Menno Martens (VanEck): Social and governance aspects of crypto often underestimated
This text was originally written in Dutch
By Esther Waal
Donald Trump's re-election and his openly pro-crypto stance have boosted the confidence of many investors in cryptocurrencies. That confidence was already growing following the introduction of Bitcoin ETFs and the involvement of some major financial institutions in them. Is the time ripe for institutional investors to do more with crypto? Financial Investigator asked Menno Martens, Crypto Product Manager at VanEck some questions about the crypto world.
How will the crypto market evolve in the coming years?
'We expect the crypto currency market to grow significantly as trends such as tokenised real-world assets, DeFi and DePIN disrupt traditional businesses as more efficient, transparent and future-proof solutions. While the market is currently largely dominated by speculation, only real adoption can show winners, and this still involves eliminating trusted intermediaries. We foresee crypto becoming an integral part of the technology stack of tomorrow's society.'
What most prevents institutional investors from investing in cryptocurrencies?
'Institutional investors usually struggle with regulatory and ESG concerns, as it is widely believed that it makes sense from a portfolio management perspective to allocate to crypto because of its asymmetric return profile. However, these struggles are slowly but surely clearing up and paving the way for crypto as an asset class. For instance, ESG-related concerns are mainly about Bitcoin's energy consumption, but people tend to completely underestimate the importance of the social and governance aspects, for which crypto's features could be significantly beneficial. Crypto offers decentralised, transparent governance and a financial system for billions of people who are currently under-served in today's society. Regulation is moving in the right direction, as it is often seen as a double-edged sword. The crypto-natives may not favour regulation, but it will enable wider acceptance of the asset class as it is legitimised and recognised.'
People tend to completely underestimate the importance of the social and governance aspects