Should cryptocurrencies be authorised for inclusion in Irish investment funds? Photograph: Karen Bleier/AFP via GettyThe State’s funds sector, home to investment pots holding €4 trillion of assets for global investors as of the end of 2021, has had plenty to deal with in recent months as equity and bond markets have taken a hammering.
It follows on from the Central Bank this year allowing two funds aimed at professional investors – so-called qualifying alternative investment funds – to have a low level of indirect exposures to bitcoin, the grandfather of almost 20,000 cryptocurrencies in the market today and an asset that has slumped almost 60 per cent from its peak last November.
First of all, they are next to impossible to value compared to, say, stocks, bonds or property, where pricing is ultimately based off expected dividend, interest or rental income . The Irish Funds paper itself acknowledges that bitcoin has yet to meet three key tests to call itself a currency. Wild price fluctuations in recent years show that it has failed to become a store of value. It is also, clearly, not a unit of account that would be easily understood by people to understand the value of something when quoted. Bitcoin’s unstable value also makes it difficult to function properly as a medium of exchange.
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