While BlackRock Inc., the largest asset management firm in the world, made headlines last week with the announcement of a proposed Bitcoin fund, Australia’s Holon Global Investments was already ahead of the curve, despite not being in the same league as BlackRock. In the midst of the so-called “crypto winter,” or when the value of crypto markets had collapsed to $793 billion from a November high of around US$3 trillion, Holon, which touts itself as a next-generation fund manager focusing on Web3 infrastructure, established three cryptocurrency funds in June. This occurred when the capitalization of crypto markets had plunged more than 70% from their November high.
The majority of Holon’s funds are held in Bitcoin, Ethereum, and the less well-known cryptocurrency, Filecoin. Holon is an active participant in the Filecoin network and possesses 27 petabytes of data storage capacity that has been built in western Sydney. The company, which provides cryptocurrency custody services in partnership with the United States company Gemini Trust Co., which Cameron and Tyler Winklevoss founded, stated that it figured its funds might find a market among those who do not have a great deal of experience with direct trading on exchanges.
Rory Scott, the Chief Executive Officer of Holon Investments Australia, stated that there has been a tremendous risk-off climate and that it is potentially more tempting to enter the market now than it was previously. He explained that the all-time highs in November may have prevented some investors from entering the market.
Understanding The True Extent Of The Crypto Winter
The collapse of the stablecoin project Terra/Luna in May, which was projected to be worth $40 billion U.S. dollars, helped to grease the wheels of this year’s crypto slump. Additionally, the United States Federal Reserve’s campaign to combat inflation at levels not seen in 40 years by hiking interest rates has caused crypto prices to fall along with larger equity markets. Rory Scott believes that it is fascinating to consider whether this is a prolonged crypto winter or whether this is a macro-driven event, that it is just a risk-off across all assets, and that the firm will start to see a little bit of a comeback in price once the Fed starts to cool its jets on rising interest rates.
Regardless of the circumstances, Feroze Medora, the managing director and head of Asia Pacific operations at Gemini, stated that he is optimistic about the possibilities of cryptocurrencies in the long run. He stated that they have experienced a number of winters in the past and that the business sector as a whole always seemed to come back stronger after each winter that they have experienced. According to Feroze Medora, interest from an institutional point of view is bringing long-term positive growth to the cryptocurrency business, as well as an increase in the implementation of blockchain technology.
Crypto Funds Growing In Australia
Gemini established a presence in Singapore in the latter half of 2017, shortly after making public its intentions to broaden its operations throughout Asia and Australia. According to Rory Scott, Australia is a desirable location for conducting business for everyone, making it a natural choice for Gemini, which is looking to conduct business, to locate its operations there. As per Scott, the magnitude of Australia’s superannuation business, also known as the retirement fund industry, is the primary factor contributing to this phenomenon. The 2021 Willis Towers Watson Global Pensions Asset Study estimated the size of this industry to be worth $2.3 trillion.
As a result, Australia’s pension funds are now the fifth largest in the world, and their annual growth rate is required to be at least 10%. Scott predicted that it would not be long until larger fund managers began investing in the asset class, despite the fact that there is minimal interest for crypto investments among this money. Even though the most recent federal election resulted in the Labor party taking power in Australia, which has a reputation for being less crypto-friendly than the Liberal party that it replaced, Australia appears to be in a position to regulate cryptocurrencies.
Late in the previous calendar year, the legislative body of this country’s senate produced a comprehensive report on cryptocurrencies and the potential influence they could have on the financial technology industry. The body then made a number of suggestions that the previous administration was considering putting into practice. However, the Australian Treasury Department is currently drafting its own study on crypto asset service providers after accepting submissions from the business in Australia. It remains to be seen how many the new Labor administration will pick up, but in the meantime, the answer can be found in Australia.
The Consultative Crypto Approach Of The Regulators
Recently, the Reserve Bank of Australia made public its intention to collaborate with the Digital Finance Cooperative Research Center in order to investigate potential applications for a digital currency issued by the Australian central bank. Medora stated that one of Australia’s strengths is its consultative approach with bitcoin institutions. He is of the opinion that the establishment of a worldwide regulatory framework for cryptocurrencies would result in large and beneficial growth for crypto assets in general.
When compared to the 1.25% fee that was levied against the first batch of spot exchange-traded cryptocurrency funds that were listed on Australia’s CBOE exchange earlier this year, Scott stated that the funds have a 0.4% yearly management fee and a further 0.4% to cover costs. According to Scott, the three Holon funds were selected to symbolize the three different areas of expansion in Web3. Bitcoin represents the transfer of value, Ethereum the functionality of Web3 upon which numerous protocols are built, and Filecoin the data storage layer, he explained.
Scott is of the opinion that the overarching premise of Holon is that this is the infrastructure in which users may make an investment and which, in the end, will be a benefactor of the incremental things that people will build on top of it over the course of time. In addition, he thinks that it was the reason why Holon had those three exposures that investors can choose from.