Shalini Nagarajan

A majority of crypto-native hedge funds expect higher market capitalizations for digital assets by the end of 2023 compared to 2022, according to a PwC study released Thursday.



Bitcoin has demonstrated an upward trend since the end of last year, with an 85% year-to-date rally alongside recoveries in global equity indexes. The <a href="https://www.coingecko.com/en/global-charts" target="_blank" rel="noreferrer noopener">total</a> crypto capitalization has jumped 50% in that time, from $828 million to $1.25 trillion, with bitcoin making up about half.



“Despite market volatility, a fall in digital asset prices and the collapse of a number of crypto businesses, investment in crypto assets is expected to remain strong in 2023,” John Garvey, global financial services leader at PwC US, said in the <a href="https://www.pwc.com/gx/en/news-room/press-releases/2023/pwc-2023-global-crypto-hedge-fund-report.html" target="_blank" rel="noreferrer noopener">report</a>.



The study separately found the percentage of traditional hedge funds investing in crypto assets declined from 37% last year to 29%, as the crypto landscape <a href="https://blockworks.co/news/jay-clayton-doesnt-like-regulation-by-enforcement" target="_blank" rel="noreferrer noopener">grappled with regulatory strife</a> in the US.



Still, those hedge funds already invested in crypto assets intend to uphold or even increase their exposure, regardless of market volatility and regulatory challenges, it noted.



The report utilized data from two separate surveys, one involving 131 crypto-native hedge funds and the other gathering information from 59 traditional hedge funds.



<h2 class="wp-block-heading">Traditional funds more interested in tokenization than crypto-natives</h2>



Traditional hedge funds showed more interest in <a href="https://blockworks.co/news/2023-year-of-asset-tokenization" target="_blank" rel="noreferrer noopener">blockchain-powered assets and securities</a>, with around 25% exploring tokenization.&nbsp;



However, unlike last year when one in five traditional hedge funds invested in non-fungible tokens (NFTs), no hedge funds reported NFT investments this time.



Among the crypto hedge funds surveyed, <a href="https://blockworks.co/news/crypto-hedge-fund-launching-market-neutral-strategy-to-meet-investor-demand-sources-say" target="_blank" rel="noreferrer noopener">market neutral strategies</a>, designed to generate profits irrespective of market direction, remained the preferred choice.



Meanwhile, the usage of discretionary long-only strategies rose from 14% in the last survey to 19%, while more quantitative long-and-short styles fell from 25% to 18%.



In terms of response to regulatory enforcement, 12% of crypto hedge funds were found contemplating a shift from the US to jurisdictions that offer a more favorable environment for crypto.



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crypto hedge fund

Crypto hedge funds expect digital assets will be up by the end of the year

Casey Wagner

<div id="highlights-block_624b71f4bcd04" class="highlights">
 <ul>
 <li>Central banks are going to continue to investigate CBDCs, PwC analysts say</li>
 <li>Stablecoins offer many of the same benefits as CBDCs but without the surveillance that comes with a government-issued currency</li>
 </ul>
 
</div>



The vast majority of central banks are considering launching a central bank digital currency (CBDC), according to analysts at accounting firm PwC.



“CBDCs will facilitate more effective, lower cost and 24/7/365 cross-border payments for the financial services industry,” analysts from PwC said in the firm’s annual <a href="https://www.pwc.com/gx/en/new-ventures/cryptocurrency-assets/pwc-global-cbdc-index-stablecoin-overview-2022.pdf" target="_blank" rel="noreferrer noopener">index</a> of CBDCs and stablecoins, which was released Monday. “We expect that CBDCs will greatly benefit cross-border transactions and economies of all relevant jurisdictions.”



Overall, retail CBDC projects, which are digital currencies designed for public use, have reached greater maturity levels than wholesale projects, which are digital currencies used by financial institutions that have accounts with central banks, the report notes. There has been an increase in wholesale pilots in recent years though, analysts said.



China became the first major economy to pilot a retail CBDC in 2020 with the digital yuan. The pilot is running in 12 cities as of March 2022.&nbsp;



The Sand Dollar, issued by the Central Bank of the Bahamas as legal tender in October 2020, was the first retail project of its kind. Nigeria’s central bank launched the first CBDC in Africa, the eNaira, shortly afterwards.&nbsp;



On the wholesale side, PwC ranked the combined effort from the Hong Kong Monetary Authority and the Bank of Thailand to launch mBridge as the top product. The central banks are working to develop a proof-of-concept prototype to enable real-time, cross-border foreign exchange payments on distributed ledger technology.



Other top projects include efforts by Canada, Singapore, France and South Africa.



“Wholesale CBDCs have the potential to streamline security token post-trade operations through atomic delivery-versus-payment and increase the market efficiency for several asset classes,” Benoit Sureau, PwC France and Maghreb financial services risk and blockchain partner, said.



