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KPMG: Bitcoin Cannot Be Classified As Store of Value Yet

Top audit, tax, and advisory services firm, KPMG, has revealed in a study on cryptocurrency that for digital currencies like Bitcoin (BTC) to attain the status of a store of value asset, it would take a long period of time.

Crypto Needs Institutionalization for Adoption

The Big Four firm’s “Institutionalization of Cryptoassets” report stated that issues arising from bitcoin’s lack of trust and scalability (its inability to process a lot of transactions at a time may not be improved in the coming years) has led to its incapability of being used as a medium of exchange or as a store of value. The report further suggested that cryptocurrency, the digital arm of finance has to undergo institutionalization if it intends to go a lot further in terms of mass adoption and stability. KPMG’s chief economist, Constance Hunter, stated that;

“More participation from the broader financial services ecosystem will help drive trust and scale for the tokenized economy and help the crypto market grow and mature.”

Institutionalization, according to the KPMG report, defines large-scale participation of Fintech companies, banks, payment institutions, exchanges, broker-dealers, and other entities in an industry. When major institutions get involved in the crypto world, cryptocurrency would ultimately get validated as currency with the potential to reduce the problems plaguing the current fiat system.
The crypto market, however, is currently, experiencing a phase of speculation driven by investments at the retail levels. The attitude of investors towards crypto is by betting on its potential than what it can actually deliver, thereby increasing risks in a mostly unregulated space. In the report, KPMG stated that one of the most significant problems facing cryptocurrency is the compliance with regulations and that crypto businesses would need to define their products with clarity before regulators.
A coherent approach at defining comprehensive legal parameters for crypto space could at the same time, allow big businesses to enter significant capital into its market. A contributor to the report made by KPMG, Coinbase, stated that as crypto explores adoption by major institutions of finance in the world, the market would transit from the speculative phase into institutionalization. The exchange which also offers wallet services, founded in 2012, reiterated that scalable platforms are already being put into place for major players to enter the crypto space and also adding that they would feature “high-frequency, low latency matching engine, transparent and efficient price discovery tools” to attract significant monies.
bitcoin

The Future of Cryptocurrency Adoption

The report also indicated that Coinbase would also be a qualified custodian that allows for the security of digital assets in compliance with regulations.
The report, however, indicated that cryptocurrency has a bright future ahead of it despite the trials encountered. The study tended towards predicting that cryptocurrency would gain mass adoption and would be frequently used in the future. The report, however, did not fail to further state that before this could happen, the crypto space would have managed to find solutions to the problems currently plaguing the industry like compliance, taxes, software upgrades (hard forks), security, financial auditing, and asset provenance. KPMG noted that;

“New tokens and assets are one thing, but new business models and market participants may redefine the space significantly over the next few years.”

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