Bryan Whalen, Group portfolio manager of the Trust Company of the West (TCW) recently remarked that even in the staid world of bond investment, crypto investors are approaching huge banks for loans against their virtual assets during a panel discussion, Thursday, at the Morningstar Investment Conference and crypto-lending products are already intense scrutiny from regulators.
Along with his unexpected statement “The market is starting to knock on the doors of big institutions, even in the bond world”, bond funds, Whalen, predicts, will gain greater exposure to cryptocurrency this way. Furthermore, he conjectured that borrowers sell bonds to raise funds from investors who will lend them money for a set period of time and that crypto assets are now being used as a kind of collateral in bond markets. Although he remarked about the countless inquires they receive about lending against crypto, as of now, the Trust Company of West doesn’t want to meet such requests.
The approach of Fidelity Investments can be analyzed to get a greater degree of understanding of the situation. Based in Boston, Massachusetts, Fidelity Investments Inc. is an American multinational financial services corporation. With $4.9 trillion in assets under management, Fidelity Investments is one of the world’s largest asset managers. In a symposium on the launch of crypto-based exchange-traded products by Fidelity Investments and Securities and Exchange Commission officials, Fidelity opined that the Bitcoin and crypto markets have already grown to a “substantial size” and have “deep liquidity” as defined by the SEC. A traditional player who has dabbled in virtual assets is Fidelity Investments and in cooperation with blockchain company BlockFi, the Fidelity Digital Assets group announced last year that institutional customers will be able to pledge Bitcoin as collateral against cash loans.
Though it is uncertain if Trust Company of West will follow the path of Fidelity Investments, the likelihood is bleak. However, the whole matter is still in the bubble!