August 20 – 27, 2019 | Central Bank Digital Currencies, Crypto Fund Performances & More Crypto News
3iQ Research Group consolidates the top five cryptoasset stories of interest
to investment advisors and our investors.
UK Central Bank Governor Suggests a Global Digital Currency to Replace the US Dollar
August 23 – According to the Bank of England governor Mark Carney, a central bank-supported digital currency could be a potential replacement to the US dollar as the global hedge currency. Last Friday at the Economic Policy Symposium in Wyoming, Carney discussed the needs for a new international monetary and financial system (IMFS). While the US dollar has proved to be the dominant reserve currency over the last century, Carney believes that increasing globalization and newly arising trade disputes may have stronger impacts on economies around the world than they would have had in the past. Carney suggested several potential replacements to the US dollar, but most notably mentioned a digital currency which could be supported by international central banks. “It is an open question whether such a new Synthetic Hegemonic Currency (SHC) would be best provided by the public sector, perhaps through a network of central bank digital currencies,” said Carney.
Crypto Funds Outperformed Bitcoin in 2017 and 2018
August 24 – According to Crypto Fund Research (CFR), a resource for market intelligence on crypto hedge funds and VCs, crypto funds are outperforming the underlying cryptoassets in which the funds hold. Through January 2017 to June 2019, bitcoin had climbed around 1000%, while several crypto funds and hedge funds gained more than 1400%. In 2018, bitcoin lost around 75% of its value, while the CFR Crypto Fund Index only lost 33%. Outperformance and loss mitigation of crypto funds may have stemmed from strategies that perform well in new markets. Collectively, crypto hedge funds and crypto investment funds manage less than $20 billion USD. To put this in perspective, Bridgewater Associates, one of the world’s largest hedge funds, manages over $100 billion USD. “Despite the potential issues, it’s encouraging that crypto hedge funds seem to have done more or less what they are supposed to, namely preserve capital in bear markets. And with the majority of crypto funds in the index now employing outside auditors, custodians and fund administrators, the industry is becoming less haphazard,” said Josh Gnaizda of Crypto Fund Research.
Stablecoins May Need Decentralization to Mitigate Risk
August 21 – During the Blockchain Futurist Conference in Toronto, Brad Kirby, the founder of DLT Advisory Group, discussed the stablecoin market and its issues with centralization. He noted that only a few stablecoins have a market capitalization exceeding $5 million USD, but despite their small size, the stablecoin industry is poised for growth after interest gained in the space following the entrance of Facebook and their stablecoin, the Libra. Kirby noted that centralization is becoming an issue in the stablecoin market, since most stablecoins are managed by an entity that is centralized, such as an exchange. “…all of them are being run by cryptocurrency exchanges. They’re also central. So you have a cryptocurrency exchange that’s centralized, that is acting as the custodian. They’re acting as the wallet and the bank account. They’re acting as the broker. Now, they’re also acting as the central bank. There’s no independence across the cryptocurrency supply chain with respect to stablecoins.” Despite centralization, Kirby remained optimistic about the stablecoin market, and highlighted recent developments in the Canadian stablecoin market. “In the Canadian ecosystem, there are a couple launching: 3iQ and [Mavennet] have formed a joint venture to launch QCAD. And then the Coinsquare is trying to launch eCAD.”
Read the full article from Investing News Network here.
Winklevoss Twins Suggest Wall Street has been “Asleep at the Wheel”
August 23 – Tyler and Cameron Winklevoss have recently given their perspective on Bitcoin as an investment, outlined its industry risks, and compared the traditional financial sector’s approach to the new asset class. In the interview, Cameron Winklevoss compared bitcoin to gold, in terms of it being a store of value asset, but for the digital era. “We had to invest because we were afraid of missing out, we couldn’t miss out on this future,” said Cameron Winklevoss. Despite its volatility, bitcoin has become an alternative investment vehicle for the future of finance. “Unlike the internet, which you couldn’t buy a piece of, you can actually buy a piece of this new internet of money. It’s still a retail-driven market, from day one […] and a lot of people have done really well. Wall Street has been asleep at the wheel,” said Tyler Winklevoss.
August 23 – Gemini, a leading cryptocurrency exchange and crypto custody provider founded by the Winklevoss twins, has announced that David Damato will be joining the company as its Chief Security Officer. Damato was previously the Chief Security Officer of Tanium, a leading cyber security firm, where he served for four years. Damato has over 20 years of experience in cybersecurity. The company now has around 200 employees over three locations in New York, Chicago, and Oregon. “Security is the bedrock of our culture, and Dave adds to that legacy. His depth of security knowledge and his experience defending global networks will be invaluable as we continue to build the market’s most secure cryptocurrency offering,” said Tyler Winklevoss.
3iQ Corp. (“3iQ”) is the first Canadian investment fund manager to agree to terms and conditions with the Canadian securities regulatory authorities which permit 3iQ to manage a multi-cryptoasset investment fund available to Canadian accredited investors. 3iQ provides accredited investors with exposure to bitcoin, ether, and litecoin through its 3iQ Global Cryptoasset Fund.
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