Cryptocurrencies have evolved from a niche interest to a legitimate form of investment over the 15 years since its inception. Today, over 600 million people globally own a cryptocurrency, with the sector’s market capitalization at around $3.7 trillion, roughly one-fifth the total value of gold.

At Oliver Wyman, we believe crypto is poised to cross the chasm from early adoption to broader acceptance. As the industry continues its evolution and acceptance, crypto’s next chapter will see it enjoy mainstream adoption across individual and institutional investors.

During this period, crypto and blockchain will reshape a number of areas of the financial services industry  most notably these four dimensions:

Crypto as an asset class

Cryptocurrencies (including Bitcoin, Ethereum, and Avalanche) represent an emerging investment class, with a volatile returns profile but the potential to deliver outsized and uncorrelated returns.

Blockchain as a transformative technology for payments

Blockchain technology facilitates 24/7, fast, secure, and low-cost payment transactions (via platforms like Tether, USD Coin, and PayPal USD) without the need for intermediaries.

Blockchain as a transformative technology for real world assets

Blockchain technology enables the tokenization of assets, including funds, bonds, and commodities, that provide enhanced liquidity and transparency, lower costs, and global access.

Blockchain natives as a client segment

A population of businesses with crypto- and blockchain-centric business models (such as Coinbase, Riot Blockchain, and Consensys) have the potential to mature into a proper client segment for a broad range of traditional financial services.



The next frontier

These four shifts will provide momentum for the broader adoption of blockchain technologies across the rails of the traditional financial services ecosystem, including the tokenization of real world assets. Eventually this will support the development of a true blockchain native client segment for diversified financial services.

The uncertain outlook presents a challenge for traditional financial institutions, which must prepare for a crypto future while operating in a regulatory framework that has historically been deeply sceptical of crypto. However, a wait-and-see stance would clearly leave these institutions too far behind to catch up with those that are getting prepared today.