Inside Politics

PWC targets investors in crypto mart

Tuesday, August 3rd, 2021 00:00 |
Cryptocurrency. PD/file

Global investment advisory firm PWC has set up a crypto team to woo high net-worth individuals and institutional investors in what appears to be a huge legitimisation of the controversial market but Kenyan investment managers say the local market is  not ready.

PwC has put together a one-stop shop offering, focused on crypto services across its various lines of services in a move to cash in on the crypto goldrush clouded in controversy.

“We believe we have a role to play in the development of the crypto ecosystem.

Our goal is to service your needs in the best possible way to allow you to focus on your business,” PWC said in its latest report.

PwC said its crypto clients span the entire crypto spectrum including crypto exchanges, crypto funds, Initial Coin Offerings (ICO), Security Token Offerings (STO).

Others are tokenisation projects including stable coins and asset backed tokens traditional financial institutions entering the crypto space governments, central banks, regulators and other policy makers looking at crypto.

The Central Bank of Kenya in 2015 issued a notice warning the digital currencies are not a legal tender. 

“The purpose of this circular therefore is to caution all financial institutions against dealing in virtual currencies,” the Central Bank said at the time.

Currency transactions

Kenya is among the top three countries in Africa with high peer to peer crypto currency transactions, according to a report by Chainanalysis, a crypto research platform sponsored by the UN.

Currently, regulated institutions in Kenya are not allowed by law to invest public money in cryptocurrencies but industry players say it is just a matter of time.

“Kenyan institutions are only allowed to invest 5 per cent of their capital overseas, they can possibly invest in crypto by investing with institutions like Goldman Sachs and others but not directly,” said Rina Hicks, the head of operations at Faida Investment Bank.

The company, however, did not mention free floating cryptocurrencies such as bitcoin, ether and many others perhaps to avoid being sucked into controversy.

“Please contact us to get a copy of our crypto value proposition to see how we can help make your project a success,” the global advisory firms said.

The company will seek to advise tax agencies on how to tax crypto transactions and also help central banks implement central bank digital currencies.

It also provides legal services to companies on how to craft legal contracts governing transactions in the sector.

Hedge funds

PWC reveals returns on hedge fund crypto activities shading light on heavy outsized returns in the crypto trading sector. Most hedge funds deal in bitcoins, ether and other volatile units.

“We estimate that the total assets under management (AuM) of crypto hedge funds globally increased to nearly $3.8 billion in 2020 from $2 billion the previous year,” the company said in its crypto report.

Unlike traditional investment options whose returns on investment have continued to grow thin due to high competition and widespread market information alongside the entry of high frequency trading, crypto currencies provide huge margins on trades opening a new frontier of high returns.

PWC is following in the footsteps of big banks such as Goldman Sachs and corporates who have decided to include bitcoins in their treasury reserves.

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