Cryptocurrencies are not known for their stability as an investment, yet growing numbers of institutional investors are diversifying their portfolios with digital assets, according to a survey by Fidelity Investments.
The survey found 47% of institutional investors saw cryptocurrencies as suitable to add to their investment portfolios, and the same percentage of respondents appreciated the innovation behind the digital assets.
Traders can use a commodity trading adviser fund to invest in cryptocurrency and get exposure without [risk], it is a cash settle so you dont have any custody risk, nor do you have any [money laundering] tainted coins. These are issues you have all the time otherwise, said Jan Brzezek, founder and CEO of Crypto Finance AG.
Crypto Finance is an asset management platform that aims to mitigate the risk involved in investing in various cryptocurrencies. Despite the volatility of cryptocurrencies such as bitcoin, a growing number of investors are experimenting with them as an asset class.
Earlier this month, the New York State Department of Financial Servicesgranted a license to Fidelity Digital Assets, a cryptocurrency branch of Boston-based Fidelity Investments.
Tom Jessop, President of Fidelity Digital Assets, told Reuters that demand for digital currencies has been changing, and that they are Seeing strong demand and greater diversity of client types there are more traditional investors. When we started it was crypto funds and hedge funds.
Nonetheless, Bitcoin prices have recently dropped nearly 50% in value from their highest point in 2019, and is trading at around USD$7,000, according to CoinDesk.
One reason why investors may be seeking out cryptocurrencies is global economic instability affecting traditional assets amid an ongoing trade war between China and the U.S. Moreover, 46% of respondents to Fidelitys survey said that they found digital assets low correlation to other assets as a positive factor.
Hong Kong may become a testing ground for the use of digital assets as a financial instrument as the citys Securities and Futures Commission (SFC) recently announced anew regulatory framework for virtual asset trading platforms.
SFC CEO Ashley Alder said at Hong Kong FinTech Week that the new rules will cover aspects of financial security including custody, know-your-customer requirements, anti money laundering rules and market manipulation.
See related article: Behind the Scenes Conversation with: Ashley Alder, CEO of Securities and Futures Commission
A lack of regulation for cryptocurrency in numerous countries has been one aspect hindering wider adoption from traditional investors, and observers will watch to see how the legitimacy of obtaining an SFC license will affect the industry.
Other financial organizations experimenting with cryptocurrency include the owner of the New York Stock Exchange, Intercontinental Exchange Inc., and CME Group Inc.
Forkast.News Senior Editor Sam Reynolds spoke with Brzezek on the sidelines of Hong Kong FinTech Week to find out how traditional investors are starting to adopt cryptocurrencies.
Sam Reynolds: We are back at Hong Kong FinTech Week and were talking now with Jan from Crypto Finance. Crypto Finance offers a fund that gives investors some exposure to crypto. Jan, tell us about your product and how would it differ from investing directly in crypto.
Jan Brzezek: Yeah, thanks very much for having me here. Were not just doing asset management, we have two other offers as well, which is brokerage and custody infrastructure. But back to your question on asset management. What we do is we come from traditional finance.
We aim to fulfill all the best practice in the traditional world, and give clients and traditional investors access to this asset class without the operational risk on top, which is normally pretty high in crypto, and thats what most of the investors are still cautious on. Thats why they are not currently investing.
Sam Reynolds: Well, thats a good point. When you talk about risk, that is pretty much synonymous with crypto, so perhaps you can go into how this risk is avoided with your products.
Jan Brzezek: So what we do is we set up a CTA fund. Thats a long/short fund and algorithmically quant-driven fund where we just go long and short the bitcoin futures at a CME. Currently, the only CME bitcoin futures are the only regulated proper futures which have proper liquidity.
Obviously you have box now as well, but liquidity there is still rather small. And with that, you can really get this exposure without [risk], it is a cash settle so you dont have any custody risk, nor do you have any AML tainted coins. These are issues you have all the time otherwise.
Sam Reynolds: We had the Crypto Winter, which was a time where crypto assets, be it coins like Bitcoin or Ethereum or other projects, experienced quite a big chill. Talk to me about this Crypto Winter and how you guys survived it.
Jan Brzezek: It was definitely not fun for everyone in the space, but I think it was very healthy. There was such a hype before and now you really see most of the not really professional or sustainable businesses disappear. So you have very good companies here who are strong, tech-wise, business-wise, professionally set or professionally managed, and I think thats exactly what we need in the space.
Sam Reynolds: So we are at Hong Kong FinTech Week. What is your favorite trend youve seen here so far in the show floor?
Jan Brzezek: I think Asia is very progressive in general. For Hong Kong, obviously, as a very big financial hub, it was very important to be here as well and to meet investors, partners, other fintechs. You have very good companies here in Hong Kong in the crypto space.
And for me, it was good to feel a little bit the spirit, and to see whats going on, exactly what they are doing. Maybe we can cooperate. You know, its this is about an ecosystem. Its not just about you or me. Its about working together and really building this foundation and this technology.