PwC analysts for the first time included a stablecoin overview in the annual CBDC index report, noting that privately issued tokens will continue to evolve and exist alongside CBDCs.&nbsp;



Stablecoins reached a market capitalization of around $190 billion in early 2022 and will continue to grow as the tokens offer many of the same benefits as a CBDC without the surveillance that comes with a government-issued currency, the report noted.&nbsp;



Transparency around reserve assets, particularly for stablecoins that are backed with fiat currency, will be a major concern going forward, though, as the asset class continues to grow and regulation ramps up, analysts added.



“The role of the stablecoin in the crypto markets has and will continue to evolve as adoption of crypto increases, forcing a more prominent role of stablecoins across the larger financial ecosystem,” Matt Blumenfeld, director and digital asset specialist at PwC said. “Regulation will only strengthen the importance and give credence to the role that stablecoins will play.”



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Benoit Sureau

PwC: More Than 80% of Central Banks Are Considering Launching a CBDC

Jacquelyn Melinek

<div id="highlights-block_621557c086517" class="highlights">
 <ul>
 <li>Rod Bolger has over 25 years of experience in traditional financial institutions from other industry players like Bank of America, Citigroup and PwC</li>
 <li>Celsius has over $8.2 billion in loans processed, over $18.9 billion in assets and about two million community members as of Feb. 18</li>
 </ul>
 
</div>



Cryptocurrency lender Celsius has tapped a Royal Bank of Canada alum as its new chief financial officer, the company’s CEO Alex Mashinsky told Blockworks.



Rod Bolger previously held the same title at the Canadian bank, one of the country’s largest. He has over 25 years of experience in traditional finance, with resume stints including Bank of America, Citigroup and PwC.



<div class="wp-block-image"><figure class="alignright size-full"><img loading="lazy" decoding="async" width="300" height="300" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg" alt="" class="wp-image-17763" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=257 257w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=219 219w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Rod-Bolger-celsius-cfo.jpg?w=50 50w" sizes="auto, (max-width: 300px) 100vw, 300px" /><figcaption>Rod Bolger, Celsius CFO | Source: Celsius</figcaption></figure></div>



Bolger replaces Celsius’ Interim CFO Roni Cohen-Pavon, who will remain in his role as the company’s chief revenue officer. Cohen-Pavon stepped in after former CFO Yaron Shalem was suspended last year following his arrest in Israel on suspicion of money laundering, Blockworks <a href="https://cms.blockworks.co/celsius-suspends-cfo-due-to-external-fraud-sexual-assault-investigation/" target="_blank" rel="noreferrer noopener">reported</a>.



Mashinsky told Blockworks that Shalem has since been dismissed.



“[Shalem] was questioned by the police in relation to a matter that happened before he joined Celsius, so we suspended him. And since then, he’s no longer with the company,” Mashinsky said. “It’s not a good situation, but nothing he did had to do with Celsius, so there was no money missing or wrongdoing that occured at Celsius.”



Bolger is tasked with implementing controls to protect client assets and help the company expand globally.



&#8220;I am thrilled for the opportunity to join such a fast growing mission-based company such as Celsius,&#8221; Bolger said in a statement. “I feel fortunate to be able to bring my traditional finance and banking experience to help grow this visionary global company.&#8221;



This move adds to the ongoing trend of talent migrating from other industries, mainly finance, into crypto. This shift has been building for years and is expected to continue to accelerate, Blockworks <a href="https://cms.blockworks.co/the-upside-is-huge-tradfi-talent-flocks-to-crypto/" target="_blank" rel="noreferrer noopener">reported</a>.



Bolger made over $4 million at RBC, according to <a href="https://www.erieri.com/executive/salary/rod-bolger-akvo" target="_blank" rel="noreferrer noopener">data</a> by the Economic Research Institute. He left the bank in September 2021 after five years. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The fact that he wanted to jump into crypto is phenomenal,” Mashinsky said. It’s rare that high-paid executives at banks leave for crypto companies, but Bolger did, which speaks volumes to the crypto industry’s ability to attract talent, Mashinsky added. </blockquote>



“There are CFOs who do number-crunching, and there are CFOs who love creating businesses and, [Bolger] is doing the latter,” he said.



Celsius has over $8.2 billion in loans processed, over $18.9 billion in assets and about two million community members, as of Feb. 18, its website <a href="https://celsius.network/about-us" target="_blank" rel="noreferrer noopener">stated</a>. In November, the company expanded its Series B funding round from $400 million to an oversubscribed <a href="https://cms.blockworks.co/?s=celsius#:~:text=Celsius%20Expands%20its%20Series%20B%20From%20%24400M%20to%20Oversubscribed%20%24750M" target="_blank" rel="noreferrer noopener">$750 million</a>, marking one of the largest funding rounds in crypto history.



Celsius hopes that it can continue to “build that bridge from TradFi to crypto” alongside other crypto-focused companies by bringing in talent from both traditional finance and crypto, Mashinsky commented.



“We don’t want to take the worst habits from Wall Street, we want to bring the best ideas that help crypto…there are trillions of dollars [in traditional finance] that need to cross that bridge, and that’s what is at stake,” Mashinsky said.



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