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5G, FoodTech, Biotech? Unveiling Top Surprising Portfolios by eToro

Exclusive interview with Jasper Lee at eToro: Part 2 (Link: Part 1)

Jasper Lee is the Managing Director of Asia, eToro and is a veteran in the trading and Fintech field with over 10 years of experience. He opened eToro Asia in 2016 and has led the company to become the largest and most reputable social trading platform in Asia. Before joining eToro, Lee served as the General Manager at FXCM in China.

Copy Portfolio – the Perfect Tool for Thematic Investors

In case eToro had not simplified things enough, the innovative platform also offers a number of portfolios that are categorized by theme, lumping carefully selected assets into a basket for investment. Lee explained, “In our retail offering, we have a Copy Portfolio option that allows you to choose different themes for investment.

For example, the 5G portfolio—if an investor believes 5G technology to be a wise investment for the future but is unsure of which companies to back, they may invest in the themed 5G CopyPortfolio. Lee said, “We have a lot of different themes in our copy portfolio to simplify trading for our investors— including food tech and biotech. He concluded, “We, of course, have a copy portfolio for crypto. Our mission is to simplify trading for everyone and educate our users, these CopyPortfolios allow you to successfully invest in a concept or an idea without having the necessary background or spending hours on market analysis.”

Acquisition for eToroX and tokenized market

eToro recently acquired the Delta app, which helps investors make better decisions regarding their crypto investments by providing tools such as portfolio tracking and pricing data. It is a good fit for the evolution of eToro which has also ventured ambitiously into crypto — in March eToro leveraged its platform to bring cryptoasset trading to the U.S.Lee said, “eToro’s acquisition of Delta integrated the crypto portfolio management tool with eToroX. We will explore how to develop the functionality offered by Delta to complement eToro’s ethos to make trading and investing as easy and fun as possible. Allowing traders and investors to view and ultimately manage all their assets – from crypto through to stocks, ETFs and FX – in one platform would be the logical extension of this partnership.” In March 2019, eToro also acquired smart contract startup Firmo with the intent of strengthening its tokenized assets offering. Lee said, “We at eToro believe that the future of finance is in the tokenization of investable assets. So far we have tokenized traditional assets such as gold and silver and we have also added over 10 stablecoins to our exchange, eToroX. Acquiring Firmo and Delta are just two examples of creating the infrastructure for tokenized assets, leading to the future of finance.”

Wyoming State Says Cryptocurrency Represents Property, Allows Insurers to Include Digital Assets in Investment Portfolios

The US state of Wyoming has recently amended its insurance code that will allow local insurance companies to invest in digital assets like cryptocurrencies. The new amendment will only include insurance companies operating within the state. This important announcement is set to drive institutional money from local insurance into the cryptocurrency market.

The state sees cryptocurrencies as ppportunity

The new law, which will come into effect as from 1st July, specifies that an insurer may invest in digital assets. The state of Wyoming defines digital assets as a representation of economic, proprietary, or access rights, which is stored in a computer-readable format, and include digital securities, digital consumer assets, and virtual currencies, which include cryptocurrencies like Bitcoin.

The law defines cryptocurrencies as digital assets, which serve as a unit of account, a store of value, or a medium of exchange. It further defines cryptos as assets that are not recognized as a legal lender by the United States government. Based on the new legislation, insurance firms are now allowed to invest in various digital consumer assets, which are defined as digital assets that are bought or used mainly for household, personal, or consumptive purposes.

One of the US law firms, Kramer Levin, commented on the recent amendment made. However, the company recognized the amendment as the first provision of such nature made in the country. The firm stated that it remains to be seen whether insurance firms would take advantage of this law. This is because insurance firms are traditionally conservative with their investment portfolio as they normally invest in mortgages and high-grade bonds. Since the financial markets show huge volatility, the cryptocurrency’s non-correlation could be something beneficial for them.

The firm further identified that the law does not address some major issues like liquidity risk, accounting treatment, or valuation.

Caitlin Long, the CEO and founder of Wyoming-based forthcoming crypto bank Avanti also commented on the new law. She stated that most likely local insurance companies would offer this part of variable life policies instead of whole life because NAIC (National Association of Insurance Commissionaires) capital charge would be high.

First crypto-native bank set to be launched in the United States

Wyoming remains of the most blockchain and crypto-friendly states within the US. In February, Caitlin Long, the former Wall Street Executive who helped Wyoming state to enact 13 blockchain-enabling laws, revealed her plan to establish the first-ever crypto-native bank in 2021. The regulated bank is set to offer its crypto custody for big institutional money and to act as a bridge for federal reserve for payments. Caitlin is making this to become a reality because of the progressive Wyoming legislature that recognizes cryptocurrency as money and allows favorable tax treatment of crypto, among other friendly measures.

