[ M A R K E T R E V I E W | C R Y P T O ]
In what may seem like conflicting stances , some of the world ’ s largest traditional asset managers are exploring cryptocurrencies , while at the same time seeing little demand from clients , according to multiple industry experts . This exploration is not always a sign of intent however , more just what you would expect from some of the biggest financial institutions on the planet – essentially just having their finger on the pulse .
A lack of regulatory clarity and a chequered past has made the cryptocurrencies while the latter then posted an interview with the BlackRock chief Larry Fink , who said there hadn ’ t been any client interest .
Both positions can co-exist , according to experts , who also say a handful of major players are also looking to establish their own cryptocurrency funds .
“ On the traditional side of asset management some are talking about creating a fund which is a passive buy and hold strategy where they are allowing investors
Given the volatility of prices there is certainly a chance for the buy-side to make money when trading crypto , but the risk may not outweigh the reward in the current environment .
Aite Group analyst , Gabriel Wang , recently authored a report on cryptocurrencies and says some asset managers confirmed to him they intended to launch their own crypto funds
“ A couple of asset managers are looking to launch their own crypto investment funds , as they see the
“ Putting a value on where Bitcoin is supposed to trade is difficult , some people think it is zero and others think it is worth one million in the future .”
PETER KAMBOLIN , CHIEF EXECUTIVE OFFICER , SYSTEMATIC ALPHA MANAGEMENT
institutional use of cryptocurrencies a somewhat contentious topic . Subsequently , any comment or suggestion from an investment bank or asset manager is being interpreted as a firm indication of their stance . The reality is , that for those in the upper echelons of the financial markets , any kind of investment phenomenon will be investigated in some way or another , regardless of intent to invest or trade . Whether it ’ s blockchain technology , exchange-traded funds ( ETFs ) or swaps , all new and innovative products fall into the ‘ worth a look ’ category .
BlackRock was the subject of such scrutiny on 16 July , after stories from Financial News and Bloomberg appeared to be in contradiction , with the former suggesting the asset manager had set up a working group to explore exposure to a basket of cryptocurrencies , essentially giving them easy access to this different asset class ” says Ed Gouldstone , head of product management for Linedata ’ s asset management business .
“ What I like about this is that it ’ s an area where asset managers can be innovative , they are starting to offer new products to their investors . It may be they are doing it on more of an individual client basis or test strategies themselves before an outright launch .”
Maciek Kolodziejczyk , founder at Stable Foundation , believes that members of major financial institutions certainly have an interest , even if it is from a personal point of view right now .
“ A lot of people from big institutions are trading their own money , or friend ’ s and family ’ s money but not the institution ’ s ,” he explained . appeal of cryptos as an emerging asset class ,” he says . “ On the other side , trading orders have been flushing into OTC desks that handle crypto trades , mostly coming from hedge funds and prop trading shops right now .”
Speaking to The TRADE , one asset manager said they did not feel the need to be “ first to the party ” and that they have more to be getting on with than trying to understand the world of cryptos .
“ As an institutional asset manager we don ’ t yet see underlying clients expressing much interest in cryptos ,” they explained , adding that the ‘ Wild West ’ nature of the market is not ideal in the age of transparency . “ In time though , once things are a lot clearer and possibly regulated , we may see a lot more client interest and look to get involved .”
60 // TheTrade // Autumn 2018