Prelims

Half Title Page

The Emerald Handbook on Cryptoassets

Title Page

The Emerald Handbook on Cryptoassets: Investment Opportunities and Challenges

EDITED BY

H. KENT BAKER

American University, USA

HUGO BENEDETTI

Universidad de los Andes, Chile

EHSAN NIKBAKHT

Hofstra University, USA

AND

SEAN STEIN SMITH

City University of New York, USA

United Kingdom – North America – Japan India – Malaysia – China

Copyright Page

Emerald Publishing Limited

Howard House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2023

Editorial matter and selection © 2023 H. Kent Baker, Hugo Benedetti, Ehsan Nikbakht, and Sean Stein Smith.

Published under exclusive licence.

Individual chapters © 2023 Emerald Publishing Limited.

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No part of this book may be reproduced, stored in a retrieval system, transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright Clearance Center. Any opinions expressed in the chapters are those of the authors. Whilst Emerald makes every effort to ensure the quality and accuracy of its content, Emerald makes no representation implied or otherwise, as to the chapters’ suitability and application and disclaims any warranties, express or implied, to their use.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-1-80455-321-3 (Print)

ISBN: 978-1-80455-320-6 (Online)

ISBN: 978-1-80455-322-0 (Epub)

Dedication Page

We dedicate this book to Linda and Rory Baker; Pascale and Luciano Benedetti; Parvin, Auzin, and Daniel Nikbakht, and Ximena Romero; and Frederick Smith, Kathleen Stein Smith, Patrick Stein Smith, and Frederick Stein Smith

Contents

List of Figures and Tables

About the Editors

H. Kent Baker, CFA, CMA, is a University Professor of Finance at the Kogod School of Business, American University. He is an award-winning author who has published 41 books and more than 200 academic articles in such journals as the Journal of Finance and Journal of Financial and Quantitative Analysis. Professor Baker has been a consultant or trainer for more than 100 organizations. He has received numerous awards for research, teaching, and service, including University Scholar/Teacher of the Year at American University and the 2019 Distinguished Scholar from the Southern Finance Association (SFA). He was also the SFA’s past President. Professor Baker received a BSBA in Management from Georgetown University and an MBA, MEd, and DBA from the University of Maryland. He also has an MS in Quantitative Methods, an MA in Training and Career Development, a PhD in Educational Administration and Organizational Development, and a PhD in Counseling and Student Development from American University.

Hugo Benedetti is an Assistant Professor at ESE Business School, Universidad de Los Andes, Chile. His research focuses on entrepreneurial finance, venture capital, and FinTech, particularly blockchain technology and blockchain-enabled assets. The Economist, Bloomberg, The Wall Street Journal, Nasdaq, and several crypto-industry publications have featured his research. Professor Benedetti frequently delivers workshops on entrepreneurial finance, venture capital, and FinTech to incubators, angel investor networks, and venture capital funds. He has advised and mentored several FinTech and blockchain projects. Before joining academia, he co-founded a financial advisory boutique and held leadership roles in corporate finance, financial advisory, and venture capital at world-class firms. Professor Benedetti is a Fulbright scholar and received a PhD in Finance from Boston College.

Ehsan Nikbakht, CFA, FRM, is a Professor of Finance at Frank G. Zarb School of Business, Hofstra University. His research focuses on international finance, hedge funds, real estate, and financial blockchain. Professor Nikbakht has published in the Journal of Corporate Finance, Journal of International Accounting, Auditing and Taxation, Journal of Financial Crime, Managerial Finance, Global Finance Journal, and International Journal of Business. He is a Co-editor of The Emerald Handbook of Blockchain for Business. In recognition of his research monograph, Foreign Loans and Economic Performance, Professor Nikbakht received a Stessin Prize for “Outstanding Scholarly Publication.” He received a DBA in Finance from George Washington University.

