Ciara Sun, head of global markets at Huobi Group, participated in an initial interview for China Blockchain Week in Cointelegraph China Great Bay Area on July 27. She emphasized that although security and the lack of infrastructure services may be the biggest obstacle to the crypto industry, increased clarity in regulation around the world has resulted in a significant increase in institutional crypto investors.

Systemic risk in cryptocurrency infrastructure
The biggest risk is in digital assets, according to Ciara Sun. She stressed that while piracy usually does not lead to major losses in traditional financial markets, the decentralized nature of digital currencies means that it is almost impossible to recover lost assets if they are stolen. She added:

“Unlike banks, cryptocurrencies simply function as transaction books. Actual assets are stored in cool portfolios, so losses can be permanent if keys are stolen. Traditional institutions also have very strict insurance and guarantee requirements to protect users from loss, but the same cannot be said. About many of the smaller cipher hubs operating in this space. ”

According to Sun, exchanging encryption at Huobi is a top security priority. She notes that there have been no major security breaches in Huobi over the past six years. She added an example like:

We launched a series monitoring tool called Star Atlas to detect and detect illegal activities. Our security team plans to regularly disclose a security report in the fourth season of 2020. ”

The lack of infrastructure services in the basement area
In addition to the existing security concerns, Sun noted that a lack of services such as insurance and custody is a major obstacle preventing many large asset managers and institutional traders from entering the building. She explained:

“These large corporations have higher compliance requirements, but regulators have not made enough recommendations for digital assets in the past. This unclear regulatory landscape makes it more risky for large corporations. Moreover, digital capital space remains small compared to traditional markets. It is in its infancy as an asset class in the eyes of traditional institutions, but exchanges like ours aim to help provide the liquidity and market depth required for the crypto industry as a viable investment alternative. ”

More regulation and clarity about encryption on the way
Sun believes that although the industry is still promising compared to traditional markets, the spectacle of digital assets has come a long way in recent years. “There is a lot of regulation and clarity in digital currencies now. For example, Singapore, London, Hong Kong and Japan have started regulating cryptocurrency using certain principles.”

With countries recognizing digital assets and regulating them as legal financial instruments, institutional adoption is becoming more common. According to Sun, Huobi's institutional trading volume in the spot and derivatives markets has increased 3-4 times since the beginning of last year. According to Song, institutional clients currently account for 40% of Huobi's turnover. You expect:

2020 will be a particularly exciting year for the institutional market with compliance and regulation beginning. We already see older Wall Street folks like Tower Research and Renaissance Technologies and some of the world's best hedge funds deployed as they enter the digital asset market. However, these large institutions will not rely on unregulated digital asset exchanges, and we are still five years after the market matures. ”

Service providers versus institutional markets
According to Sun, the fluctuations and high liquidity of digital assets are particularly attractive to institutional investors. The cryptocurrency market is unique in that it can meet liquidity and volatility requirements. Go to give an example:

“Traditional investments such as real estate are characterized by price fluctuations but lack liquidity. Foreign exchange markets are very liquid but lack price fluctuations. Institutional investors view arbitrage opportunities in cryptocurrencies as an emerging market. The first to enter the market are high frequency traders. Institutes.”

In addition, Sun also believes that digital assets can offer organizations a way to hedge against volatility in traditional investment markets, adding:

“Traditional assets depend directly on monetary policy and economic measures such as quantitative easing, but digital assets are not linked to the actions of a single country or administrative body.

Source: CoinTelegraph