In last week’s blog, I told you how financial institutions are starting to take cryptocurrencies more seriously, citing the intention of Hong Kong’s SFC to regulate crypto exchanges.
This week I want to follow that crypto theme.
Why? Well, a report from Bloomberg this week really caught my attention. There was one sentence in particular that stood out to me: “the wild west days of crypto are really turning the corner.”
I couldn’t agree more – the crypto space is becoming ‘professionalised’ at an incredible pace.
You see investment funds are now major players in terms of purchasing. That same report from Bloomberg states that funds are now buying a significant amount of digital coins through private transactions, rather than on crypto exchanges.
Specifically, investment funds are now buying coins direct from miners through over the counter (OTC) sales. In April this year, these private transactions accounted for between $250 million to $30 billion in daily trades (according to Digital Assets Research and TABB Group).
This type of transaction is favoured because it protects both parties from the price volatility that has long been associated with crypto exchanges.
Having said that, we’ve already seen crypto prices stabilise in 2018 compared to the swings we saw in 2017. This will continue as financial institutions and investment funds looks to become major players in the crypto space. This will result in crypto exchanges and investment products being tightly regulated – much like traditional assets.
So if you’re thinking of creating your own cryptocurrency investment fund, time really is of the essence.
In particular, you might want to explore how to ensure your investment fund can make OTC crypto purchases from reliable mining firms before the competition (remember – newly mined coins can hold more value, because buyers can prove they’ve not been used in money laundering schemes).
If you’re ready to create a cryptocurrency investment fund we should talk. Just email me – I’d be happy to arrange a call with you.