Institutional Digital Asset Newsletter - January 2020

Jan 26, 2020

Once a month, we summarize the best crypto news for Institutional Investors

In this monthly newsletter we plan to answer questions institutional investors may have about Digital Assets. We won’t offer investment advice, but we hope to make it easier for you to develop your own strategy, and to keep abreast of the fast-paced evolution of an emerging asset class.

In each newsletter you’ll get a smattering of links from Trakx and from other reputable sources that reveal trends and developments for our sector. We’ll also fill you in on movements of people and companies (we might even mention you!).

We hope that you find this useful. Constructive criticism is welcome, feedback is valued, and praise will just make our day. Please send comments to [email protected]

INVESTING

Crypto: A case for Portfolio Diversification?

Previously, large investors have stayed clear from the crypto-investing space due to extremely high volatility of the key cryptocurrencies. As bitcoin and ether prices have seemed to reach certain equilibrium this year, more and more traditional financial institutions have started to enter into cryptocurrency to benefit from potential value appreciation and portfolio diversification. We encourage our readers to read this study from Bitwise on the impact of crypto on a Portfolio

Are Cryptocurrencies Paying Any Yield?

Staking” promises rewards that mirror incentives in traditional finance.

Many fund managers that have engaged with us keep asking whether crypto assets pay any carry or dividends equivalent to traditional finance? And, the short answer is Staking!

Staking is the process of holding funds to support the operations of a blockchain network through a reward-driven process. Staking has been one of the unique differentiating features offered in crypto industry. Binance Academy in this paper greatly describes the concept. Trakx finds clearly that staking is a way for crypto investors to hold digital assets and get rewarded some non negligible yield compared to a decade of low interest rates offered by bonds.

Hunt for yield across asset classes
Hunt for Yield Across Asset Classes

Allocations to digital assets combined with staking may be the path forward for investors looking for more return.

NEW ASSET OVERVIEW

Synthetix (SNX) token

Synthetix is a decentralized synthetic asset platform that provides on-chain exposure to real-world currencies, commodities, stocks, and indices. These synthetic assets (Synths) are backed by Synthetix Network Tokens (SNX) locked into a smart contract as collateral. Synths track the prices of various assets, allowing crypto-native and unbanked users to trade P2C (peer-to-contract) on Synthetix Exchange without liquidity limitations.

In 2019 Synthetic crypto assets grew exponentially. At Trakx, we expect this growth to continue this year.

PLATFORM

REGULATION

The European Union’s 5th Anti-Money Laundering Directive (5AMLD) came into effect this week

The regulation was entered as an effort to bring increased transparency to financial transactions for pushing back against money laundering and terrorist financing across Europe.

For the first time, 5AMLD is broadening its regulatory scope by including crypto service providers like virtual-fiat exchanges or custodian wallet providers.

PEOPLE MOVE

Huobi Group CTO Xianfeng Cheng, also known as Mars Cheng is leaving after four years at crypto firm

Wall Street veteran and former CEO of blockchain startup Digital Asset, Blythe Masters, has joined investment firm Motive Partners following its $473 million private equity fund.

Gary Rebibo

CMO @Trakx