Benzinga - Before diving into the world of crypto staking, Jesper Johansen, founder and CEO of institutional staking entity Northstake, emphasizes the importance of understanding the regulatory framework and assessing counterparty risks.
In an interview with Benzinga, Johansen also elaborated on the need for rigorous due diligence, an understanding of jurisdictional regulations and the importance of technical security measures. He suggested a number of factors that institutional investors should take into account before staking their claim in the crypto economy.
Johansen's comments come at a time when the crypto industry is witnessing a surge in institutional interest. Benzinga's Future of Digital Assets conference, scheduled for Nov. 14, is poised to be a pivotal gathering for the crypto community. As a nexus for groundbreaking discussions and networking, the event will spotlight the latest trends, innovations and challenges in the digital asset realm.
With industry data suggesting 48% of asset managers now include digital asset management as part of their services, the need for clarity and guidance has never been more paramount.
The rise of institutional-grade infrastructure and compliant staking service providers, as highlighted by Johansen, has played a significant role in this shift.
Reflecting on the past, Johansen pointed out the pitfalls of previously dominant staking-as-a-service providers such as Genesis and Kraken.
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"As an institutional staker, you should not accept any credit risk when actively participating in the network through a centralized entity," he cautioned.
For emerging staking service providers, Johansen believed adherence to common financial sector practices, including thorough counterparty assessment and compliance with securities laws, is crucial.
He also emphasized the importance of building a foundation of trust with clients and ensuring coherency with regulatory standards.
When asked about the collaboration between institutional staking providers and policymakers, Johansen highlighted the importance of transparency, education and feedback.
He believed clear and consistent regulatory guidance from policymakers can significantly boost investor trust in crypto and DeFi.
On the broader impact of institutional adoption, Johansen envisioned a future where blockchain innovations drive new economies, similar to the rise of e-commerce in the Web2 era.
He stressed the importance of institutions in legitimizing the sector and unlocking mass crypto adoption, potentially setting crypto on a pathway to becoming a multi-trillion-dollar asset class.
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