The crypto sector, currently valued at around $2.46 trillion, is starting to attract the interest of profitable institutional investors. In its latest report titled ‘The State of Crypto’, Coinbase states that 56 percent of Fortune 500 companies are testing blockchain technology in one way or another. Creating the underlying technology for cryptocurrencies, NFTs and the metaverse – blockchain technology is also called distributed ledger technology that stores data and facilitates technical procedures through small separate nodes, replacing traditional servers.
Coinbase highlights the key factors that attract large companies to Web3
The research was conducted for Coinbase by The Block, which surveyed executives working at Fortune 500 companies. The findings of this report suggest that on-chain projects, including consumer-facing payment applications, have begun to attract the attention of these large companies.
“Many of the most trusted names and products in finance are embracing blockchain technology and crypto, driving innovation and providing ramps for widespread adoption,” the report said.
This year, the US SEC approved Bitcoin and Ether ETFs in a historic move. This allows interested investors to deal with crypto assets through traditional exchange platforms instead of having to register with crypto exchanges. According to the report, the approval of these ETFs has eased access to cryptocurrencies, driving adoption.
Institutional investors are also looking at real-world asset tokenization – which is the process of creating digital units of physical or virtual property where each token represents a certain percentage of the entity. According to the report, “beyond ETFs – on-chain government securities are fueling new interest in real-world asset tokenization. Recent high interest rates have fueled demand for safe, high-yielding on-chain Treasuries.” The increase in the value of tokenized T-bills reached a value of $1.29 billion (roughly Rs. 10,776 crore).
Catalysts in favor of merging large companies with Web3
A number of online payment apps in the US are integrating crypto transfer services into their existing offerings. These platforms include PayPal and Stripe among others. These platforms allow the use of fiat currencies as well as stablecoins and selected cryptocurrencies to facilitate instant payments, including cross-border.
“PayPal supports stablecoin users’ cross-border transfers in around 160 countries – with no transaction fees, compared to 4.45 percent to 6.39 percent average fees in the $860 billion global remittance market. The annual settlement volume of stablecoins will reach $10 trillion in 2023, which is more than 10 times the amount of remittances worldwide,” the report said.
Since online payment companies also have a positive approach to crypto and blockchain, large companies do not hesitate to experiment with crypto-based financial settlements.
The future of Web3 in the legal, corporate sectors
With more funds pouring into Web3 at the institutional level, the report said, it could become a major factor in forcing global financial regulators to enact clear laws to oversee the digital asset sector.
“The US needs to take the lead in this space. F500 executives show significant interest here: 79 percent would like to work on initiatives with a US partner. “The increased activity increases the urgency for clear crypto rules that help keep crypto developers and other talent in the US, deliver on its promise of greater access, and enable U1 to lead crypto globally,” the report said.
The report estimates that small businesses are also considering jumping on the Web3 bandwagon. Seven out of ten small businesses surveyed for this research claimed that cryptocurrencies can help with “at least one of their financial pain points, the biggest of which are transaction fees and processing times.”
Drawbacks with Crypto
While blockchain technology has intrigued several nations, cryptocurrencies have met with a skeptical approach. This is mainly because while blockchain offers improved data security and transaction transparency, cryptocurrencies are volatile in nature and susceptible to abuse for illicit purposes.
In March 2024, the FBI claimed that crypto investment scams had increased by 53 percent in the past year.
To prevent misuse of these advanced technologies, Web3 industry players such as Meta, Ripple and Kraken and Coinbase have launched awareness initiatives.
