Soros Fund Management is bullish on cryptocurrency infrastructure

What’s next for the global cryptocurrency sector? While the euphoria and waves among investors seem to be getting higher with each passing day, a possible ban on private digital currencies continues to hover over the heads of players. At Soros Fund Management, they have their own view on this issue and announce that they are betting on the digital currency related infrastructure sector for the long term.

On the one hand, risk of a cryptocurrency ban hovers over the heads of investors and speculators in this sector. Further reports can be found HERE and HERE. On the other hand, after a successful entry by large investors and institutional investors, numerous opportunities are also opening up in this sector.

Currently, it is hard to see how this story will end globally. In an interview with Bloomberg, Soros Fund Management asset manager Dawn Fitzpatrick noted that her firm is making long-term bets on the cryptocurrency sector.

The focus at Soros Asset Management, however, is not on a trade in private digital currencies, but rather the capital manager is focused on the entire infrastructure associated with private cryptocurrencies, according to Fitzpatrick. Because Soros Fund Management is convinced of the power of this infrastructure, it has made a number of investments in this area, he said.

Markets at inflection point & Fidelity plans bitcoin ETFs
Fitzpatrick said these markets are at an important inflection point. He said that the infrastructure associated with cryptocurrencies allows for exchanges as well as the management and trusteeship of digital currencies, as well as supportive assistance with tax-related matters, which are important from the perspective of companies in the case of accruing cryptocurrency profits.

Just recently, Soros Fund Management had announced that it had participated in a funding round of the company Lukka in a total amount of $53 million. Furthermore, the capital management company Fidelity announced plans related to the launch of its own bitcoin ETF.

It is rumored in the industry that Fidelity wants to offer its own clients, which are largely made up of retirement savers, a way to gain exposure to cryptocurrency markets in this way.

Ban or regulation as biggest threat – central banks want their own digital currencies
Of course, Fitzpatrick was also asked by Bloomberg about the existing dangers and risks that would arise based on exposures to the cryptocurrency markets. According to Fitzpatrick, the biggest risk is that central banks may view private digital currencies as a threat and an unwelcome competitor to their own fiat currencies.

In the People’s Republic of China in particular, the People’s Bank of China has shown a willingness to take tougher action against the rise of private digital currencies. The reason for this is the bank’s own intention to launch the yuan/renminbi on a digital level.

From the current perspective, it is foreseeable that an e-RMB (electronic Renminbi) will probably be launched in the People’s Republic of China as early as next year. Meanwhile, the chairmen of the Federal Reserve and the European Central Bank, Jerome Powell and Christine Lagarde, have also expressed interest in launching their own digital currencies.

Whether private cryptocurrencies such as Bitcon, Ethereum & Co. will still be allowed to play a role in such a case or will be tolerated as digital parallel currencies remains to be seen. According to Fitzpatrick, the efforts of the People’s Bank of China in this area in particular proved to be a potential threat to Bitcoin.

China is forging ahead in terms of the digital yuan
Despite everything, Fitzpatrick believes in the survival of bitcoin in the future. However, no one should or should not underestimate the current developments in this area, as digital currencies are likely to be launched by central banks more quickly than many market players currently dare to imagine.

The People’s Republic of China has been working on this project for some time now, which is why it can be assumed that the speed shown by the People’s Bank of China seems to be linked to strategic reasons. Fitzpatrick himself assumes that China will soon want to use the digital yuan in trade – not only at home, but also on the international stage.

An internationalization of the yuan/renminbi could be given tailwind in this way, which in turn should prove to be an increasing threat from the perspective of the U.S. dollar and its status as the world’s reserve currency. Despite all this, Fitzpatrick personally does not believe that central banks will be successful in permanently destabilizing Bitcoin & Co.

DepthTrade Outlook

In concrete terms, it means that so far it is only possible to conjecture and speculate about what will actually happen in this area. On Zerohedge’s site over Easter, there was a report on this topic worth reading titled 88 Years Ago Today, FDR Banned Gold. Will A Bitcoin Ban Be Next? which I would recommend to read.

Ben Schaack Send an email

Mr. Schaack is a financial analyst, specializing in the commodity, foreign exchange, and crypto markets - with more than 10 years of experience. Besides his business analytics studies, Mr. Schaack works as a journalist - covering finance, economy, and geopolitics. His special interests are focused on inflation hedging and exponential (compound interest) growth. He posts and discusses relevant news on his Twitter account.
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