Corporate adoption and trust in the cryptocurrency industry are still in their infancy, despite the previous approval of the first spot Bitcoin exchange-traded funds (ETFs).
The regulatory approval of the first spot Bitcoin ETFs in the United States was considered a turning point for the legitimacy of the crypto industry, introducing the first publicly traded Bitcoin (BTC) products to the market.
However, corporate adoption is still in the “amateur league,” according to Marc Degen, the co-founder and chairman of Trust Square, a blockchain-focused technology hub.
Degen said, during his speech at the Web3 Corporate Innovation Day:
“Corporate adoption is just complete utter failure. It’s amateur league against the pros.”
To argue his point, the co-founder contrasted the inflows of the spot Bitcoin ETFs with inflows in the traditional finance space. Degen explained:
“Everybody is stoked about the Bitcoin ETFs, [which] collected about $60 - $70 billion year to date in inflows. All digital asset funds have a year-to-date inflow of about $100 billion. Well, that's half for JPMorgan alone delivered here in the last ten years.”
Since launch, the U.S. spot Bitcoin ETFs amassed $58.4 billion worth of total on-chain holdings, according to Dune.
In contrast, wealth management giant JPMorgan has brought in a record $489 billion worth of net new client inflows during 2023, said Jeremy Barnum, JPMorgan’s chief financial officer, during an earnings call in January.
This means that JPMorgan alone has attracted over eight-fold more inflows than the eleven U.S. spot Bitcoin ETFs combined.
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Corporations could lead to more crypto adoption
The main reason behind the lagging digital asset adoption is the lack of mainstream trust in the crypto industry.
Illustrating the lack of mainstream trust, approximately 75% of people who’ve heard of crypto said they aren’t confident in the reliability and safety of digital assets, according to a 2023 study by Pew Research Center.
Despite its decentralized nature, corporations are needed to create more trust among mainstream users, according to Degen. He said:
“We have a lack of trust in the [crypto] market. And only corporates can solve this.”
New crypto adopters tend to place their trust in corporate-backed centralized exchanges (CEXs) instead of decentralized exchanges (DEXs), as evidenced by the trading volume discrepancy between CEXs and DEXs.
According to Dune, cumulative trading volume on DEXs reached a total of $3.86 billion in the past 24 hours. This is just a small fraction, or nearly five times less than the $17.6 billion trading volume amassed by Binance, the world’s largest CEX.
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Bitcoin ETF inflows and crypto adoption: The bigger picture
Looking at cumulative Bitcoin ETF inflows alone doesn’t paint the complete picture of the uptick in institutional adoption since their launch.
This is partly because Grayscale’s Bitcoin Trust ETF (GBTC) accounted for the lion’s share of outflows, significantly impacting the total amount of cumulative inflows registered by the ETFs.
To date, Grayscale’s GBTC has sold 18,207 BTC worth over $1.19 billion, accounting for the majority of outflows, according to Farside Investors data.