How does an escalating crypto exposure affect direct and indirect investments?

The portfolios of those with low risk are mostly centered around bonds and low risk equity investments crypto. These conservative investors are also staying away from volatile asset classes like cryptocurrencies. In addition, “green” investors stick to environmentally, socially and governance-compliant (ESG) investments.

A recent study shows At least 52 listed companies according to the MSCI ESG rating are exposed to cryptocurrencies as of September 2021. Therefore, institutional investors and private investors are generally exposed to more “crypto risks” than they expected or not.

This is taken into account against the background of the escalating  exposure and affects both direct and indirect investments. In general, investing in companies or indices involves exposure to Bitcoin.

BILLIONCryptocurrency exposure escalates | Source: MSCI

Another report from Gartner shows 85% of investors consider ESG factors when investing in 2020.

As a result, this large segment can be affected by potential or existing ESG risks in cryptocurrencies. The report said exposure to cryptocurrencies poses environmental risks like carbon emissions and e-waste, social risks related to transactional disputes, and governance risks like cybersecurity and anti-money laundering policy.

MSCI has too explain in a recent podcast that companies with high exposure to cryptocurrencies have a market cap of about $ 7.1 trillion, or about 6.6% of market cap through “escalated exposure”.

Research shows that audiences range from “pure companies like Coinbase and Online Coin Exchange to component manufacturers like Nvidia”.

“There are also companies like Facebook that do not generate any income with coins, but want to monetize the system.”

Additionally, companies like MicroStrategy, Tesla, Galaxy Digital, and Square have significant exposure to Bitcoin among the largest public companies. In addition, with the adoption of funds like the Volt ETF, there seem to be more “indirect” exposure options.

Meanwhile at a developments Elsewhere, environmentalists are protesting against Bitcoin mining in New York power plants. Because of the climate crisis and energy shortages, proponents of the New York Policy for Earthjustice have called for the mining company’s license to be revoked. Greenidge’s decision to renew its license is pending with the New York State Department of Environmental Conservation (DEC).

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Minh Anh

According to AMBCrypto

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