The rise of digital assets

Following Coinbase’s IPO via a direct listing on Nasdaq on 14.04.2021, digital assets gained an immense amount of traction globally. Most of the worlds leading asset managers and industry specialists are circling the topic.

Blackrock CEO Larry Fink was asked in an interview with CNBC about his opinion of cryptocurrencies. “I’m encouraged by how many people are focusing on it. I’m encouraged about the narrative. It may become a great asset class.”

In November last year, Blackrock Chief Investment Officer of Global Fixed Income Rick Rieder said that “cryptocurrency is here to stay” and bitcoin could replace gold. In December, Fink said that bitcoin makes the U.S. dollar less relevant, noting that cryptocurrency can evolve into a global market. In January filings with the U.S. Securities and Exchange Commission (SEC), Blackrock disclosed its plans to add bitcoin futures to two of its funds: the Blackrock Strategic Income Opportunities and the Blackrock Global Allocation Fund. Blackrock is the world’s largest asset manager, with more than $8.7 trillion in assets under management.

Bitcoin specifically has been rapidly gaining popularity among institutional investors. More companies are embracing the cryptocurrency, including Elon Musk’s Tesla, which has invested $1.5 billion in bitcoin and will soon accept the cryptocurrency as a payment option for its products. Last week, Mastercard announced that it will allow certain cryptocurrencies directly on its network and BNY Mellon unveiled a crypto unit to provide clients with bitcoin services.

Recently Brazilian asset manager Hashdex also launched the world’s first crypto exchange-traded fund (ETF), the Hashdex Nasdaq Crypto Index ETF. The fund, which is available for trading on the Bermuda Stock Exchange (BSX) for accredited non-U.S. investors, offers a simple solution for institutional investors to gain exposure to the cryptocurrency market.

Developed by Nasdaq and Hashdex, the ETF tracks the Nasdaq Crypto Index (NCI). The index, which is maintained by Nasdaq’s calculation agent, CF Benchmarks, and rebalanced quarterly, is designed to represent the investable landscape of the cryptocurrency market through strict eligibility criteria.

“With support from Nasdaq, Nasdaq’s calculation agent CF Benchmarks, and BSX, we’re delighted to bring to market the world’s first crypto ETF. This is a great achievement that shows the maturity of the cryptocurrency market, which garnered a much higher level of respect in 2020,” said Hashdex Chief Executive Officer Marcelo Sampaio. “The product should also accelerate the entry of institutional investors in crypto, a trend that has gained incredible momentum in the past months.”

As a part of a push into the digital assets space, global asset servicer State Street has appointed a new global chief architect, who will be charged with leading the company’s technology transformation projects and developing its digital, crypto and innovation strategies. In March State Street was appointed as the fund administrator and transfer agent for the VanEck Bitcoin Trust, a US-based crypto ETF that is awaiting approval from the Securities and Exchange Commission.

In the retail space a lot of investors might find it difficult to navigate the avant-garde mechanisms involved in direct Bitcoin investments, ETFs provide a way to invest in them minus the complexities (mining, securing, storing etc.). Investors neither have to sign up for a digital wallet nor a crypto exchange nor do they have to routinely monitor cryptocurrency prices. An ETF simplifies the investment in crypto while also providing leverage to the price of cryptocurrencies like Bitcoin without necessitating knowledge about how Bitcoin works.

It seems that investors and funds alike are finally embracing the onset of digital assets and the subsequent transformation in the industry.

Integrating new complicated asset types like digital assets can be a daunting task for asset managers and depositaries with in-house solutions. Since Depowise operates as a central integration platform, connecting many providers and end-users, we can implement these changes on a macro scale. Based on the recency of the trend and the complicated nature of digital assets, this space hasn’t been appropriately mapped and regulated, leading to many potential investors being put off by the inherent risk.

Depowise is designed to keep up with the ever-changing nature of the industry. All of our services operate on top of the Depowise data warehouse. Regardless of the asset type, partner or integration specifics, we can keep your business agile without costly changes to existing operations, compliance and reporting setups. Keeping up with all of the industry trends can spread most companies too thin. Outsourcing to the right strategical partner is paramount in Today’s investment climate!

Menu