Aside from liquidity, what do institutions bring to crypto? What precisely is their value added? This is an instructive question to ponder, because there is little consensus on what deeper institutional participation means for an industry that is riven with contradictions.
The long-running wait for Bitcoin ETF approval, giving pensions and funds exposure to BTC, may well prove to be a positive catalyst for industry growth. But in focusing on price action, observers are missing out on the real benefit of broadscale institutional adoption. The greatest benefit of deepening institutional adoption may be the regulatory certainty it ushers in.
Tax and Compliance
There are a number of areas where institutional involvement is forcing regulators to give straight answers. Chief among these are taxation and compliance. What trades can a business legally make, how should they be disclosed on its balance sheet, and what steps must it take to report these activities?
Related: Bitcoin ETFs: A $600B tipping point for crypto
Determining what constitutes a taxable event in crypto depends on your dominion. While U.S. traders are required to calculate profit and loss (PnL) on every trade on a decentralized exchange (DEX), perps position, and on-chain event, other…