Sean Stein Smith is Assistant Professor of Business and Economics at Lehman College, City University of New York. He serves on the Advisory Board of the Wall Street Blockchain Alliance, where he chairs the Accounting Work Group. Professor Smith has published numerous articles and several books focusing on the intersection of accounting and emerging technologies, including the Forbes Crypto & Blockchain vertical. He is a member of the NJCPA Board of Trustees and president of the NYSSCPA Manhattan-Bronx chapter. Professor Smith was an AICPA Outstanding CPA of Year (2022). He is on the Advisory Board of Gilded and is a Strategic Advisor to the Central Bank Digital Currency Think Tank. He served as a Visiting Research Fellow at the American Institute of Economic Research with a book due for publication in late 2022. He received a BS, MS, and MBA from Fairleigh Dickinson and a DBA from Capella University.

About the Contributors

Luis Álvaro Abarzúa is a specialist in educational policies for improving learning at the school and professional levels. He currently advises several scientific and technological-based startups. He worked at the Ministry of Education of the Government of Chile, where he supported the implementation of national educational policies. He is the Co-founder of an Ed-tech company present in six countries in the Americas. He is an enthusiastic researcher in blockchain and cryptocurrencies, delivering courses on decentralized finance and raising business ideas oriented to public education. Trained as a sociologist, he has completed postgraduate studies in Multivariate Statistical Analysis and has a Diploma in Applied Studies in Entrepreneurship and Innovation from Stanford University. He is pursuing a postgraduate degree in Innovation from Pontificia Universidad Católica de Chile.

Alevtina Dubovitskaya Ackerer is a Docent at Lucerne University of Applied Science and Arts, Switzerland. Her work as a Consultant at Swisscom and Gilded ranges from client advisory to designing and implementing blockchain-based solutions compliant with the laws and regulations. She has experience in designing protocols for privacy-preserving data aggregation and sharing. She also develops the systems using blockchain technologies, focusing on accountable and trusted interactions and reputation management in dynamic distributed systems. Her research interests are distributed data management for blockchain and cryptographic solutions for providing security and privacy. She has a PhD from the Swiss Federal Institute of Technology in Lausanne.

Damien Ackerer is a Senior Quantitative Researcher at Covario, where he works on data-driven solutions for digital asset management, such as optimal execution algorithms for cryptoassets. He is also an External Lecturer at the Swiss Federal Institute of Technology in Lausanne (EPFL), where he created a course on Machine Learning for Finance. He worked in applied research at major banks in Switzerland, UBS, and Swissquote Bank. In these institutions, he developed methodologies for risk calculation, derivatives margining, portfolio allocation, and systematic trading strategies. He has a PhD in Finance from EPFL. He focused on the pricing of financial derivatives contracts using quantitative models.

Lennart Ante co-founded the Blockchain Research Lab. As a researcher, he evaluates the use of blockchain technology across various sectors and studies the implications and characteristics of cryptocurrencies and their respective markets. He believes that blockchain technology will positively influence business models and society. Thus, he studies the technology’s positive potential and assesses its barriers and risks. Besides his research activities, he is a co-founder of STOKR, which provides asset tokenization and corporate financing via blockchain technology. He studied business administration at the University of Cologne, TU Clausthal, and Universität Hamburg. He obtained a PhD in Finance at the University of Hamburg.

Antonio Brasse is the CEO of BlockQuake, a regulatory-driven digital asset and cryptocurrency trading platform. He has nearly two decades of regulatory, financial, operational, and technology audit experience within the financial services industry. He spent much of his career at AIG, Citi, and New York Life before co-founding BlockQuake. Before delving into cryptocurrency trading, his personal trading experience included stocks, options, and forex. He holds a BS in Accounting and Computer Science from the City University of New York – Brooklyn College. He also has the following certifications: Certified Information Systems Auditor, Certified Internal Auditor, Certified Financial Services Auditor, Certified Anti-Money Laundering Specialist, and Certified Public Accountant.

