Accelerating Inclusion of Virtual Assets into the Institutional Sector… Will Bitcoin Establish Itself as a ‘New Asset Class’?

Regulation and institutionalization change the nature of the market

The institutionalization of the virtual asset market is a key variable in enhancing its credibility as an investment asset. Once regulations on exchanges and custodians, measures to prevent unfair trading, and disclosure and accounting standards are established, the boundaries between the traditional financial market and the virtual asset market could narrow further. Conversely, if regulatory gaps or market manipulation issues recur, trust in virtual assets as a regulated asset could be shaken once again. Securing the reliability of financial infrastructure is just as important as expanding the market.

Institutional Investor Participation Fuels Debate on ‘New Asset Class’

If institutional investors incorporate Bitcoin into their portfolios, the nature of the market could change. As the participation of professional investors, such as pension funds and asset management firms, expands in a market currently dominated by retail investors, liquidity and price discovery functions are likely to be strengthened. At the same time, as the interconnectedness between traditional financial markets and virtual asset markets increases, the need to manage the risk of price crashes spilling over to other asset markets also grows. As virtual assets become increasingly integrated into financial markets, the structure is becoming such that it is difficult to manage them separately from existing markets.