Bitcoin Surge Leads Assault On Mainstream Finance

As promised, there’s more from the bitcoin-led assault on mainstream finance. This set of prognostication comes from our friends at Crowdfundinsider. Tomorrow we’ll be visiting the regulation of cryptos and digital tokens, plus the emergence of Decentralised Finance (DeFi).

Bitcoin (BTC) and other cryptocurrency platforms such as Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), Binance Coin (BNB), Chainlink (LINK), and Polkadot (DOT) are being increasingly adopted by a diverse group of users across the globe.

Many more institutions and fairly large publicly listed companies like MacroStrategy Incorporated entered the crypto space in 2020, which was marked by great socio-economic uncertainty due to the COVID-19 outbreak.

The digital assets market cap currently stands at over $860 billion, with Bitcoin dominance reaching nearly 70% – which means that the flagship cryptocurrency has captured the majority of the nascent market with a market cap of over $585 billion at the time of writing. The Bitcoin price continues to set new all-time highs and is presently trading at around $31,667, according to CoinGecko data.

Bitcoin is not the only crypto-asset that’s surging this year. Ethereum, the world’s second-largest digital currency, now has a market cap of over $117 billion and ETH is trading at more than $1,000 for the first time since early 2018 when it briefly surged to around $1,400 before crashing hard along with the rest of the crypto market a couple of years back.

While we have seen similar prices during the historic crypto market bull run of 2017 (and now much higher BTC prices), there’s a lot that has changed fundamentally since that time. It can be argued that the late 2017 and early 2018 rally was based on a lot of speculation and driven by many eager retail traders.

But after the Bitcoin and larger crypto market crashed badly during the extended bear market of 2018, most of the companies and platform developers began re-evaluating their strategies. At that time, there were a number of serious issues that needed to be addressed before the crypto market could rise again and gain more meaningful adoption among the masses.

As most industry participants would know, there were numerous scams carried out under the guise of initial coin offering (ICOs) and this trend continued later on (for the most part) in the form of initial exchange offerings (IEOs). Like ICOs, IEOs were more about “speculation and trading” than fundraising and project development, according to an extensive blockchain industry report.

These fraudulent activities led to losses worth billions of dollars for unsuspecting investors. The crypto space has endured some of the largest scams ever orchestrated including Bitconnect, the multi-billion dollar PlusToken scam, among many others. These malicious and highly damaging activities made it abundantly clear that the crypto industry was badly in need of a proper and clear regulatory framework.

Historical Performance And IFISA Process Guide

  • Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). 

That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.

  • Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.

All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.

So here’s our guide to the process:

  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.

The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.

Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.

Risk: Security, Access, Yield

Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.


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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.