Digital Assets: The Flip Flop Around Cryptocurrencies
Are regulatory fears around bitcoin unfounded?
In a note published last week, analysts at UBS’ global wealth management unit warned that investors should stay clear of cryptocurrencies because they were vulnerable to tougher regulations, particularly in the US and UK. (Bitcoin.com)
“We’ve long warned that shifting investor sentiment or regulatory crackdowns could pop bubble-like crypto markets,” the analysts added. “We think investors should avoid crypto speculation, and consider risk-adjusted returns before buying alternative assets.”
UBS cited developing regulatory glares on cryptos across the world including in Canada, Japan, Cayman Islands, and Thailand. The Swiss bank also pointed to China’s crackdown on bitcoin mining and crypto payments.
However, across the border, in Germany, regulators sang a different tune.
Germany: Institutions allowed to invest in cryptos
In Germany, a new law, the much-anticipated Fund Location Act (Fondsstandortgesetz) came into effect on July 1, 2021. It permits new and existing domestic special funds (Spezialfonds) to invest up to 20% of their portfolios in crypto assets, like bitcoin.
This would potentially bring about 4,000 institutional funds with almost 2 trillion euros in assets under management in Germany into the crypto fold.
A back-of-the-envelope calculation shows that if all these funds allocated 20% of AUM to cryptos, the amount would be approximately 376 billion euros, or nearly $446 billion.
US: Crypto Mom calls for approval of a bitcoin ETF
Meanwhile, in the US, the regulatory hand-wringing around the approval of a bitcoin ETF drew some comments from U.S. Securities and Exchange Commission (SEC) Commissioner, Hester Peirce.
Peirce, who is also fondly referred by the digital asset industry as “Crypto Mom,” called into question the SEC’s rationale for not approving a bitcoin ETF till date.
Speaking on a CNBC interview on Thursday Peirce said: “I thought that if we had applied our standards as we have applied them to other products, we would already have approved one or more of them.”
“With each passing day, the rationale that we have used in the past for not approving seems to grow weaker.”
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