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Portfolio manager for TWC Group sees more crypto-lending inquiries, which he says is good for the future of bond funds.
At the Morningstar Investment Conference, Bryan Whalen of TWC Group remarked on the rise of inquiries from crypto investors. Whalen said digital asset investors increasingly ask large institutions for loans against their digital assets. Moreover, he said this happens even in the world of bond investments.
Whalen oversees about $225 billion as managing director of TWC’s fixed income group. “The market is starting to knock on the doors of big institutions, even in the bond world,” he said. “What I’ve found has crept our way is incoming inquiries about the question of lending against crypto.”
However the director says TCW does not service such requests. Though he suggested others such as hedge funds and alternative asset managers might.
For example, Fidelity Investments partnered with BlockFi to allow institutional clients the ability to pledge Bitcoin against cash loans. Robin Foley, the chief investment officer of bonds for Fidelity, said they’re looking to the future of the markets. “For us the role of crypto is really a cross-market, cross-company conversation,” Foley said. “We are looking to the future as the market evolves.”
Despite the high profile partnership with Fidelity, BlockFi faced scrutiny from various states towards its crypto lending program.
Crypto Lending Under Scrutiny
The crypto industry faces a slew of new scrutiny as regulators target crypto lending and interest programs. As mentioned above, BlockFi received a series of negative reactions from state regulators over its program.
Today, September 23rd, 2021 Kentucky lawmakers zeroed in on yet another crypto firm. The state prohibited the crypto lender Celsius from offering accounts within the state. Lawmakers cite the company offering “unregistered securities” to clients and a lack of post-deposit transparency.
In addition, Coinbase received major backlash from the U.S. Securities and Exchange Commission over its new crypto lending program. The company planned its new product, Lend, as a way for investors to make money off of their invested crypto. Nonetheless, the SEC threatened a lawsuit and inquired about names on the waitlist for the product.
A week later, Coinbase decided against the product.