Image via Shutterstock

Warren Buffett Changes Attitude on Gold, Not Bitcoin Reminds Peter Schiff

Warren Buffett has made a shock investment buying a stake in Barrick Gold Corp after previously calling gold a “non-productive asset.” Peter Schiff mocked the Bitcoin community reminding them that Buffet once called the cryptocurrency “rat-poison squared” and will likely never invest in Bitcoin.

Warren Buffett made some significant investment changes in the second quarter. Buffett has added a new stock to his Berkshire Hathaway portfolio by taking a stake in Barrick Gold Corp. Barrack Gold corporation is a leading Canadian mining company that produces gold with 16 operating sites in 13 nations.

Buffett has always been critical of gold, but now things have changed. He currently sees where profit would come from going forward. The price of gold has surged this year up almost 30% as investors have sought safe havens. Buffett’s current move to buy a gold stock has a significant impact as institutional investors would follow. The move not only ergo higher prices of gold but also prices of mining stock.

This clearly shows that Buffett is not positive on the US dollar or the US economy. He sees global central banks have entirely lost control as they are printing trillions and killing fiat money.

Coronavirus Crisis

Buffett has moved to pull out of stocks most affected by the COVID-19 related shutdowns. He did more selling than buying between April and June, Berkshire’s quarterly shareholding filing released on Friday 14th August 2020 made this clear.

Airlines were not the only stocks that Buffett sold during the coronavirus pandemic. Besides selling all his holdings in airline stocks, including Southwest Airlines Company, Delta Air Lines, Inc, American Airlines Group, Inc, and United Airlines Holdings, Buffett also dumped his bank stocks. The Berkshire Hathaway investor completely dumped all his holdings in Goldman Sachs and reduced his holdings in Wells Fargo by 26% and in JPMorgan Chase by 60%.

As the COVID-19 pandemic escalated, Buffett’s Berkshire has just acquired about 20.9 million shares of Barrick Gold Corporation, a position valued at $563.5 million at the end of the quarter. Hours after Buffett bought gold stock, the value of Barrack’s stock hit $29 from $26.99 on Friday 14th August.

The celebrated investor has also exited its holdings in Occidental petroleum corporation during the coronavirus pandemic. He also exited a position in Restaurant Brands International, the owner of fast-food restaurants including Popeyes and Burger King, which struggled as regional restrictions compelled dining rooms to close and customers stayed home more.

All bank stocks are in negative territory during this year, although they have not lost almost as much as energy and airline companies. Buffett may be shying away from banks due to the anticipation that loan defaulters could increase as the economic pain resulting from the pandemic continues, which Wall Street CEOs have recently warned of.

However, it was not all about selling, Berkshire has added to its earlier stake in Store Capital Corporation (real estate investment trust company) and its holdings in Liberty media corporation (US mass media company) and in grocery chain Kroger company.

Rat Poison Squared

Peter Schiff, the American stock broker, gold bull and enduring Bitcoin opponent was only too happy to remind the Bitcoin community that Buffet will likely never invest in the cryptocurrency.

Schiff tweeted:

“Bitcoin pumpers are exploiting Buffett’s decision to buy Barrick Gold. Since Buffet changed his mind about gold, he may change his mind about Bitcoin too. While he called #gold a non-productive asset, he called #Bitcoin rat poison squared. Buffet will never buy Bitcoin!”

He further added:

“Buffett’s decision to buy Barrick Gold and not Bitcoin or GBTC is a further condemnation of Bitcoin. Buffett clearly doesn’t thinks Bitcoin represents a threat to gold or its dominance as a safe-haven asset. Buffet knows #gold is here to stay and #Bitcoin is just a passing fad.”

Despite increasing institutional demand and growing mainstream investment, Schiff is the eternal Bitcoin bear. Meanwhile Bitcoin’s price continues to test the $12,000 resistance gaining close to $9000 since the March crash and gold has surged to nearly $2000.

Image source: Flickr: Shannon Patrick

Tether Says No Chinese Commercial Papers Holding on its Reserve

Tether Holdings Ltd, the blockchain startup that is in charge of the USDT stablecoin issuance and operations, has come out yet again to address the growing rumours about the composition of its reserve base.

Per the update on Wednesday, the stablecoin issuer said it is unlike what is currently in circulation. It holds no Chinese Commercial Paper as a part of the security to protect the integrity of the USDT. The firm warned against the impacts of false news, which can literally do more damage to the ecosystem than even cyber threats.

“The spreading of false information is the biggest threat to the cryptocurrency industry that currently exists. It is a threat of the same concern as scams, hacks, or cyberattacks because the spreading of false information risks not only the reputation of the industry but also each and every member of the community,” the company wrote in the update.

It clearly outlined that its total Commercial Paper exposure has been slashed from 30 billion as of July 2021 to approximately 3.7 billion nowadays. The firm said it plans to reduce the commercial papers to about 200 million by the end of August this year and its ultimate goal is to take the number to 0 latest by the end of November this year.

