Eq: Tech

(New York)

Deutsche Bank has just put out a stern warning on what is one of the quickest growing asset classes there is. Yes, you guessed it, cryptocurrencies. The bank does not recommend any of its wealth management clients to invest in the space, saying “We do not recommend that. It’s only for investors who invest speculatively … There is a realistic risk of total loss”. The bank says cryptos are plagued by high volatility, possible price manipulation, and data loss or theft.


FINSUM: Just to clarify our opinion on cryptos, our view is that they are not going anywhere and will likely be a part of financial markets for the foreseeable future. However, they have such high regulatory risk right now, and such a lack of clarity on valuation, that it is simply too risky to put any money in.

(Washington)

The whole market seems to have become punch-drunk with blockchain fever. The recent cases of small companies seeing their share prices surge on the back of adding “blockchain” to their name has been well documented. Now the SEC is cracking down. Jay Clayton, chairman of the SEC had this to say on the issue, amidst an even larger statement shaming the rebranding practice: “The SEC is looking closely at the disclosures of public companies that shift their business models to capitalize on the perceived promise of distributed-ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering.”


FINSUM: The final straw seemed to be when a publicly traded company that specializes in Long Island ice teas changed its name to Long Blockchain and saw its shares skyrocket.

(Washington)

The SEC has just made an announcement that those in financial industry, and beyond, were waiting for. That announcement was that the SEC has now all but grounded all hopes of having bitcoin ETFs. There has been a remarkable amount of hype about the chances of launching bitcoin ETFs in the hope of getting more mainstream investors involved in the asset class. However, the SEC dashed those hopes, saying “Until the questions identified above can be addressed satisfactorily, we do not believe that it is appropriate for fund sponsors to initiate registration of funds that intend to invest substantially in cryptocurrency and related products”.


FINSUM: This was effectively an unsolicited warning not to try to shirk investor protection rules in efforts to create bitcoin ETFs. It looks like the SEC is taking a hard line here.

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