ALFI: chomping at the bitcoin
25 March 2015 Luxembourg
Image: Shutterstock
Virtual currency funds are creeping into existence, but early adopters might be getting their hopes up a little too soon, according to a panel at the Association of Luxembourg Funds Industry (ALFI) Spring Conference.
Philippe Hoss, a panellist and partner at Elvinger, Hoss & Prussen, referenced Jersey’s Global Advisors Bitcoin Investment fund, which was approved in July last year, and the bitcoin exchange-traded fund (ETF) set up by the Winklevoss brothers.
He pointed out that some funds will choose to treat the bitcoin “as a commodity”, while others see it as “something like money”, and that virtual currency funds could soon start investing in infrastructure.
But Hoss maintained that bitcoin funds will not become the norm, partly as “there is not much to buy”, but also because those who do own bitcoins are not conventional investment fund clients.
The panel also discussed the bitcoin’s credibility as an asset. Nadia Manzari of Luxembourg financial sector regulator the Commission de Surveillance du Secteur Financier (CSSF) said that some of the concerns about the securitisation of virtual currencies, such as bitcoins, are unfounded.
She said there “is no financial activity without risk”, and argued that it is adopters that ultimately create risk, saying: “We don’t regulate the currency, we regulate the operator.”
Manzari also pointed out that any transfer going through a depository will be regulated, and as soon as finds transfer from virtual currency in to ‘real’ currency, they are as heavily regulated as any other financial transaction.
Jean-Louis Schiltz, a partner at law firm Shiltz & Shiltz, pointed out that there is “no legal definition of money that is accepted around the world”, while questioning what exactly defines a currency.
The morning’s chairman, Bob Kneip, founder and CEO of fund service provider KNEIP, summed up the general mood of the room, concluding: “As soon as something gets too virtual, I like to bring it back to reality.”
Philippe Hoss, a panellist and partner at Elvinger, Hoss & Prussen, referenced Jersey’s Global Advisors Bitcoin Investment fund, which was approved in July last year, and the bitcoin exchange-traded fund (ETF) set up by the Winklevoss brothers.
He pointed out that some funds will choose to treat the bitcoin “as a commodity”, while others see it as “something like money”, and that virtual currency funds could soon start investing in infrastructure.
But Hoss maintained that bitcoin funds will not become the norm, partly as “there is not much to buy”, but also because those who do own bitcoins are not conventional investment fund clients.
The panel also discussed the bitcoin’s credibility as an asset. Nadia Manzari of Luxembourg financial sector regulator the Commission de Surveillance du Secteur Financier (CSSF) said that some of the concerns about the securitisation of virtual currencies, such as bitcoins, are unfounded.
She said there “is no financial activity without risk”, and argued that it is adopters that ultimately create risk, saying: “We don’t regulate the currency, we regulate the operator.”
Manzari also pointed out that any transfer going through a depository will be regulated, and as soon as finds transfer from virtual currency in to ‘real’ currency, they are as heavily regulated as any other financial transaction.
Jean-Louis Schiltz, a partner at law firm Shiltz & Shiltz, pointed out that there is “no legal definition of money that is accepted around the world”, while questioning what exactly defines a currency.
The morning’s chairman, Bob Kneip, founder and CEO of fund service provider KNEIP, summed up the general mood of the room, concluding: “As soon as something gets too virtual, I like to bring it back to reality.”
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