Although the Bank of New York Mellon entered Bitcoin (BTC), the CEO of one of the company’s asset management departments is still skeptical of the significant risks associated with the world’s largest cryptocurrency.
Francesca Fornasari, head of currency solutions at Insight Investment, a subsidiary of the Bank of New York Mellon, believes that Bitcoin may not be suitable for most institutional investors due to extreme volatility, low liquidity, governance issues, and environmental-related risks.
In an interview with Bloomberg on Tuesday, Fornasari stated that Bitcoin may be more difficult to assess than gold due to large price fluctuations, which further complicates its response in an inflationary environment.
“At the end of the day, you should be aware of the fact that if you’re investing in Bitcoin, there’s a whole number of different factors and considerations that are going to affect the value of your investment, that have nothing to do with inflation or inflation hedges,” she said.
Forex experts say that Bitcoin’s slow and expensive transactions may be the main obstacle to mainstream adoption. Fornasari said: “We are skeptical of Bitcoin’s ability to take over as a means of payment.”
However, according to Fornasari, Insight Investment is optimistic about altcoins or other cryptocurrencies other than Bitcoin, and expects such digital assets to increase, especially those that address transaction speed and cost, energy usage, and volatility.
Insight Investment is one of the world’s largest asset management companies, managing approximately US$1 trillion in assets. Since the acquisition of Bank of New York Mellon from the Lloyds Banking Group in 2009, the company has been a subsidiary of Bank of New York Mellon.
Although the Bank of New York Mellon announced in February this year that it plans to custody and transfer bitcoin and other cryptocurrencies as an asset manager, the bank is still actively entering the bitcoin field, but the company is skeptical of bitcoin. The company also argued that the poor performance of one of the exchange-traded funds was due to a lack of exposure to companies investing in Bitcoin.