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Pension funds may join cryptocurrencies
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Pension funds may join cryptocurrencies

by John M.April 13, 2018

After the initial doom & gloom of 2018, experts now agree that cryptocurrencies may not have such a bad time at it. Regulation is still a problem, and there are no two ways about that. People will need to be more willing in sharing out their crypto riches, in terms of information, with the competent authorities. The regulatory framework will continue to pose a difficult question for everyone, and with this in mind, people will have to double down and prepare themselves to treat cryptocurrencies as normal money.

However, cryptocurrencies may find 2018 a promising year for their future prosperity, for a number of reasons. Let us start with the simple fact that more global pension and endowment funds are preparing to allocate some of their money into cryptocurrencies.

Pension industry advisors have all been speaking of a trend towards investment flows going the way of cryptocurrencies. With the groundwork already laid out, it is quite possible to witness a mass investment in the sector, and that is brilliant in its own right.

With serious investment, not only in pure monetary value, but also the level of authority investing in the asset, cryptocurrencies may finally stabilise, or at least become more volatile. Moreover, financiers investing themselves in the world of crypto assets will certainly want governments, central banks, and regulators to be at least slightly more expedient when lying down the groundwork for taxation and anti-money laundering practices.

In one recent post, CNBC shared its own take on the global asset owners’ wealth and the partial commitment of this in cryptocurrencies:

Global asset owners including pension funds, sovereign wealth funds, endowments and foundations, mutual funds and insurance funds control $131 trillion of global wealth, according to research by Willis Towers Watson. Pensions make up 45 percent of that total, roughly 59 billion, while endowments and foundations make up 1 percent.”

These numbers indicate that these types of investment could become the next big thing when it comes to spending on cryptocurrencies. Institutional investors may begin to invest generously into the crypto sector in the hopes of turning a long-term windfall. However, they will also be required to pull their own weight and push for better legislation all across the financial system.

The number of institutional investor may increase. However, the question remains whether these investors would seek to splurge on traditional cryptocurrencies, or wait for something a central bank would issue.

Central Banks have been intensifying the dialogue about cryptocurrencies and whether the lessons learnt from blockchain can be put to good use to run their own brand of digital money. The long and short of that is yes – however, no new cryptocurrency will appear, experts estimate. Rather, banks will gradually try to pull out hard cash and replace it with a digital form of payment that will alleviate the financial burden banks are carrying out. As costs fall, both user & financial institution will benefit. Financial collapses will become much easier to alleviate.

However, a cryptocurrency that has been introduced based on blockchain may make any major financial crash difficult to recuperate from. Put in simplest terms, the European Central Bank has been able to print money and pour into ailing banks to prop them up and make sure that they will remain operation come what may.

However, with cryptocurrencies people cannot pursue the same course of action. There is an all too simple reason behind that. With all of these things taken into account, cryptocurrencies cannot be printed on a whim. Blockchain is a self-regulating and self-affirming ecosystem, which would not allow anything new to just sprout out of existence.

Some believe that leaving a backdoor open in the source code to allow the creation of emergency crypto tokens on a whim would be advisable. However, others riposte that this is already too risky and it invites foul play. Conversely, banks can just amass sufficient reserves to put in cold storage and disburse this in cases of emergency. But who can tell how much of an emergency fund is actually good to have put on one side?

As investors from serious realms of finance, begin to show interest in the sector, all serious institutions from the world of banking and money should lend their firm support for the sector, determining the future course cryptocurrencies should take.

Pension funds have long been debating whether they should go after cryptocurrencies and do their absolute best to invest and pursue this sector of work. All is possible now that the world is becoming more aware of the downsides of unregulated crypto market.

 

 

 

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John M.

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