Watch CNBC's full interview with Northern Trust's Justin Chapman on blockchain adoption

Institutional investors have lost interest in cryptocurrencies after 2022 and even with the upside this year, their appetite for it has not yet returned, according to Northern Trust’s head of digital assets and financial markets.

Institutions have shifted their focus to the underlying blockchain technology for cryptocurrencies, but his company “has potential” should customer interest in crypto assets rebound, Justin Chapman told CNBC’s Crypto World at the Digital Assets Week conference in San Francisco.

“Just after March, the cryptocurrency market went off a cliff… Customer interest has definitely veered off the same cliff in terms of institutional interest in cryptocurrency,” he said.

He continued, “The situation is definitely calm now, since 2022, from the institutional side.” “Before, we were seeing traditional fund managers looking to launch crypto funds, ETPs in Europe, which is the equivalent of ETFs in the US — it’s been really quiet. Even hedge funds, which are very active in the markets, have definitely reduced their exposure in those markets. designated space”.

Meanwhile, leaders of the largest financial institutions gathered at the San Francisco conference have been energized when it comes to blockchain technology — specifically its ability to help tokenize real-world assets such as gold for customers.

Chapman said that the “evolution of technology” is moving to a “better place” in terms of support from market participants.

“As a company, we have capabilities that are there to manage (cryptocurrency trading) functions, but it’s a very quiet market right now and (after) most of the issues we had last year, we haven’t seen a recovery at all on the institutional side yet.”

Specifically, Northern Trust partnered with Standard Chartered in 2020 to launch Zodia, a crypto custody tool for institutional investors.

bitcoin It has gained nearly 75% this year after losing 64% in 2022. It was still trading at the start of the year, with volatility at historic lows. The regulatory crackdown in the US has been a dark cloud over the industry while the banking crisis has helped push the price of Bitcoin higher. Both returned volatility to the market. Even as bitcoin is currently struggling to break above the $30,000 level, investors agree that it is still in a long-term uptrend.

“We’re not very focused on the asset class because the customer is not right now,” Chapman said. “So we don’t see this desire to have that within their portfolios. If that changes, as a company, we can account for those capabilities. But it certainly has lost its luster from a corporate perspective.”


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