Crypto: The Birth Of An Asset Class

Interviews, News | July 1, 2019 By:

Lewis Fellas is the Co-Founder and Chief Investment Officer at Bletchley Asset Management and a member of Caspian’s board of strategic advisors.

In his advisory role, Fellas works closely with Caspian CEO and Co-Founder Robert Dykes and the board on finding ways to give institutional firms greater access to the digital asset class. Fellas has over 19 years of investment, research and trading experience, and was a portfolio manager at Harvard University’s $39.2 billion endowment fund, before launching digital currency-focused asset manager Bletchley Park Asset Management in 2017.

BLOCK TRIBUNE: You launched digital asset hedge fund Bletchley Park Asset Management in 2017 after a long career in traditional asset management. What prompted you to take this step?

LEWIS FELLAS: I’ve been in crypto and Bitcoin from a very early stage. I was first alerted to Bitcoin during the financial crisis, tinkering with desktop mining, and then followed the trajectory of Bitcoin closely. But it’s only been since 2016 that I could see the potential genesis of a new asset class, where blockchain technology could be applied to the tokenization of equities and other financial assets. To me that seemed like a great entry point – it’s very rare that we see the birth of an asset class.

BLOCK TRIBUNE: Why were you attracted to the growing cryptocurrency sector specifically?

LEWIS FELLAS: For the first time in history, with the evolution of technology we now see the potential of blockchain to disintermediate centralized recording parties and affords us the opportunity to imagine different profiles for financial instruments. People can transact on their own time, rather than being beholden to the business hours of financial institutions, and can trade new types of financial instruments. It’s one of the most exciting financial innovations ever seen.

BLOCK TRIBUNE: What are the biggest problems still faced by institutional investors wanting to invest in crypto?

LEWIS FELLAS: If you go onto any forum and you click on the hurdles to institutional adoption, everybody out there will say a few things. They’ll say there is a lack of institutional infrastructure, a lack of a secure custody solution, and a lack of regulation. That’s only part of the puzzle because yes, those things matter, but there have been huge inroads to tackle those concerns. What’s keeping many institutions still on the bench, however, is the fact that compelling investment opportunities that are of a significant size and scale are yet to emerge. Right now, it’s easy for institutions not to invest, citing infrastructure and regulatory issues.

But this stance might change if they’re presented with opportunities with fantastic risk-reward profiles. Right now, I think the big and compelling value propositions are still six to nine months off.

BLOCK TRIBUNE: What is your outlook for institutional investments in bitcoin and other crypto assets over the next 12 months?

LEWIS FELLAS: I think we’re going to see the parting of the ways between institutionally-focused players and some of the crypto evangelists who are looking for crypto to change the world and become an alternative to fiat currencies. From this we’ll see more regulated blockchain-based equity economic models running on regulated exchanges, and I think these are the projects that are really going to attract the institutional investor.

The institutional investor may have an interest in trading Bitcoin because it is still an extremely interesting economic experiment in that it’s the first established non-state backed electronic monetary system. That can’t be ignored, but where that value settles is very hard to determine – it’s pure supply and demand, and greed and fear. Putting any value on Bitcoin will always be challenging, whereas I think the tokenization of assets is likely to appeal to institutions, because all we’re really doing is adding a crypto element to an asset to which we can apply standard valuation methodologies.