digital wallets

‘Wall of worry’ led to digital wallets, blockchain tech ignored: Cathie Wood

Market uncertainty calls for an opportunity to take advantage of disruptive innovation, which has historically “gained share during turbulent times,” said the ARK Invest CEO.

ARK Invest CEO Cathie Wood believes that digital wallets and blockchain tech were among the “game-changing innovations” that the equity markets largely ignored in 2022.

In a Jan. 12 blog post on the ARK Invest website, Wood suggested that the equity market faced a “wall of worry” in 2022, caused by fears of entrenched inflation and higher interest rates and largely ignored some innovative technologies.

Wood highlighted that digital wallets are “replacing cash and credit cards,” noting that they overtook cash as the top transaction method for offline commerce in 2020.

Further arguing that digital wallets should not be overlooked, Wood noted that they also accounted for approximately 50% of global online commerce in 2021.

After the most difficult year ever in the equity market for innovation-based strategies, we just sent our clients this letter highlighting the breakthrough technologies that already are transforming the world. In our view, innovation solves problems! https://t.co/YdBiIZhY0D

— Cathie Wood (@CathieDWood) January 13, 2023

Wood suggested that the recent collapse of crypto exchange FTX hasn’t affected the larger mission of what public blockchains were intended for. She noted:

“Public Blockchains like Bitcoin and Ethereum have not skipped a beat in processing transactions.”

Wood highlighted how the FTX collapse educated crypto investors to be more diligent with where they store their crypto assets, saying that the share of trading volume on decentralized exchanges, which allow for trading without a central intermediary, rose 37%, jumping from 8.35% to 11.4%.

Wood said she has never, in her “30 years working in portfolio management,” experienced such unstable market conditions, saying she has never seen “markets this dislocated.”

The CEO suggested that the economy is facing a challenging situation, with a decrease in money supply, a decline in commodity prices and the “unwinding” of bloated inventories, which indicate a slowdown in inflation and possibly even deflation.

Wood noted in the report that the fear is high in investors stating that investors are holding “high levels” of cash not seen since the 9/11 crisis in 2001.

Other “game-changing” innovations that Wood believed the equity market “largely ignored” in 2022 included artificial intelligence, electric vehicles, space exploration and 3D printing.

She believes that despite the uncertainty in the market, disruptive innovation technologies that “solve problems” have historically “gained share during turbulent times.”

Recent FTX hacks prove it was right to ‘secure’ its assets: Bahamian regulator

The Securities Commission of The Bahamas said the continued hacking attempts on FTX prove it made the right call to “secure” FTX’s digital assets.

The Securities Commission of The Bahamas says the continued “hacking attempts” on FTX’s digital assets prove they made the right call to take control of the exchange’s assets on Nov. 12.

In a statement on Nov. 23, the commission said the fact that FTX’s “systems were compromised, and that they continue to face new hacking attempts – reinforces the wisdom of the commission’s prompt action to secure these digital assets.”

On the same day that FTX filed for bankruptcy on Nov. 11, the crypto community began flagging roughly $266.3 million worth of outflows on wallets associated with FTX. By Nov. 12, the outflows had ballooned to more than $650 million.

Blockchain analysts have suggested that $477 million is suspected to have been stolen, while the remainder was moved to secure storage by FTX themselves.

In its latest statement, the commission said while it suspended FTX Digital Markets (FDM) license to conduct business and stripped its directors of their power on Nov. 10, this was not sufficient in protecting customers and creditors of FDM.

The commission further explained that due to the “nature of digital assets” and “the risks associated with hacking and compromise,” it sought an order from the Supreme Court to transfer all digital assets from FTX to the commission for “safekeeping.”

The latest statement reinforces recent analysis from blockchain analytics firm Chainalysis, and Twitter crypto sleuth ZachXBT, who said that on-chain evidence suggests that the actions of the Bahamian regulator is not related to the alleged “FTX hacker.”

The commission has also lashed out at the Nov. 17 emergency motion by FTX Trading Limited, which called out the “Bahamian government” for “directing unauthorized access to the Debtors’ systems” after the commencement of Chapter 11 bankruptcy filings.

“It is unfortunate that in Chapter 11 filings, the new CEO of FTX Trading Ltd. misrepresented this timely action through the intemperate and inaccurate allegations lodged in the Transfer Motion,” the Commission said.