The fund wanted to avoid the sort of crypto horror stories such as losing the password to a bitcoin wallet or buying bitcoin on an exchange such as Cryptopia in New Zealand, which went bust in 2019 leaving owners of cryptocurrencies purchased on the exchange in limbo.

Ideally, the fund would have purchased bitcoin through an exchange traded fund, but none was available in Australia, and Canada was yet to launch one.

The next best alternative was to either buy the bitcoin on a crypto exchange such as BTC Markets, Coinbase or Independent Reserve, or buy shares in the Grayscale Bitcoin Trust in New York.

The trustees sought advice from the fund’s financial adviser, Charlie Viola, the wealth partner at Pitcher Partners. He had recently invested in a bitcoin miner and was supportive of the idea.

On Friday, Viola said about half of his clients had requested information about bitcoin. He tells them bitcoin is exhibiting all of the qualities that have been embedded in successful currencies, including a store of value, ease of transfer and difficult to counterfeit.

“It’s not going to provide income and is therefore not suitable for the average retired couple seeking to fund their daily living expenses,” he says.

The fund bought shares in the Grayscale Bitcoin Trust at $US14.77 each. On Thursday, the stock was trading at $US52.60, a near fourfold increase.

Flourishing environment for scams

Investing in bitcoin can be fraught with danger judging from the number of people losing money in scams that start with false information being published on Facebook, Twitter, Google and in emails.

One of the big four Australian banks tells Chanticleer that it was dealing with bitcoin scams among its customers of about $100,000 a month in 2019.

In the past year, this has bumped up to scams totalling about $2 million a month. On Friday, Chanticleer received two scam emails offering access to bitcoin riches, which included photos of Richard Branson, Bill Gates and Andrew Forrest.

These scams are flourishing because Australia is lagging the world in bringing bitcoin investing into regulatory nets.

Fortunately, Andrew Bragg, the chairman of the Senate Select Committee on Financial Technology and Regulatory Technology, has put cryptocurrencies and digital assets on the committee’s agenda.

Meanwhile, the Australian Securities and Investments Commission appears to be waiting for the ASX to approve the first local bitcoin ETF. ASIC is unwilling to lead on crypto policy development.

Investor protections are being held back by the reluctance of major institutions to support crypto businesses. Chanticleer this week heard of a bank deciding to de-bank a crypto-related business, and a major trustee company refusing to offer crypto custodian services.

Cryptocurrency investment options, however, are expanding. This week’s listing in New York of crypto exchange Coinbase, was hailed as a “landmark moment” in crypto history. It closed on the first day with a market value of $US84 billion.

Westpac’s Reinventure arm sold half its holding in Coinbase – worth $500 million – and Chanticleer understands it will soon sell the remaining $500 million.

Coinbase provides a classic example of crypto’s new-found respectability. In September 2017, JP Morgan Chase chief executive Jamie Dimon said bitcoin was a “fraud” and if “you’re stupid enough to buy it, you’ll pay the price for it one day”.

Coinbase was floated on the market by three Wall Street banks, including JP Morgan.

(Excerpt) Read more Here | 2021-04-16 07:00:16
Image credit: source

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