Maintaining a robust reserve has always been a major requirement for running a stablecoin like the USDT. While it has been bedevilled by a number of controversies with regulators in the past, Tether is now committed to publishing a regularly updated report about its stablecoin reserve portfolio.

Circle, the issuer of the second largest stablecoin, USDC, has also joined this trend as both stablecoin companies have continued to face scrutiny following the collapse of TerraUSD (UST) algorithmic stablecoin. Regulators are determined to prevent any other such mishap, and the oversight on these platforms has grown over the past couple of weeks.

Crypto Becomes Valid Portfolio Options and Assets Diversifier , Says Wells Fargo's Subsidiary

Wells Fargo Investment Institute, a registered investment adviser and wholly owned subsidiary of Wells Fargo, recently released its fifth publication in its digital asset and cryptocurrency educational series in August, as seen on Sunday, August 7.

The investment advisory firm published the report to ensure that new investors see the comprehensive picture of the digital assets industry and therefore take advantage of investing in the new asset class.

As per the new report, Wells Fargo considers digital assets as a transformative innovation, just like the internet, cars, and electricity.

The investment adviser described cryptocurrencies as the building blocks of a new large digital network that moves money and assets. That network is open for anyone in the world to use. Wells Fargo said infrastructure is emerging to support this new Internet of Value.

Since traditional finance is starting to embrace open networks, adopting digital assets is expected to accelerate over the coming years.

According to Wells Fargo, early adopters are set to gain profitability (economies of scale), while those late comers could lose something that the internet has taught the world for 40 years.

The adviser stated that while there is an investment thesis behind digital assets, the industry is still young to become mature, and therefore, many investment risks remain.

The main risks facing the industry are additional regulation, technology and business failures, limited consumer protections, price volatility, as well as operational risks associated with handling and storing digital assets, the bank elaborated.

Wells Fargo said cryptocurrencies have evolved into a viable investment asset. Long-term supply and demand trends further support industry growth and compress price volatility. Crypto has therefore emerged to play a role as portfolio diversifier. The bank classifies cryptocurrency or digital asset investment as an alternative investment.

Crypto Increasingly Gaining Mainstream Adoption

In 2020, several crucial events attracted increased mainstream usage in transactions and accelerated the maturation of crypto markets. For example, banks received regulatory permission to custody cryptocurrencies. Regulators took additional steps to extend a legal and oversight framework that have helped solidify crypto as investable assets.

In 2020 and 2021, more operating companies such as MicroStrategy, the Block Inc., (formerly Square), Tesla, among others, began allocating cash to digital assets and cryptocurrencies.

This year, crypto continues to gain ground as an investment despite the market crash. According to a recent Morning Consult data intelligence and market research firm survey, about 24% of American consumers own crypto.

Research shows that clients are increasingly asking investment advisors about crypto – with 94% of financial advisors receiving questions about the asset class from clients in 2021.

Cryptocurrency should be part of clients’ portfolios as long as they can afford to lose that money and they are going to keep it for a seriously long period of time, according to Suze Orman, a US personal finance expert.

Many experts advise clients that cryptocurrencies should be about 5% of their portfolio and not more.

MakerDAO Increases US Treasury Bond Holdings by 150%

MakerDAO, a lending protocol and stablecoin issuer, has voted in favor of a proposal to expand the amount of United States Government bonds held in its portfolio by 150%, from $500 million to $1.25 billion. This would be a significant increase. This action is being taken with the goals of diversifying its liquid assets and earning a net yearly yield in the range of 4.6% to 4.5%. The remaining $500 million of USDC in the PSM will be handled by decentralized finance asset manager Monetalis Clydesdale. MakerDAO has plans to deploy $750 million of the USDC in the PSM to acquire further US Treasury bonds.

The bonds will be acquired with equal maturities, monthly, and over the course of a period of six months; the total number of slots will be 12, and each slot will be worth $62.5 million. After taking into account the costs of custody, the proposition is anticipated to result in a net yearly return of 4.6% to 4.5%. The income stream of MakerDAO can potentially benefit from an increase in trading expenses. This action will result in the continuation of Monetalis Clydesdale’s management of a current allocation of $500 million from the United States Treasury, which has been in effect since October 2022.

On the other hand, some people who took part in the governance forum had reservations about the proposition. They pointed out that MakerDAO has not yet received any money from Monetalis for the first half billion DAI, and they claimed that questions asked in Maker’s Discord and governance forum were not responded swiftly, which did not provide sufficient time to evaluate the proposal.

The failure of Silicon Valley Bank on March 11 caused widespread fear throughout markets and led to the depeg of a number of stablecoins, including USD Coin (USDC) and Dai. In response to this, MakerDAO said that its community was working on suggestions to convert its stablecoin exposure to money market instruments, such as U.S. Treasurys, “with the objective of diversifying DAI’s liquid collateral.”