Sam Reynolds: Exactly. Definitely seeing lots of that at the show, cooperation and building a stronger ecosystem. All right. Well, thanks for your time.
- Bank of England to consider adopting cryptocurrency - The Guardian - January 22nd, 2020
- Crypto Tidbits: Bitcoin Hits $9,000, Institutional Cryptocurrency Investment Spikes, NBA Team Uses Ethereum - newsBTC - January 22nd, 2020
- How Cybercriminals Are Converting Cryptocurrency to Cash - BankInfoSecurity.com - January 22nd, 2020
- UK offers $130K for software that can trace Bitcoin, Ethereum, and (hopefully) Monero - The Next Web - January 22nd, 2020
- Hackers have got their hands on $11 billion in stolen cryptocurrency since 2011 - SmartCompany.com.au - January 22nd, 2020
- Thailand launches probe into $2.46M cryptocurrency pyramid scam - The Next Web - January 22nd, 2020
- Moonday Mornings: Its 2020 and the OneCoin scam is still alive - The Next Web - January 22nd, 2020
- $140,600,000 in Bitcoin (BTC) Exits Cryptocurrency Exchange As Whale Moves $6,320,422 in XRP - The Daily Hodl - January 22nd, 2020
- Cryptocurrency No longer banned in India? - The Coin Republic - January 22nd, 2020
- Akons AKOIN Cryptocurrency City White Paper to be Live by February 2020 - The Cryptocurrency Analytics - January 22nd, 2020
- BTC/USD: Will 2020 Bring Clear Vision to the Oldest Cryptocurrency? - FXStreet - January 16th, 2020
- Cryptocurrency Market Update: Two-day recovery on the rocks as Bitcoin, Ethereum and Ripple trim gains - FXStreet - January 16th, 2020
- Cryptocurrency Market Update: Bitcoin bulls hit the pause button, altcoins follow the lead - FXStreet - January 16th, 2020
- Cryptocurrency billionaire funds SF-wide web of cameras to help fight crime - KRON4 - January 16th, 2020
- North Korea is Holding a Secretive Cryptocurrency Conference, and Experts Warn it's a Very Bad Idea to Attend - Newsweek - January 16th, 2020
- Ripple Price Analysis: XRP/USD capitalizes on the global cryptocurrency bulls' run - FXStreet - January 16th, 2020
- Bitcoin rises as cryptocurrency has its best January since 2012 - SiliconANGLE News - January 16th, 2020
- Cryptocurrency and Remittance: The Case of Mexico - Crypto Education - Altcoin Buzz - January 16th, 2020
- Ethereum (ETH) - Based Cryptocurrency Tested By The Reserve Bank of Australia as Payment Tool - U.Today - January 16th, 2020
- $1.4B in illicit Bitcoin was laundered via Binance and Huobi last year, report says - The Next Web - January 16th, 2020
- How to minimize the cryptocurrency tax burden this tax season - Canadian Lawyer Magazine - January 16th, 2020
- The future of cryptocurrency - Lexology - January 13th, 2020
- Analyst: Bitcoin Will Skyrocket to $100,000 in 24 Months and Theres Nothing You Can Do About It - CCN.com - January 13th, 2020
- Cryptocurrency Slowly Recovers as Buyers Fail to Emerge - Coin Idol - January 13th, 2020
- Cryptocurrency Has Earned Its Place as a Safe Haven - Investorplace.com - January 13th, 2020
- eToro CEO On Bitcoin Dominance in the Cryptocurrency Market - The Coin Republic - January 13th, 2020
- Moonday Mornings: Ethereum dev released on $1M bail over North Korea case - The Next Web - January 13th, 2020
- As Bitcoin Struggles, This Minor Cryptocurrency Is Up Almost 500% Over The Past 12 Months - Forbes - January 12th, 2020
- What to expect from cryptocurrency legislation in 2020 - Yahoo Finance - January 12th, 2020
- South Korea Moves Toward Institutional Acceptance of Cryptocurrency - Nasdaq - January 12th, 2020
- Cryptocurrency Market Cap May Surge 37%. But There's One 'If' - U.Today - January 12th, 2020
- Financial Services Agency to limit leverage in cryptocurrency margin trading to twice the deposits made by traders - The Japan Times - January 12th, 2020
- Naive IoT botnet wastes its time mining cryptocurrency - ZDNet - January 12th, 2020
- Directors of bogus Ugandan cryptocurrency startup charged after 4,000 investor complaints - The Next Web - January 12th, 2020
- Can digital gold Bitcoin ever be mined in India? - ETCIO.com - January 12th, 2020
- 321 Cryptocurrency Whales Control Staggering Amounts of Bitcoin, Ethereum And Litecoin - The Daily Hodl - January 12th, 2020
- Why the Worlds Most Used Cryptocurrency isnt Bitcoin - NewsLogical - January 12th, 2020
