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Cryptocurrency Market Will Get ‘Much Bigger’: Former JPMorgan Banker

Last Updated March 4, 2021 5:06 PM
Gerelyn Terzo
Last Updated March 4, 2021 5:06 PM

Daniel Masters, who previously led JPMorgan’s global energy trading desk, says cryptocurrencies are fueling a financial revolution.

Masters is now chairman of digital investment bank Coinshares and chief investment officer at Global Advisors, and he explained in an interview with Bloomberg  how distributed ledger technology is doing for the democratization of peer-to-peer transactions what the internet did for the democratization of news.

“That’s at the core of what makes this a revolution,” Masters told Blooomberg.

Leakage Problem

He was asked by Bloomberg about the potential for the problem of “leakage” in the fractional reserve monetary system, where only some of a bank’s deposits are backed by assets. Masters said no, cryptocurrencies aren’t creating leakage in that leverage, at least not yet.

Masters described a “regulatory sandbox” environment where digital assets resided for the past five years or so through the end of 2017. He said an ecosystem that’s $1 billion – $10 billion in size “is almost experimental in the scope of the main financial system.”

But with the market roaring near $1 trillion combined with all of the crypto-fueled headlines, cryptocurrencies “suddenly became something regulators, banks … central banks and governments decided could no longer be ignored,” said Masters. “I don’t think there’s any concern from that community at the moment that there’s leakage .. but I think they’re beginning to realize that there is potential for that in the future,” he added.

IMF Chief Christine Lagarde said in a blog post today that cryptocurrencies “pose no immediate danger” to the economy.

‘Crypto Market Will Be Much Bigger’

The way that Masters sees the world has never been a “fight to the death between crypto and the USD/GBP legacy financial system.” Instead, he says it’s about “what portion of the total financial ecosystem accrues to cryptocurrencies,” adding: “I think even if it’s only 5% at the end of the day, that market will then still be much bigger than it is today.”

Masters manages more than $800 million in cryptocurrency assets across both passive and active strategies for both leading coins such as Bitcoin, Ethereum, Zcash, and Monero down to ICOs. As for staying away from the scam ICOs, Masters pointed to a “multi-stage screening process” by which fewer than 3% of small ICOs that come to them make it through their filter.

Masters recently touted bitcoin as “the play” of 2018 before the cryptocurrency market had begun to turn around. He said then that he liked ICO issuers with “non-forkable/blockchain specific ideas.” Masters has reportedly owned  bitcoin since 2012 when it was trading at $100.

Featured image from Shutterstock.