the new opportunities in the area.”
While cryptocurrency has gained significant attention, mainstream financial institutions have also expressed interest in blockchain technology, which underpins cryptocurrencies, for various applications in the traditional financial industry. However, the widespread adoption of blockchain technology in traditional finance has yet to materialize.
On Monday, the London Stock Exchange Group announced its exploration of blockchain technology for developing a system aimed at “raising and transferring capital across asset classes.” Notably, this initiative would not involve incorporating cryptocurrency assets.