3IQ , Fred Pye Chairman and CEO discussed with UNLOCK the current state of cryptocurrencies, ETFs, and digital asset funds. In terms of the crypto situation, Pye believes that Bitcoin and Ethereum have been quite positively correlated with other risk assets over the last several quarters. As he states, “Geopolitical uncertainty has put downside pressure on both digital assets and other risk assets, such as stock indices. Interestingly, Bitcoin just set a new all-time high in Russian Rubles recently, so would Russian participants also consider that we are in a bear market? Ultimately, at 3iQ we consider market price volatility to be the cost of decentralization. But I would caution against only analyzing the USD market prices of these digital assets, as this is a poor indicator of their overall network health.”
In terms of Bitcoin and Ethereum growth as networks, Pye sees both as growing yet market prices are volatile and could easily reverse at any tie given the sheer velocity we have seen in terms of adoption over the last year.
In terms of the ETF space Pye states that the space is still seeing inflows. 3iQ’s spot bitcoin and ether ETFs (3iQ CoinShares Bitcoin ETF and 3iQ CoinShares Ether ETF) provide institutions with a quick and easy way to get exposure to the underlying asset at a low cost without worrying about building custody infrastructure. Another unique advantage of 3iQ ETFs is that large orders can be processed in the primary market through a designated broker, so the investor can create or redeem large amounts at minimum slippage and fees.
Within the MENA region, while 3IQ has yet to rollout new products, Pye believes that over time thingS will find equilibrium. Today the geopolitical events have had an adverse impact on the markets.
The recent virtual asset regulations in the UAE and globally are seen as a positive move forward according to Pye. He states, “We believe regulation to be a positive in the cryptocurrency space– as long as the regulations are aimed at fostering the growth in an organized and efficient manner. Effective regulation adds credibility to the space.”
In terms of Bitcoin as a legal tender given the use case of El Salvador and IMF (International Monetary Fund) reaction, Pye believes that El Salvador is free to offer Bitcoin as a legal tender within its borders especially given that 70 percent of its population receives remittance payments making up nearly a quarter of the country’s GDP, making its ripe for disruption.
He adds that the pushback from IMF pushed rating agencies to downgrade El Salvador’s credit ratings; however he says, “this has possibly fueled a fire as an increasing number of private businesses have expanded investments to El Salvador after these announcements. El Salvador was once a small, overlooked country – now it’s on many radars. While their strides to adopt Bitcoin will likely have little instantaneous impacts on the global financial system, it could spur a “domino effect” on other Latin American countries and other small sovereign nations which rely on the US dollar.”
As for the future plans for 3IQ, they are in discussions with regulators in various jurisdictions and will be announcing any new expansions once they happen.
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