Christian Caceres is an Adjunct Professor of Corporate Finance and Entrepreneurship Management at Universidad Central and Universidad de las Americas. He has experience in designing, developing, and implementing business models in commercial strategies focused on innovation processes and customer experience. His research concerns the entrepreneurial ecosystem and how to build collaboration and complementation between different stakeholders. He coaches students and companies in several graduate programs at Pontificia Universidad Católica de Chile, and Impulso Chileno, a program supporting small and medium enterprises. He has also developed several ventures, including Kolife SpA and Fintelligence. He has more than 20 years of experience in the financial sector. He is a Civil Industrial Engineer with a Diploma in Computer Science. He has an MBA from Pontificia Universidad Católica de Chile and a Master’s in Finance and Investments from ESE Business School, Universidad de los Andes, Chile.

Duncan Cameron is a management consultant specializing in blockchain technologies, cryptocurrencies, and tokenomics. He is currently a Manager at Capgemini Invent, the innovation, design, and transformation arm of Capgemini. His career spans a range of business and technical innovation work across digital IT strategy, IT operating model design, technical architecture, and project management. He is a former Australian Lawyer and holds an LLB with honors and a BA from Monash University.

Brett Cotler is a tax and cryptocurrency attorney at Seward & Kissel LLP. He advises investment funds, FinTech startups, and public and private companies on US federal income tax and business law matters. He also advises on business transactions, securities offerings, structured finance and securitization vehicles, and joint ventures. He received a BA and JD from Rutgers University and an LLM in Taxation from New York University.

Rocher Cyrus, CPA, CGMA, is the Managing Partner of Global International Management (GIM.cpa) and a Partner of Confirmation (part of Thomson Reuters) and Becker Professional Education. He is also a channel learning partner for the Association of International Certified Professional Accountants (AICPA). Mr. Cyrus was an early adopter of Gilded.finance, a platform unifying fiat and crypto back-office operations. He is also the Owner and Director of Curacao Business Magazine, which has published blockchain and technology-related articles. He has been driving innovation through technology, education, and connectivity with more than 10 years audit experience at PwC and KPMG. He holds a BS in accounting from the University of Curacao. Mr. Cyrus is enrolled in the double degree Global Masters in Blockchain Technologies program from Zigurat Innovation and Technology Business School and the University of Barcelona.

Robinpreet Dhillon is a Research Associate at Third Bridge LLC, New York. Formerly, he was an Equity Analyst at the Student Management Investment Fund, sponsored by Hofstra University. He has been on the executive board member of the Association of Latino Professionals for America chapter. He assisted organization members with professional development by leading weekly interactive meetings and giving presentations. He participated in competitive Olympic Weightlifting events. He received a BBA degree in Finance with honors from Zarb School of Business, Hofstra University.

Russell Dominic is an Australian Lawyer currently undertaking a Master of Financial Technologies at the Swinburne University of Technology. He is also a member of the Digital Law Association of Australia. Previously, he worked with an Australian FinTech company that pioneered using a capital-raising platform to accept fiat and cryptocurrency in Australia. He is now working in a PropTech company. He has first-hand knowledge of legal tech and is enthusiastic about regulation and the impact of emerging technology that could affect organizations and society. He has a Legum Baccalaureus (LLB) at the University of Tasmania. He also holds a Graduate Diploma in Legal Practice from the Leo Cussen Centre for Law.

Peter C. Earle is an Economist in the Research Faculty of the American Institute for Economic Research (AIER). Before joining AIER in 2018, he founded Intangible Economics, LLC, a cryptocurrency and gaming consultancy. He was a trader and analyst at different securities firms and hedge funds in the New York metropolitan area. His research and writing focus on financial markets, monetary policy, cryptocurrencies, and problems in economic measurement. He has written for and been cited in the Wall Street Journal, Bloomberg, Barron’s, Fortune, Forbes, Grant’s Interest Rate Observer, and other media venues. He has written and edited seven books and written hundreds of articles for various research institutes. He has a BS in Engineering from the United States Military Academy at West Point, an MBA in Finance, and an MA in Applied Economics.

