Mainstream financial institutions such as Goldman Sachs are finally beginning to realize what forward-thinking venture capitalists have known for years: investors need to pay attention to the cryptocurrency ecosystem.
A few months ago, Goldman’s hedge fund clients asked the bank to begin providing analysis on bitcoin investments. In July, chief technical analyst Sheba Jafari accurately predicted that the bitcoin price would pull back to about $1,850 before setting a new record during its current wave; she forecasts it could extend as far as $3,915 before the wave is over.
Now, Goldman Sachs is counseling institutional investors to give cryptocurrency a closer look. In a note distributed this week, Goldman analyst Robert D. Boroujerdi advised portfolio managers that with the total cryptocurrency market cap reaching record levels, investments in this space are getting harder to ignore:
With the total value nearly $120 billion, it’s getting harder for institutional investors to ignore cryptocurrencies.
The Goldman Sachs team notes that initial coin offering investments–which are approaching $2 billion in 2017 alone–have exceeded angel and seed funding during the past few months.”
Mainstream financiers have begun to view ICOs as digital gold mines and have abandoned lucrative posts to stake their claims. Boroujerdi says that whether or not one believes cryptocurrencies have merit, “real dollars are at work” in the cryptocurrency space and warrant attention from investors.
Whether or not you believe in the merit of investing in cryptocurrencies (you know who you are) real dollars are at work here and warrant watching especially in light of the growing world of initial coin offerings (ICOs) and fundraising that now exceeds Internet Angel and Seed investing.
One hurdle institutional investors must overcome is the uncertain regulatory environment. Until recently, ICOs have been largely unregulated. The U.S. Securities and Exchange Commission (SEC) recently issued a ruling suggesting that some ICO tokens are “securities” and thus subject to federal securities laws. It is unclear how soon and to what extent the SEC will begin enforcing securities laws, but Adam Draper of Boost VC advised developers to avoid using language like “DAO” and “ICO” because the use of such terms virtually guarantees attention from the SEC.
4/ If you are pitching as a “DAO” or a DAO related product, you will be targeted by the SEC. Even if you are structured differently.
— Adam Draper (@AdamDraper) August 9, 2017
Other nations are beginning to view ICOs more closely as well. An advisor to the Chinese national bank recently said that ICOs need moderate regulation. Just last week, the Monetary Authority of Singapore (MAS) announced it would begin regulating token distributions.
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