I have expressed interest before on investing in cryptocurrencies. But it requires an extensive level of time and effort to understand the underlying blockchain technologies. Being lazy resulted in me not pursuing cryptocurrencies as a form of alternative investments for my portfolio. However, I have continued to monitor the developments in this space at a high level. After all, the applications of blockchain technologies are likely to have a massive impact on the banking sector that I work in. It’s actually in our interest to understand them and how we can utilize the business aspects to our advantage.
A part of me continued to hold out for some way to gain exposure to cryptocurrencies in our portfolio. As the portfolio continues to grow in size, we will eventually have the means to allocate a portion of our funds to such alternative investments. The question is what would be the most convenient way to do that with the least time and effort. I don’t need the high returns. I just need the exposure to another asset class with decent returns.
Cryptocurrency ETFs sound like the solution to my problem and my understanding is that some have already been launched. However, none are available to a Singapore retail investor like me to invest in. This is due to the unanswered questions of valuation, liquidity, protection of assets of the funds and even possible market manipulation. It would be interesting to see whether they can be addressed sufficiently for a viable cryptocurrency ETF to be launched for me to invest in.
I’m okay to wait it out in the meantime because I reckon these questions will be answered eventually as blockchain technologies advance and mature. I accept that I will miss out on the possible tremendous gains that can be achieved by the early adopters and users. In exchange, I don’t have to deal with the volatility and potential massive losses that can be incurred if I end up getting burnt in the process.
As cryptocurrencies and blockchain technologies become mainstream and attract more attention, Governments and Regulators will most likely want in on the action. My guess is they will become more regulated in one form or another. As with every major technological development, there is more than one way to benefit from it. We just have to work on positioning ourselves to tap into it for the future.