Often an investment cannot be compared to security, Bog-standard bonds and risky capital holdings. But that is happening now with some crypto asset schemes – new developments in digital finance are distorting old interpretations.
With the transfer of billions of dollars from the US to new Bitcoin-monitored EFAs, the debate over why – if any – is used in portfolios is changing.
Bitcoin, the largest cryptocurrency, has been compared to “digital gold” by many investors, which serves as a defensive asset against inflation and poses other risks.
However, some investors are considering some crypto-based strategies as alternative sources of securities. And interest is growing in the area with low returns and bond returns attached Negative debt, Around the world, close to higher levels.
Nowadays, there are many ways for investors to market their products through crypto markets.
First, it is possible to lend money to other parties and get competitive interest rates on both centralized and decentralized crypto platforms. For example, SEBA – a Swiss-controlled crypto investment bank, started by a pair of former UBS employees – has a decentralized interest rate of DeFi and crypto loan loans of 3 to 13 percent.
“We were more interested in the product than the institutional customers,” said Guba Buhler, CEO of SEBA.
Similarly, the amount of smart lending on the ethereum blockchain has increased from $ 3 billion to $ 26 billion, according to research provider CryptoCompare.
Second, revenue can be generated from “stocking”.
Goldman Sachs analysts have compared the “maximum profit” paid by some blockchains to the dividend paid on shares. He also said that the returns from Defifa services contributed to their growth last year. CryptoCompare figures show that shares in the ethereum blockchain rose from $ 65 million in January to $ 4 billion in October.
At the same time, the value of stablecoins pledged for the exchange – cryptocurrencies backed by traditional currencies – jumped from $ 2 billion to $ 19 billion. B2C2 even thinks Max Bone, CEO of the largest crypto trading companies Crypto bonds to pay in Stablecoins It is approaching.
However, this high-yield crypto investment has led to a major crackdown on groups that offer products to the public. The crypto exchange Coinbase, listed by the US, dropped its bid to launch the “Find” product after the US Securities and Exchange Commission last month. He threatened legal action. If he goes ahead.
Many US regulators believe that the product offered to pay interest on crypto deposits is technically safe. Therefore, suppliers must comply with financial regulations regarding the issuance of guarantee documents, such as the obligation to register with the authorities.
Many of the companies that started issuing these interest-bearing accounts are now being monitored by state regulators. Last month, New York Attorney General Leticia James ordered two unnamed crypto lending platforms to operate in the state. Officials in several other states said lenders BlockFi and Celsius He violated their safety rules. Both companies have denied these claims.
Interest rates for decentralized finance and crypto loans
However, the provision of crypto products to institutional managers and professional investors is not subject to the same regulatory restrictions as those provided to the public.
However, experts say caution should be exercised when it comes to comparable to regular fixed-income investments – experts say – the high volatility of crypto currencies, the lack of control and the risks associated with supporting early-stage crypto projects.
“Frequent protocol errors and losses from hacking are typical features of the new technology and reflect the immaturity of the process. [DeFi] Industry, ”warns Goldman Sachs.
Buehler uses a similar approach to explain crypto products to investors at SEBA Bank. “What we saw 25 years ago for real estate is giving some crypto the same opportunity,” he argues. When they produce high yields, they buy property with significant reversal potential.
Some investors, however, take a more cautious view. Peter Edwards, chief executive of the Australian Family Bureau, said Victor Smurgon Group, which has started converting a small percentage of its assets to crypto, sees Bitcoin as an alternative to gold but views all other crypto opportunities as a high risk.
“Every penny, [we] Consider the basic venture capital. ”
But Edwards admits that the products offered at DeFi are attractive. “When I inspected the Defensive site, I was surprised by the availability of certain fencing policies that limit your risk,” he said. ”[A] Production is 6.5 percent higher today.
According to Ruffer, UK’s managing director, the lack of attractive products elsewhere has undermined the traditional strategy of keeping 40 percent of the portfolio in bonds and increased crypto appeal. He invested $ 1 billion on Bitcoin.
“The rise in bitcoin prices is very reasonable because investors have to take drastic measures to protect against inflation and numbers,” said Duncan McKinnes, director of investment at Bitcoin, who helped control Bitcoin’s share. Find out what to do with 40 percent of their portfolio with no income.