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The year 2018 has been a terrible one for cryptocurrencies, Even for a market accustomed to turbulence, losses of 80% or more are somewhat unsettling.
Almost all of the top 100 tokens by market cap on crypto analytics site CoinMarketCap are in the red for the year – the impact is especially for bitcoin, the first and still most popular digital currency.
Despite this rather dire situation, Mathieu Saint-Cyr, MD of the Geneva Management Group (GMG) 's crypto unit, believes that 2019 will be a better year for cryptocurrencies. He is quick to point out, though, that cryptocurrencies as we know them (bitcoin and ethereum for instance), are just one of many possible applications that can be derived from the underlying blockchain technology.
He believes that 2019 will see the advancement of new applications, also underpinned by blockchain, that have the potential to be greater.
For example, he references security token offerings, a relatively new way of raising funds for a start-up business. A regular dividend or a voice in the business decision is a public offering that is a public offering because it is a legally binding investment contract that gives investors access to a share of the company -making process.
This is a step forward from the initial coin offering (ICO) to the boom and bust of 2018. Investors poured billions into acquiring tokens that do not generate equity or any other kind of asset from the company. Instead, they are issued as an IOU or coupon that owners can exchange for future products or services. But in most cases, there were no future products or services – the underlying company went bust and the investor was left with the puff of a good idea.
'Proactive'
"These (security) tokens are based on something tangible, like bonds or real estate," says Saint-Cyr. He cites as an example Crowdlitoken, a real-estate-backed crypto coin registered and regulated in Switzerland.
"The regulator in Switzerland is very proactive," he adds. Earlier this year, a regulator issued as a set of guidelines that harmonized the regulatory regime; it focused on which tokens would be classified as ICO activities.
In October, Crypto Fund became the first company to get the green light from the Swiss Financial Market Supervisory to offer a wide range of blockchain-based assets to institutional investors in the country. This is an example of an array of investment products that "track bitcoins and other cryptocurrencies", including Swiss-based funds.
It is this trend towards increased regulation of the crypto space, also happening in other jurisdictions, that will increase the share of the market and that investors will gain confidence in the asset class.
Depending on where you stand, the news in the US Securities and Exchange Commission had two companies, CarrierEq (Airfox) and Paragon Coins, conducted illegally ICOs is a setback or step forward for the nascent industry. To the same level, as well as to return funds to the investors, register the tokens as securities, file periodic reports with the commission, and pay penalties.
Saint-Cyr does not see it as a setback. If you want cryptos to reach a mass adoption stage they will need to follow the same guidelines and regulations.
"I think we are moving into a new phase. History is filled with people investing in new products or asset classes that go. Look at tech stocks in the 2000s, or property speculation in 2008. The same has happened with cryptocurrencies. Now there is a strong effort around the world to add to a layer of regulatory protection. We may have seen in the last year. One way to protect people is to establish clear guidelines and regulations.
I hope that I will be able to do it again. This will be the condition for this new asset class. "
GMG will not develop crypto assets, nor will it run crypto portfolios. Instead, the company is responding to the interest coming from its clients who are high-net-worth individuals and interested in blockchain and cryptocurrencies for the portfolio diversification opportunities and peer-to-peer settlement options, among others.
"Our investors are looking for trading, analysis, corporate services, fund formation and management assistance," he says. "In the process of providing them with support, we want to demystify this world for others."
- This article was originally published on Moneyweb and is used here with permission
