With cryptocurrencies finally finding its way to the institutional investment channels, anyone would believe that the breakthrough moment is almost here.
Earlier this week a new digital asset investment fund was launched by Morgan Creek Digital and Bitwise. The new offering was in partnership with Bitwise and will allow clients of the investment house to invest in major cryptocurrencies.
According to the report, the new investment funds will cover all the top cryptocurrencies by market cap. However, coins such as XRP, TRX, NEO, and NEM are likely to miss out on this massive investment into cryptos.
The reasons are very obvious and one that was noticeable even before the foundation of these blockchains were laid.
Premining Is a Roadblock
Most cryptocurrencies such as BTC and LTC are mined by the use of computing power to solve complex mathematical problems. This process ensures that the network is decentralized. It also makes it possible for miners to receive new units of the currency as a reward for their contribution to maintaining the network.
This characteristic is quite the opposite to what blockchains such as Ripple and TRON offer. Cryptocurrencies on these networks are produced at the birth of the network, and no further units are created. Moreover, just as is the case with Ripple, the owners can hold significant shares of the coin’s total supply.
It is an unusual centralization for a blockchain and introduces the risk of owners manipulating market prices. In fact, Ripple Labs have had to face several lawsuits that label the XRP as a “security” rather than a cryptocurrency.
Will this delay the institutional and mainstream adoption of these cryptocurrencies? That could be the case.
Morgan Creek Digital Asset Fund Leaves XRP On The Sideline
“If there’s a central party that owns 30% or more of supply, then we withhold those from the index because we think that introduces a lot of additional risks that may not be there if it was a more decentralized network.” – Anthony Pompliano
True to the words of the Morgan Creek Digital partner, regulatory concerns about the securities status of tokens like XRP could push investors away from the new Index Fund. It is a “potential risk” and one that cannot be allowed to hurt the adoption of other decentralized coins.
As mentioned earlier, other top pre-mined cryptocurrencies such as TRX, NEM, ICON, and NEO will likely be excluded from the new Index. There is even no guarantee that they will be added to similar investments channels in the future.
The Morgan Creek Digital Asset Investment Fund will undoubtedly bring in institutional money into the crypto markets. Bitcoin, Ethereum, Litecoin, Dash, Bitcoin Cash, Monero all meet the requirements for being added to the Index.
But XRP and co will miss out on funding opportunities provided by an institution that manages around USD 1.5 billion in assets. Worse still, it could miss out on future investments if decentralization remains the major criteria for listing on such Index.