Disadvantages of investing in cryptocurrencies

The analysts’ research primarily focuses on institutional investors, that is, the same large companies that can be found among the indices provided by MSCI Inc. The very fact that large institutions have started investing heavily in crypto has already led to the rapid growth of the digital asset industry, the experts noted in their recent report. Here’s a rejoinder from the analysts, in which they share their take on the situation. The quote is cited by Decrypt.

While most cryptocurrencies are speculative instruments with questionable fundamental value, some have shown simply unimaginable returns.

Big companies are buying Bitcoin

The growing presence of crypto in investment portfolios could also lead to new challenges for companies, including environmental, social and governance nuances, as well as accounting and security aspects. According to MSCI vice-president Harlan Tafford, some issues may be quite trivial, but still present significant risks for large organisations.

For example, who in a company knows the password to access a cryptocurrency wallet that holds, say, a billion dollars in bitcoin investments? And how can it all be traced?

Note that if a company's blockchain address were disclosed, it would be possible to trace all transactions made through it. This is unlikely to happen, though, because executives are interested in at least temporary anonymity for their investments or actions.

Another problem for companies is the lack of experience in the crypto arena among senior executives. Out of some 6,500 board member biographies found by MSCI, only 79 people at 64 companies had any formal involvement in crypto projects, with only 1,114 having cybersecurity experience. As experts point out, all of this could be a good opportunity for digital asset specialists, as their skills will soon be very expensive in the job market.

Cryptocurrency specialists will become very valuable in the job market

While investment in crypto has already reached institutional levels in the US, the Bank of Russia is trying to reach out directly to anyone investing in digital assets. According to Elizaveta Danilova, head of the Central Bank’s Financial Stability Unit, the Bank of Russia is surveying cryptocurrency investors to estimate the volume of domestic investment in crypto. Here is her quote on the matter, published by Cointelegraph.

We need to work on both gathering information and raising public awareness of the risks of such investments, which are not backed by anything.

Danilova argues that the cryptocurrency market lacks transparency not only in Russia but also in other jurisdictions. She also points to the higher risks of derivatives such as futures or Bitcoin ETFs.

The problem is that the market is cross-border. People can invest in cryptocurrency through foreign intermediaries. Some major foreign exchanges trade cryptocurrency derivatives, which carry huge risks.

Bank of Russia

The Bank of Russia’s efforts to analyse local volumes of crypto investments comes amid a recent reluctance of Russians to invest in banks. According to Danilova, at least RUB 2.6 trillion has not been returned to banks since the massive withdrawal of funds in 2020 due to the COVID-19 pandemic.

It turns out that investing in crypto has become extremely popular in Russia. According to a survey conducted by the Russian Association of Forex Dealers, up to 77 per cent of Russian investors prefer Bitcoin to traditional investment vehicles like gold or stocks.


We believe that investing a large percentage of one's own portfolio in cryptocurrencies does create volatility, as coin rates are very unstable. However, it also provides the opportunity for greater earnings, which are usually seen over the long haul. So it is to be hoped that many companies will still decide to move some of their savings into digital assets. This trend clearly seems promising right now.


What do you think about it? Join in a discussion of the news in our Millionaires’ Crypto Chat. There we will talk about other topics related to blockchain and decentralisation.