Kyle Bass, founder of hedge fund Hayman Capital Management, spoke with Bloomberg recently about global macroeconomic issues ranging from the IMF, to the investment opportunity in Greece to China’s economy. He also touched on his impressions of bitcoin and upcoming ICOs. Bass said he’s spent a good amount of time in the last six months trying to understand the algorithms and technology underpinning bitcoin.
Bass doesn’t have exposure to bitcoin, but he wishes that he did, calling cryptocurrencies a “real asset class” that will work over time. Nonetheless it seems he’s remaining on the sidelines for now amid scams tied to certain upcoming ICOs that are going to find investors on the losing side of the bet.
His thoughts give perspective to the size of the cryptocurrency market, whose relative value he placed at USD 100 billion compare to trillions of dollars for global cash. The question is what's the value of cryptocurrencies, and he's not sure of the answer. Meanwhile he says institutional investors only have "nominal" exposure to bitcoin at this point, which suggests the potential for the leading cryptocurrency and upcoming ICOs has largely been untapped.
“I think there's a digital rold rush that going on. I think a whole bunch of people are going to lose a lot of money. These ICOs, you're going to see a bunch of them go compeltely broke; a bunch of them are frauds. And that's going to be problematic for people who rushed in," said Bass adding that there's a "mania" unfolding currently.
Meanwhile, the IMF was among the topics Bass discussed in the Bloomberg interview though not in the context of cryptocurrencies. The IMF, however, has been giving some thought to a Special Drawing Rights (SDR) digital currency. Such an IMF coin would theoretically bump the US dollar from its central position as the global currency. The Wall Street Journal describes the SDR currency as a “cryptocurrency mutual fund for central banks,” though it doesn’t appear any IMF coin ICO is in the works just yet.
IMF director Christine Lagarde during recent comments to the Bank of England said that digital currencies including bitcoin didn’t pose much of a threat or challenge to fiat currencies or central banks. She urged the BOE to not “dismiss virtual currencies,” likening them to the advent of PCs and the experts who then argued the technology would never catch on.