Cryptos March On, Amid Warnings To US Senate

The march of the cryptocurrencies, monitored and reported regularly in this News section, is relentless.

Zodia Custody, a digital asset joint venture operation between Standard Chartered and Northern Trust, has received regulatory approval from the Financial Conduct Authority and is now providing commercial services to clients as a cryptoasset business.

Zodia Custody is one of nine cryptoasset businesses granted FCA registration under the UK’s Money Laundering Regulations and has commenced commercial operations following a period of testing.

Aimed at the institutional market, Zodia Custody will initially provide safekeeping for the most commonly traded crypto currencies – bitcoin and ethereum, followed by XRP, litecoin and bitcoin cash – which collectively account for around 80% of the total assets traded on the major crypto exchanges.

Professor Angela Walch… has been studying crypto since 2013. Professor Walch believes that crypto and other digital assets “pose significant risks currently, and the risks they pose increase as they permeate the traditional financial system and more and more people invest.

“The financialization we have seen of cryptocurrencies and crypto tokens means that a problem in a single cryptocurrency (such as, for example, a software bug that causes the Ethereum network to fork (or split)) could ripple through all the financial products tied to that cryptocurrency, as well as all investors in the cryptocurrency, and companies that provide other services and products related to the cryptocurrency,” said Walch. “Further, since many investors appear to view digital assets as an asset class, a flaw in a flagship cryptocurrency like bitcoin or ether could drag the rest of the digital asset markets down as well. Although we have not yet seen ripple effects from the extreme price movements that seem endemic to digital assets, we cannot rule out such effects in the future, particularly as they become more widely used and more integrated into the traditional financial system.”

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 £24 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 2020/21 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.