- South Korea Works to Bring Cryptocurrency Into the Mainstream - The Diplomat - January 5th, 2020
- Most Significant Hacks of 2019 New Record of Twelve in One Year - Cointelegraph - January 5th, 2020
- Why a Technical Analyst Believes Bitcoin Cash (BCH) Will Surge by 80% - newsBTC - January 5th, 2020
- Why Analysts Are Bullish On Cryptocurrency As Bitcoin Turns 11 - Ethereum World News - January 5th, 2020
- Bitcoin is on the Cusp of a Major Price Movement - Crypto Briefing - January 5th, 2020
- 7 Big Bitcoin and Cryptocurrency Predictions for 2020 - The Daily Hodl - January 5th, 2020
- China and Russia begin testing cryptocurrency - Born2Invest - January 5th, 2020
- Ethereum Foundation is an opaque Swiss foundation related to cryptocurrency - AMBCrypto - January 5th, 2020
- Cryptocurrency in Arab World: Clock is Ticking, But Pace is Slow - Finance Magnates - January 5th, 2020
- National Governments Around The Globe Look To Embrace Blockchain - Forbes - January 5th, 2020
- Chinas Dichotomy Between Cryptocurrency And Blockchain - Forbes - December 31st, 2019
- What Is a Cryptocurrency? We Need Clearer Definitions - Coindesk - December 31st, 2019
- Ian Balina, The Controversial Face Of Cryptocurrency - Nasdaq - December 31st, 2019
- Cryptocurrency This Week: YouTube Removes Crypto Videos; Russia Bomb Threats Over A Bitcoin Fraud And More - Inc42 Media - December 31st, 2019
- How To Really Help Free North Koreans Through Crypto - Forbes - December 31st, 2019
- The Dividing of Bitcoin to shake markets of cryptocurrency - Market Research Sheets - December 28th, 2019
- The $3 Bilion Bitcoin Dump Isnt Going to Happen - newsBTC - December 27th, 2019
- Googles YouTube Goes To War With Bitcoin And Crypto - Forbes - December 26th, 2019
- Top five cryptocurrency guides of 2019 - Yahoo Finance - December 26th, 2019
- Cryptocurrency is a tool for speculation not an investment - The Globe and Mail - December 26th, 2019
- Rakuten Wallet Will Allow Users to Convert Their Loyalty Points to Cryptocurrency - CryptoVibes - December 26th, 2019
- Top China Cryptocurrency and Blockchain Headlines of 2019 - Crowdfund Insider - December 26th, 2019
- How to Make Money with Cryptocurrency: Beginner's Guide 2019 - December 24th, 2019
- Cryptocurrency Market News - Bitcoin and Altcoins News - December 24th, 2019
- Cryptocurrency For Beginners - CryptoCurrency Facts - December 24th, 2019
- Crypto Legislation 2020: Analysis Of 21 Cryptocurrency And Blockchain Bills In Congress - Forbes - December 24th, 2019
- This Trader Sees No Value in Ripple and Its Cryptocurrency XRP - newsBTC - December 24th, 2019
- Why XRP Isnt Surging in Tandem With Rest of the Cryptocurrency Market - newsBTC - December 24th, 2019
- Hackers steal $480,000 worth of NULS cryptocurrency from its dev team - The Next Web - December 24th, 2019
- How VeChain Cryptocurrency Was Able to Track and Freeze $6.1M of Stolen Funds - newsBTC - December 24th, 2019
- This bizarre anime cryptocurrency is now ranked 12 in the world - Decrypt - December 24th, 2019
- Zimbabwe Could End Corruption With This Cryptocurrency Initiative - Bitcoinist - December 24th, 2019
- How will Bitcoin halving shake the cryptocurrency market in 2020? - FXStreet - December 24th, 2019
- How China's National Cryptocurrency Will Improve the Nation's Economy - Bitcoinist - December 24th, 2019
- Why This Developer of the Controversial HEX Cryptocurrency Accused of Scam Left - newsBTC - December 24th, 2019
- Could there be a halal cryptocurrency? - The Malaysian Reserve - December 24th, 2019
- Even 2019s Strongest Cryptocurrency is Unable to Escape the Bear Market - newsBTC - December 24th, 2019
- Why Analysts Across the Board Expect Bitcoin Price to Surge by 8% - newsBTC - December 24th, 2019
- Investors who lost $190m demand exhumation of cryptocurrency mogul - The Guardian - December 14th, 2019
- This little-known cryptocurrency is heading towards the top ten - Decrypt - December 14th, 2019
- Moonday Mornings: IRS readies to tax your cryptocurrency no matter what - The Next Web - December 14th, 2019
- $1.6B in Bitcoin bought during 2017s bull run hasnt moved - The Next Web - December 14th, 2019
- ING bank wants to give clients a compliant way to store cryptocurrency, report - The Next Web - December 14th, 2019