Craig Hobart, Head of Distribution at Monochrome joined Lukasz de Pourbaix, Executive Director and Chief Investment Officer, Lonsec Investment Solutions to discuss crypto-assets and the questions financial advisers have regarding the asset class. Covering topics including how to access crypto-assets, client portfolio applications and the advice and regulatory considerations surrounding client discussions relating to crypto-assets.

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It can be difficult to comprehend the concept of Bitcoin. Its nature is often shrouded in speculation, especially regarding its purpose and ramifications on the global financial system and society as a whole. This speculation breeds uncertainty about Bitcoin’s risks and the tools necessary to protect oneself against them. This piece will aim to separate Bitcoin from NBCAs and traditional assets through identifying its idiosyncrasies and idiosyncratic risks. Subsequently, mitigation treatments to lessen the impact of Bitcoin’s idiosyncratic risks will be discussed, and the severity and probability of these risks following implementation of these mitigation measures will be evaluated.

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Disclaimer: The content, presentations and discussion topics covered in this material are intended for licensed financial advisers and institutional clients only and are not intended for use by retail clients. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented. Except for any liability which cannot be excluded, Monochrome, its directors, officers, employees and agents disclaim all liability for any error or inaccuracy in this material or any loss or damage suffered by any person as a consequence of relying upon it. Monochrome advises that the views expressed in this material are not necessarily those of Monochrome or of any organisation Monochrome is associated with. Monochrome does not purport to provide legal or other expert advice in this material and if any such advice is required, you should obtain the services of a suitably qualified professional.

In the first of a multi-part series on Bitcoin’s investment market evolution, Monochrome examines the journey taken in US markets to launch a Bitcoin ETF.

As Bitcoin matures and is recognised as a potential institutional investment asset and local investors anticipate the launch of an Australian Bitcoin ETF, Australian investors may find value in the journeys undertaken by other markets across the globe.

Beginning this series, Monochrome will offer insight on the development of US markets, culminating in the second largest ETF launch in history.

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Disclaimer: The content, presentations and discussion topics covered in this material are intended for licensed financial advisers and institutional clients only and are not intended for use by retail clients. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented. Except for any liability which cannot be excluded, Monochrome, its directors, officers, employees and agents disclaim all liability for any error or inaccuracy in this material or any loss or damage suffered by any person as a consequence of relying upon it. Monochrome advises that the views expressed in this material are not necessarily those of Monochrome or of any organisation Monochrome is associated with. Monochrome does not purport to provide legal or other expert advice in this material and if any such advice is required, you should obtain the services of a suitably qualified professional.

In order to fully understand the risks associated with Bitcoin, we must first understand the concept of risk itself. After understanding traditional definitions of risk and various risk management frameworks, we can see whether these frameworks are relevant or not. As alluded to in several previous Monochrome Research pieces, Bitcoin is an asset like no other, and therefore applying any one specific traditional framework would be inappropriate. However, when many approaches to risk are taken holistically, we can conduct both a thorough risk assessment of Bitcoin, and implement robust risk management practices. In the first of a four-part series on Bitcoin risk, we get definitions out of the way before we delve into Bitcoin’s idiosyncrasies, its uncontrollable risks, and finally, how people are currently using Bitcoin as a risk management tool.

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Disclaimer: The content, presentations and discussion topics covered in this material are intended for licensed financial advisers and institutional clients only and are not intended for use by retail clients. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented. Except for any liability which cannot be excluded, Monochrome, its directors, officers, employees and agents disclaim all liability for any error or inaccuracy in this material or any loss or damage suffered by any person as a consequence of relying upon it. Monochrome advises that the views expressed in this material are not necessarily those of Monochrome or of any organisation Monochrome is associated with. Monochrome does not purport to provide legal or other expert advice in this material and if any such advice is required, you should obtain the services of a suitably qualified professional.

Bitcoin has been garnering significant attention as it begins to be adopted by a wider range of investors. The investor base is starting to shift from retail investors to large institutions. Naturally, questions regarding its volatility and legitimacy as an investment opportunity will arise. This paper will address such questions and provide solutions to including and managing Bitcoin in a well structured portfolio.

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Disclaimer: The content, presentations and discussion topics covered in this material are intended for licensed financial advisers and institutional clients only and are not intended for use by retail clients. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented. Except for any liability which cannot be excluded, Monochrome, its directors, officers, employees and agents disclaim all liability for any error or inaccuracy in this material or any loss or damage suffered by any person as a consequence of relying upon it. Monochrome advises that the views expressed in this material are not necessarily those of Monochrome or of any organisation Monochrome is associated with. Monochrome does not purport to provide legal or other expert advice in this material and if any such advice is required, you should obtain the services of a suitably qualified professional.

In a canonical July 2010 Bitcointalk.org forum post by Satoshi Nakamoto, Bitcoin’s creator, they said “Sorry for being a wet blanket. Writing a description for this thing for general audiences is bloody hard. There’s nothing to relate it to.” Because Bitcoin is so hard to describe, define or contextualise, people can barely agree on what Bitcoin is, let alone how to value it. By default, all frameworks we attempt to apply to Bitcoin will fall short, simply because Bitcoin isn’t “just” a network, software, commodity, or financial asset; it is all of the above, and potentially more. In short, the following valuation methods in isolation are unsuitable for valuing Bitcoin, but when taken together, can be quite useful.

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Disclaimer: The content, presentations and discussion topics covered in this material are intended for licensed financial advisers and institutional clients only and are not intended for use by retail clients. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented. Except for any liability which cannot be excluded, Monochrome, its directors, officers, employees and agents disclaim all liability for any error or inaccuracy in this material or any loss or damage suffered by any person as a consequence of relying upon it. Monochrome advises that the views expressed in this material are not necessarily those of Monochrome or of any organisation Monochrome is associated with. Monochrome does not purport to provide legal or other expert advice in this material and if any such advice is required, you should obtain the services of a suitably qualified professional.

As Bitcoin enters its second decade, it is opportune to reflect on its transformation from a monetary thought experiment, the first recorded transactional use being to buy pizza, into a fully-fledged financial ecosystem that has garnered significant interest, both from retail and institutional investors.

Digital assets constitute a market cap of US$2.1 trillion, with market leader Bitcoin boasting over 110 million users and around US$5 billion in daily settlement volume as of early September. Companies such as PayPal, Visa, and Square are integrating digital asset payment processing to preempt disruption; financial institutions such as Fidelity and Goldman Sachs are expanding their trading services to meet the surge in client demand; and, central banks from the Federal Reserve to the People’s Bank of China are developing Central Bank Digital Currencies (CBDC) of their own.

Despite this increase in adoption, various challenges remain for institutional investors to procure digital assets, whether as an investment or as a hedge against the broader macroeconomic environment. This document explores Bitcoin from the perspective of an institutional investor to strategize for what lies ahead in the digital asset market.

Read the original article here, complete with graphics and data.

Disclaimer: The content, presentations and discussion topics covered in this material are intended for licensed financial advisers and institutional clients only and are not intended for use by retail clients. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented. Except for any liability which cannot be excluded, Monochrome, its directors, officers, employees and agents disclaim all liability for any error or inaccuracy in this material or any loss or damage suffered by any person as a consequence of relying upon it. Monochrome advises that the views expressed in this material are not necessarily those of Monochrome or of any organisation Monochrome is associated with. Monochrome does not purport to provide legal or other expert advice in this material and if any such advice is required, you should obtain the services of a suitably qualified professional.