Nexo and Amber Group executives are claiming “exponential” growth in institutional crypto investments


During the 8th edition of the Blockchain Africa Conference 2022, Cointelegraph Editor-in-Chief Kristina Lucrezia Cornèr moderated a virtual panel titled “Cryptocurrency Institutional Investment: Increasing Returns and Improving Diversification.” Panelists Kalin Metodiev, Co-Founder and Managing Partner of Nexo, and Dimitrios Kavvathas, Chief Strategy Officer of Amber Group, focused on the opportunities institutional investors are seeing in the blockchain and crypto space, both in Africa and globally.

Nexo is a crypto lending and exchange platform that has recently started offering crypto custody services, products and lending services to institutional investors in partnership with Fidelity Investments’ crypto wing, dubbed Fidelity Digital Assets. crypto trading company Amber Group recently secured a $200 million investmentwhich tripled its valuation to $3 billion following a major investment by Singapore’s Temasek Holdings.

Both panelists spoke about the current momentum of institutional investment in the blockchain and crypto space, acknowledging its “exponential” growth in institutional onboarding. Metodiev explained that institutional investors could, however, claim that the crypto market is “still too volatile,” meaning that determining the overall impact of crypto relative to other assets in a portfolio is too difficult.

Kavvathas stated that “we can do more” than just adding crypto as another asset class for large liquidity providers. He added that while participation is growing, it is “far from meaningful.” Metodiev also stressed the importance of the African market and the “number of potential users increasing every day” due to the “extremely” rapid adoption of blockchain technology on the continent.

Related: Crypto Users in Africa Up 2,500% in 2021: Report

However, regulation can accompany mass adoption. Metodiyev said that while a free market shouldn’t mix with politics, some regulation is to be expected: “It’s pipe dream if we think we’re living in a pink bubble” and expect millions of dollars without policy flow or procedure. Kavvathas agreed that it is inevitable that crypto will be included in the standard regulatory structure despite community hesitation.

Cornèr then asked what can be done to accelerate the responsible use of cryptocurrencies in line with the environmental, social and governance (ESG) agenda set by the United Nations. Metodiev explained that the louder institutions express their commitment to ESG goals, the more service providers can support these initiatives, but that this starts with greater investment in blockchain technology.

Kavvathas spoken about Amber Group’s partnership with climate technology company Moss Earth and its program to tokenize the carbon offsetting of bitcoin transactions. He added that “blockchain companies are extremely well positioned to provide solutions to climate change,” but that there needs to be a “tailwind” from governments and regulators to follow suit.

Another topic of conversation was what institutions might be aiming for in terms of returns. Nexo’s Metodiev pointed out that institutions perceive returns and risks differently than retail investors, emphasizing that institutional interest rests on how opportunities are perceived. He said it may be more important for institutional investors to enter an area where they can stake billions of dollars and generate returns of 7% to 12% year over year, rather than chasing returns of 70% to 80%.

The discussion ended with Kavvathas expressing his enthusiasm for tokenomics and the incentives associated with permissionless blockchains that can enable the crypto community to bridge and overcome barriers to sustainable investing.