Crypto is an investment asset? Or something much more?

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In recent years, the world has been experiencing the rapid development of the crypto industry, and such “monsters” as Vanguard and BlackRock, Fidelity and ICE, JPMorgan Chase and Goldman Sachs, Google and Microsoft are actively entering the fight for the tidbits of the innovative industry. The list of influential and not financially constrained conquerors of the crypto world is growing every day.

The results of the survey dated January 2020 “Attitude of financial advisers to cryptoassets” are curious. This lengthy document was published by Bitwise in conjunction with ETF Trends. In a fairly large-scale study, very respectable and quite reputable respondents took part – 415 financial advisers who manage about half of all US assets.

Among them are independent certified financial advisors, brokers, and financial planners.

To the key question of the study – “are there crypto assets in their personal portfolios” – 83% of respondents gave a negative answer.

cryptocurrency portfolio

It is noteworthy that 76% of the surveyed financial advisers noted that in 2019 they received questions from clients on crypto assets. And this fact indicates a high degree of investor interest.

Everything suggests that the number of consultants filling client investment portfolios with “crypto” will more than double in 2020 – from 6% to 13%. However, the graph above already indicates the presence of crypto assets in the personal portfolios of 17% of the study participants.

Low/uncorrelated returns on traditional assets continue to be the main driver for including crypto assets in portfolio investments, with 54% of advisors who participated in the survey now say so (up from 47% last year).

Here are some additional incentives:

  • high potential profitability of “crypto” (30%)
  • customer demand for access to “crypto” (26%)
  • desire to offer customers something new (23%).

Crypto is a legal illegal immigrant

What kept portfolio managers from expanding the use of bitcoin as an investment vehicle?

The majority (56%) cited “regulatory issues”, with financiers citing “regulatory improvements” as the most popular improvement needed (58%).

And, indeed, if we look at the world map, we will see that the number of countries with a complete ban on cryptocurrencies is not so large.

cryptocurrency legality map

(Afghanistan, Algeria, Bangladesh, Bolivia, Pakistan, Macedonia, Saudi Arabia and Vietnam).

And if the compilers of the map painted over the territory of Russia in green, they most likely proceeded from the principle “what is not forbidden is allowed”, and this, frankly, is not identical to regulation.

Even more confusion arises when trying to figure out which asset class regulators classify bitcoin as. Somewhere it is classified as “money”, somewhere as “currency”, and somewhere simply as “goods” or “property”. Naturally, the lack of a unified definition exacerbates the ambiguity in the classification and uncertainty in the regulatory policy. Even in the United States, different structures characterize bitcoin in different ways:

  • as property (IRS);
  • as a commodity (Commodity Futures Trading Commission CFTC);
  • like money (FinCEN Treasury).

Recently, the practice of imposing on society an opinion about bitcoin as a tool for “dirty and criminal” schemes has become widespread. At the same time, scientific studies indicate the opposite – only 1% of transactions in the Bitcoin network (about $ 1 billion) are associated with illegal activities.

But according to the estimates of the US government, the turnover of the industry of illegal activities and laundering of criminal proceeds on a global scale is estimated at 2% – 5% of world GDP ($800 billion – $2 trillion). But so far no one has come up with the idea of ​​banning the dollar just for being “involved” – as the main payment instrument – in drug deals, in the illegal purchase of weapons or in the financing of terrorism.

As a result, many large financial institutions that tried to legalize trading in the same bitcoin with the approval of the US Securities Commission (SEC) faced insurmountable difficulties and bureaucratic delays in obtaining the final verdict of the Commission.

There is no place for strangers in the market

Dead end? Of course not. More precisely, not for everyone. So, Grayscale in 2019 without any problems received the go-ahead to create a crypto fund from the Financial Institutions Regulatory Agency (FINRA). The fund was able to file a report (Form 10) with the SEC, and the Commission immediately approved it. This is how Grayscale got the right to trade bitcoin on the institutional market under the guise of unregistered securities.

In this case, entrepreneurs did not have problems with bureaucratic red tape and uncertainty in terms. It seems that the whole point is that Grayscale is funded by Goldman Sachs, and this structure has the opportunity to count on the patronage and support of the influential Vanguard group.

As you can see, in the world of big money there is a clear gradation into “us” and “them” with a corresponding hierarchy. And until “their own” master the new market, “strangers” – especially those with big money – will not be allowed to go there even close. The question arises, will the world be able to achieve consensus and promptly form common rules of the game in the crypto market?

From Bretton Wood to COVID

Think back to the start of 2020. On January 22, WHO emergency director Peter Salama said that the World Health Organization sees no reason to recognize the coronavirus outbreak as an emergency. Recall that on that day, 555 confirmed cases of COVID-19 infection were officially registered.

January 23, 2020 Peter Salama dies of a heart attack at the age of 51. On January 30, WHO declares the spread of coronavirus an international public health emergency. On February 11, 2020, the disease receives the official name COVID-2019, and on March 11, WHO announced that the outbreak had acquired the character of a pandemic (about 126,000 registered cases at that time).

And the question, perhaps, is not whether the death of Peter Salam was accidental. And perhaps not even whether a new and little-studied infection was really an extreme threat. The question is how quickly the whole world – without doubts and hesitations – in a single impulse blocked interstate borders, stopped air traffic, stopped production, closed hotels, restaurants, fitness centers …


Has anyone spent years agreeing and assessing the consequences? Has anyone debated the true purpose of such a scenario?

Did the world community have a choice when, at the end of World War II, from July 1 to July 22, 1944, the conference of the same name was held in the small American town of Bretton Wood, which signed the verdict on the financial system based on the gold standard?

Bretton Wood

By the way, the organization with the name “Bretton Woods Committee” still exists and has – without exaggeration – more than a significant impact on the modern world order.

At one of the committee meetings, David Mills, Associate Director of Operations and Payment Systems at the US Federal Reserve Bank, spoke at length about the role of central banks in modernizing payment systems.

Mills described the main mission of the Board of Governors of the US Federal Reserve – ensuring the security and efficiency of payment systems. The Fed spokesman was cautiously optimistic about the prospects for cryptocurrencies as an alternative to the existing payment system. At the same time, Mills shared his concern about the risks associated with the entry of non-banking entities into the traditional financial system.

As a positive example, the official cited Ripple’s encrypted “dollar-euro” currency network from Ripple, but recalled the need for additional research as a prerequisite for discussing the topic of state integration into cryptofinance.

Have XRP lovers already made a stand? But the most interesting thing is that the mentioned conference took place on April 23, 2015, when no one had heard anything about XRP yet.

In other words, for those who write the game script, everything has been planned for a long time, and deviations from the planned are unacceptable. We can only observe the development of the situation from the outside and, perhaps, in the near future we will see how it all ends – regulation or something more?


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