Over $1.2 trillion – this is the global banking system’s potential crypto assets growth capacity over the next few years. Experts from ICOBox’s Blockchain Research Center [IBRC] came up with their estimate based on the recommendations from international regulators to banks interested in trading cryptocurrency assets.
The Swiss Financial Market Supervisory Authority [FINMA] has recently established the maximum ratio of cryptocurrency assets to the total capital of the country’s banks: it should not exceed 4%. Considering that Switzerland is clearly aiming to become one of the world’s crypto industry leaders looked up to by many governments in managing their banking systems, the FINMA’s approach may become a gold standard for other international financial institutions.
To establish their assessment of the potential volume of the world’s cryptocurrency assets, IBRC’s experts relied on the annual rating of the world’s 100 largest banks and analyzed the numbers for all credit organizations located in jurisdictions of interest to the cryptocurrency market, such as the United States, Japan, South Korea, Switzerland and Australia. This is how they arrived at $30.354 trillion. The estimated maximum volume of cryptocurrency assets not exceeding 4% from this amount is $1.214 trillion. This calculation however does not include China, despite the fact that its banks actually take up the first four positions in the rating: the Chinese authorities have recently been extremely hostile to cryptocurrencies and ICOs.
“This number, $1.2 trillion, allows us to assess the potential volume of crypto assets in the global banking system in the next 2-5 years. Today’s crypto market, with its current capitalization of $223 billion, will take years to absorb this amount of capital. And if all the banks in the world were suddenly allowed to keep up to 4% in crypto assets in their accounts, this could potentially constitute the “second coming” of bitcoin,” says Anar Babaev, ICOBox’s Co-Founder and Managing Partner.
IBRC experts believe that there are other factors which may give momentum to the continued development of the cryptocurrency and blockchain industry. Among them is the expected market entry by institutional investors and major companies who have completed their IPOs but have not yet ventured into blockchain, the shift in the direction of digital currency market development away from utility tokens and ICOs and towards security tokens, Security Token Offerings [STOs], and Composite Token Offerings [CTOs], i.e. sales of “universal” tokens combining the best features of utility and security tokens. The market will also gain stability and become more attractive to the players if and when more sophisticated, legally regulated products are introduced. If the puzzle comes together just right, we can expect the second upswing in the crypto market – and this upswing will have every potential of being more global and lasting. And at that time we’ll know if the market fits into the established 4% or if it wants to move beyond this established boundary.
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