The assets of the crypto market are approaching zero
The assets of the crypto market are approaching zero
2022.11.26 08:39
The assets of the crypto market are approaching zero
Budrigannews.com – After Canadian regulators granted permission for the proliferation of products that track Bitcoin, Ether, and other digital assets, retail investors jumped at the chance to invest in cryptocurrency exchange-traded funds.In a year, they’ve lost most of it.
Daniel Straus, an analyst at the National Bank of Canada, calculated that as of November 18, Canadian-traded crypto ETFs had just C$1.64 billion ($1.22 billion) in assets under management. That is down more than 3/4 from the C$7.3 billion worth in those finances on Nov. 30 last year.
Following other sector bankruptcies, Sam Bankman-Fried’s FTX’s demise has severely undermined confidence in digital assets. As the virus spreads, other large crypto companies have been shaken: BlockFi Inc. and Genesis Global, a US cryptocurrency broker, are both said to be in dire financial straits. Genesis Global needs emergency funding to stay afloat.
In an interview, Som Seif, chief executive officer of Purpose Investments Inc., stated, “The effect of FTX has likely led to a lengthening of what would be considered a crypto winter, a period of people’s lack of focus on the space or lack of trust in the space.”
A single money-market ETF managed by CI Financial Corp. now has more assets than all of the crypto ETFs listed in Canada combined, indicating how quickly the market for risk assets has changed. The CI fund employs the simplest possible investment strategy:it places the money into premium paying investment accounts at business banks.
The falling price of Bitcoin and other holdings has caused the vast majority of the asset loss in ETFs, not small outflows. According to Straus data, crypto ETFs saw C$51 million in annual outflows as of Nov. 18, with C$20 million of that coming in the first 18 days of this month.
When it comes to allowing regulated crypto-related products, Canada has gone further than the US.For tax purposes, cryptocurrency is categorized as a commodity, and many coins and tokens are categorized as securities. After QuadrigaCX, the country’s largest cryptocurrency exchange at the time, collapsed in 2019 and was later found to be a Ponzi scheme and fraud, the regulator increased its efforts.
In an interview, 3iQ Corp. CEO Fred Pye stated, “Firms like FTX are one of the reasons regulators in Canada accepted our exchange-traded products.”However, custodians in the United States, such as Coinbase and Gemini, tend to hold the assets of Canadian crypto-trading platforms and exchange-traded funds. Dustin Plett, an executive at Paradiso Ventures Inc., a Canadian digital-asset custodian that trades under the name Balance, stated, “Hopefully, this is the impetus for Canada to look at these types of situations and think, ‘Hey, maybe we should onshore these assets now.'”
The first directly backed Bitcoin exchange-traded fund in North America, launched last year by Seif’s Purpose Investments, anticipates that demand will rise in the coming months.He stated, “In the long run, I continue to believe that an increasing number of individuals and institutions will desire access to crypto and its return streams.”
