Should I be investing my Pension in Bitcoin... and what's the long-term outlook for Cryptocurrencies?
No matter how lucrative they might be, the UK Exchequer has always set its face against Pension Funds investing in schemes to print counterfeit cash, or special purpose vehicles to fund bank robberies, for that matter: not only will contributions be ineligible for basic rate tax relief, but misguided investors are also likely to find themselves sharing a prison cell with some guy named Bubba. And the same goes for Self Invested Personal Pensions (the snappily acronymic SIPP), where investors are prohibited from investing in fine wines, classic cars and antiques (albeit for slightly less obvious reasons, and without the risk of ending up in prison). Because, just like the forger’s printing press, a bottle of 1938 Lafitte is a prohibited pension asset: aside from the glaringly illegal and the downright illogical though, SIPP investors are pretty much free to invest in anything they want: including Cryptocurrencies…and right now that means Bitcoin.
Cryptocurrency Investment Funds have gained an increasing foothold in financial markets over recent years, buying and selling Bitcoin and related products just like any other equity or security, and as with most public authorities across the globe, the UK Revenue now smiles on full pension fund participation, dishing out tax relief (at basic rate), while withholding it from a bottle of wine. And there’s method in their thinking…
Unlike conventional cash assets, cryptocurrencies are virtually impossible to counterfeit (because of cryptographic security technology): so you can be sure what you’re investing in is real, reliable and substantial. And as a non-fiat currency (not backed or issued by any central government authority), cryptocurrency investments aren’t subject to periodic fluctuations in central policymaking either. Just ask anyone who held Sterling based assets before Norman Lamont withdrew the UK from the Exchange Rate Mechanism in 1992: they'll tell you exactly what a 7% hike in interest rates can do to the pound in your pocket…especially when Swedish overnight rates rose in response to 1,200% within six hours.
Cryptocurrencies are more or less immune from this kind of localised political turbulence: widely distributed instead over a huge network of computers worldwide (using Blockchain technologies), they have systemic integrity, optimal security and impressively high levels of confidentiality at the time of the final transaction (which, after all, is the whole point of a decentralised ledger structure).
You can buy a Bitcoin Exchange Traded Note (www.ft.com), which will track the progress of your crypto investments through public exchanges: and as we all now know (all too well), $1,000 invested in Bitcoin ten years ago is currently worth $15.6 Million…so on any conceivable basis, its way, way better than printing cash or robbing banks, and you’re not likely to end up sharing a cell with Bubba either. It's no wonder Pension Funds are starting to embrace a new kind of future, with Cryptocurrencies at its heart.
Global Regulation: An Upside Opportunity
Of course, over recent years, global regulation (or the lack of it), has been a particularly problematic issue for Cryptocurrencies: but that’s now become an upside opportunity too. Only last week the US House of Representatives passed a Bill, quaintly called the “Eliminate Barriers to Innovation Bill of 2021” (www.congress.gov/bill/), which if passed by the Senate will create an entirely new platform for digital asset regulation: and that’s from a country which has been conspicuously averse to Blockchain oversight in the past. India too is moving towards formalised central regulation through its “sandbox” initiative. So across the board we seem to be witnessing the death throes of digital aversion, rooted as it has been in regulatory inertia.
This scale of strategic innovation will inevitably open up new opportunities for Cryptocurrency investment: and whether and how you embrace them in shaping the future of your own portfolio…well that’s down to you, but its daily becoming harder to ignore the long term realties of change.
Red Ribbon Asset Management
Red Ribbon Asset Management is constantly searching for new ways to apply emerging technologies, including Blockchain, AI and Data Analytics, to achieve its MII objectives of optimal environmental and social impact consistent with above market rate returns: steadfastly committed to enhance customer experience through intelligent adoption of mainstream impact investment strategies.
Fresh perspectives on the regulation of Cryptocurrencies and Blockchain seem to have become part of everyday financial markets across the world: so as ever, it pays to keep a close focus on the future.
Red Ribbon is committed to identifying and building on investment opportunities that are fully in compliance with its core Planet, People, Profit policy: not only offering above market rate returns for investors but also protecting our Natural Capital.
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