Finding a Regulatory Response to Crypto Sales that Actually Fits

Cryptoassets did not exist before 2009, the year that the Bitcoin blockchain was released and the first Bitcoins were mined. This new “asset” had no governmental backing and no tangible existence whatsoever, and was embodied only as a digitized code hosted on a computer network owned and controlled by private citizens. Yet, the original goal was to have this new technology […]

Beware of the Bitcoin Balance Sheet

Tesla made news earlier this month when the release of their 2020 annual report revealed the firm had purchased $1.5 billion in bitcoin and would begin accepting bitcoin as a form of payment for their “products in the near future.” Following this revelation, Tesla’s CEO Elon Musk tweeted:  “Having some Bitcoin, which is simply a […]

Democratizing of Free Markets’ Mission Failed

The democratization of finance is the self-proclaimed noble cause that Robinhood1 is pursuing by enabling commission-free investing for everyone. However, recent events revealed that the old saying “if it’s free, you are the product,“ has been successfully implemented in the retail investment world. In this article, we cover the recent GameStop fiasco, Robinhood’s business model, and what it means for a modern retail investor.  GameStop Fiasco  It all started with GameStop (NYSE: GME), a US video game retailer, […]

Is There a Value Premium in Cryptoasset Markets?

Cryptoasset markets have experienced a paradigm shift over the past decade: originally regarded as a purely speculative investment, institutional investors are starting to appreciate cryptoassets’ unique return drivers. As of 2020, 45% of institutional investors in Europe and 27% in the US  have exposure to cryptoassets, either directly or via futures contracts. Despite considerable interest in this evolving asset class, the question of what factors drive expected returns in cryptoassets remains largely unexplored.   On the one hand, Cheah and Fry (2015) argue that Bitcoin […]

The Custody of Cryptocurrencies: OCC Opens the Door for Banks to Take Part in the Fintech World

In 2017, journalist Nick Ortega chronicled the story of how his house-cleaning service threw away a slip of orange paper with the private key to his cryptocurrency funds scribbled on it, costing him $30,000. A private key is an alphanumeric cryptographic code, which is the only way for a user to access his cryptocurrency. A […]

Disintermediating finance: Fintech and its limitations

The recent Wirecard scandal highlighted an old issue that has been disturbing scholars and policymakers about technology companies offering financial services – trust. While Wirecard collapsed due to fraud, the public debate has shifted towards the fact that most of the Fintech industry is subject to minimal regulation at best. In our recent paper, we […]

Do Institutional Investors Prevent the Market for Tokenized Assets from Failing? The Case of Initial Coin Offerings (ICOs)

Initial Coin Offerings (ICOs) are a relatively novel mechanism for entrepreneurs to raise capital by selling digital tokens to a crowd of investors. Tokens are cryptographically protected digital assets implemented on a blockchain, which is a novel approach to recording and transmitting data across a network in an immutable manner. ICOs are attractive for entrepreneurs […]

Digitalization of Finance, Covid19 and TechRisk

Over the past 50 years, technology has transformed finance. During the 2010s, FinTechs, typically small, agile start-ups, were the focus of much of the attention. In our view, the focus of attention across the 2020s will be something entirely different: digital finance platforms. Quietly, behind the scenes, digital financial platforms are increasingly serving as indispensable […]

Sustainable Finance and Fintech: Can Technology Contribute to Achieving Environmental Goals? A Preliminary Assessment of ‘Green FinTech’

The EU’s Fintech Action Plan (now Digital Finance Strategy) and the Sustainable Finance Strategy represent important pillars of the bloc’s current policy agenda. While the two areas have been treated as separate for a long time, they present certain common features and great potential if combined. The COVID-19 pandemic provides an opportunity for countries in […]

The Architecture of Decentralised Finance Platforms in the Post COVID-19 Era – A New Open Finance Paradigm

During the COVID-19 pandemic a new consensus has emerged which castigates modern finance for its tendency towards excessive leverage, and short-termism. As all this activity took place against a background of disappearing disposable incomes, it is not surprising that it also boosted inequality, especially between the asset-rich and the asset-light classes with the latter having […]