The world’s largest crypto fund manager is offering new trusts that invest in 5 different cryptocurrencies
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Grayscale Investments is offering new trusts that invest in five different cryptocurrencies.
The new trusts will invest in Basic Attention and Decentraland tokens, Chainlink, Filecoin, and Livepeer.
Investor demand for digital currencies has never been higher, Grayscale CEO Michael Sonnenshein said.
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Digital currency asset manager Grayscale Investments announced Wednesday that it is offering five new investment trusts, bringing its single-asset lineup to 13.
The new trusts are launching into fairly niche segments of the crypto space, with three investing in Chainlink, Filecoin, and Livepeer, which are blockchain-based digital payment systems. One will invest in Ethereum-based Basic Attention tokens, while the fifth will hold coins in the virtual reality platform Decentraland. These trusts are among the first of their kind to solely invest in the digital currencies underlying each investment product.
“Digital currencies have reached an inflection point,” Grayscale CEO Michael Sonnenshein said in a statement. “Investor demand has never been higher, and every day we’re seeing new entrants to what has surely become a bona fide asset class.”
Decentraland is an Ethereum-based blockchain platform where users can operate VR applications. Decentraland
Grayscale said all five trusts are open for subscription by eligible individual and institutional accredited investors. The decision to launch them was based on assessment of investor demand and the integrity of each cryptocurrency, Sonnenshein told Bloomberg in an interview. The asset manager’s biggest product is still its $34 billion Grayscale Bitcoin Trust.
The new cryptocurrencies it has chosen have much smaller market values in comparison to bitcoin. Basic Attention tokens are known to track consumers' time and attention on websites, with the goal of understanding how to efficiently distribute advertising money.
Chainlink runs on the Ethereum blockchain, with a technology that enables delivery of price feeds into decentralized finance applications. Filecoin is a storage service provider that enables anyone to rent spare storage space on their computer, creating a huge source of data storage.
Livepeer is a decentralized video-streaming network for those who wish to add live or in-demand video to their networks. Meanwhile, Decentraland tokens can be used to buy up virtual plots of land and goods and services within its virtual-reality space.
Grayscale said it plans to continue a tradition of creating “novel pathways” for investors to access the opportunities that digital currencies may offer.
BaFin Warns against ‘Highly Risky’ Crypto Investments
The regulators are becoming wary of the soaring crypto prices and increasing demand for digital currencies. Germany’s Federal Financial Supervisory Authority, popularly known as BaFin, issued a fresh consumer warning against cryptocurrencies.
“Despite recent price records, virtual currencies such as Bitcoin and other crypto values are highly risky and speculative investments,” the regulator warned.
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BaFin’s warning came days after the European Supervisory Authorities (ESA) cautioned investors about the risks in crypto investments. Additionally, other European regulators are raising alarms to caution small investors of potential risks of crypto.
The German watchdog earlier warned against cryptocurrencies in January when the crypto prices were soaring high.
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“You shouldn’t be blinded by the recent price increases of well-known cryptocurrencies such as Bitcoin, Ether, XRP, Bitcoin Cash and Litecoin,” the regulator then noted with an additional warning on crypto derivatives.
No Protection for Losses
However, Germany is one of the few countries with a straight-forward stance on cryptocurrencies. The financial market regulator sees cryptocurrencies as financial instruments and mandated the licensing of all crypto custodian businesses operating in the country.
Despite the regulations, the market watchdog clarified that any losses incurred in crypto are not protected.
“Currently, crypto values are largely unregulated in the European Union,” BaFin added. “In Germany, companies that want to operate the crypto custody business require a permit from BaFin. In addition, companies need permission from BaFin for activities that involve banking or financial services and that relate to crypto values due to the expansion of the term financial instruments to include crypto values.”
“However, this does not provide any protection against losses.”
European Parliament highlights importance of AML in crypto-assets
The European Parliament has highlighted the importance of anti-money laundering (AML) and anti-terrorist financing (ATF) when dealing with cryptocurrency assets.
The European Parliament published a draft document on the proposal for a regulation of the European Parliament and of the Council on markets in crypto-assets and amending directive.
It said that issuers of asset-referenced tokens should draw up an appropriate plan for an orderly winddown. The paper added that this should also be required of crypto-asset service providers due to the risk factor involved.
Read more: European Central Bank could be given powers to approve cryptoassets
“AML and ATF must be a key concern when dealing with crypto-assets,” a justification in the document said.
“The added value of crypto for users stems from their cross-border and digital use as a means of payment and exchange.
“This is another reason why a level playing field between established payment service providers and new market participants must be ensured according to the principle of ‘the same rules for the same risks’.”
Read more: UK is the third most interested country in crypto
The document also recognised the possible effect that e-money tokens can have on security of monetary in the euro area.
“E-money tokens can achieve market volumes which might have an impact on monetary security in the euro area,” another justification in the document read.
“This should be taken into account by giving the European Central Bank the appropriate decision-making power.”
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