Arman Eshraghi holds the Chair of Finance and Investment at Cardiff Business School, Cardiff University, United Kingdom. He is an Editor of the International Review of Economics and Finance, Senior Editor of Finance Research Letters, Director of the Cardiff Fintech Research Group, and an Advisory Board Member of Fintech Wales. His academic research spans finance, accounting, and psychology, including behavioral finance, financial technology, and corporate governance. His work appears in some leading journals in the field. Various media cite his research, including the Financial Times, Washington Post, Harvard Business Review, Forbes, and Bloomberg. He has also contributed to handbooks published by Cambridge University, John Wiley & Sons, Springer, and Routledge. He holds a BEng and MBA from Sharif University and a PhD in Finance from the University of Edinburgh.

Ingo Fiedler is Co-founder of the non-profit Blockchain Research Lab in Hamburg, and an Affiliate Assistant Professor at Concordia University, Montreal. He has authored nine books and over fifty articles in academic journals. He adds to the public knowledge on his main research topics – gambling and blockchain – by commenting in various media outlets and consulting with key policy stakeholders. He holds diplomas in business administration and economics and obtained his award-winning PhD from the University of Hamburg.

Samuel Hyun is the Chief Strategist of Cryptocurrency Markets at BlockQuake, with over seven years of experience trading cryptocurrencies. He has a deep understanding of CEX and DEX trading platforms and cryptocurrency markets. Before joining BlockQuake, he was an Associate in Barclay’s Treasury Liquidity Risk Department and a Senior Analyst in the Internal Audit Group at AIG. He holds a BS in Mathematics and Economics from New York University.

Kristin M. Kalish is an Independent Financial Consultant. She directs an incubator program at Yale University and Georgetown University for young entrepreneurs globally. She is currently a Graduate Research Fellow at Villanova University, pursuing a Master of Science in Finance. Her prior work experience includes internships in private investment management and commodity analysis at a Chinese investment firm. She graduated summa cum laude from Hofstra University, earning a BBA with double majors in Finance and Management. She also holds a BS in Economics from Dongbei University of Finance and Economics.

Sebastián Labbé is a Research Assistant at the Institute of Concrete Structures and Building Materials at Karlsruhe Institute of Technology. His research focuses on structural dynamics, concrete technologies, and modeling impact loads due to railway traffic. Building and Construction Materials and The German Federal Railway Authority have featured his research. He is a blockchain enthusiast due to his experience with personal finance while living abroad, focusing on the technology, applications, and teaching of DeFi. He is a CHILFITEC and DAAD Alumni and received a Civil Engineering and Master of Engineering degree from Pontificia Universidad Católica de Chile and an MS at École Centrale Paris.

Paul P. Momtaz is a Professor of Financial Economics at the House of Finance at Goethe University Frankfurt. He holds a Chair of Private Equity and the Metzler Professor of International Finance at the Wharton School at the University of Pennsylvania. His research focuses on decentralized and private markets, particularly FinTech, entrepreneurship, and innovation economics. He has published in journals such as the Journal of Corporate Finance, Strategic Management Journal, Strategic Entrepreneurship Journal, and Journal of Business Venturing. He received a PhD in Economics and a Habilitation from the University of Hamburg, a Diploma in Applied Mathematics from the University of Paris, and an MPhil in Innovation, Strategy, and Organization from the Judge Business School at the University of Cambridge. He is also a PhD candidate in Finance at the University of California Los Angeles.

Kiran Pandian is a Graduate Student in Finance at the Frank G. Zarb School of Business at Hofstra University. He is a recipient of Dean’s Scholarship and conducts blockchain research. He also mentors students in Blockchain Technology. He also holds an MS in Industrial Engineering from the University of Wisconsin, Madison.

Daniel Pfeiffer is an Equity Research Analyst at J.P. Morgan, in New York, where he covers Internet stocks. He was also an Equity Research Intern at Oppenheimer & Co. Inc. where he researched digital asset companies. He was a Team Leader for Adirondack Cup Competition and the CFA Institute Investment Research Challenge. He was the Coordinator of the Bloomberg Trading Room at the Frank G. Zarb School of Business, Hofstra University, where he received a BBA degree with a major in Finance and a minor in Accounting.

Kerem Proulx is an Independent Financial Consultant with experience working in roles involving operational risk, leveraged finance, and credit risk. He focuses on modeling tail risk using computational methods. He has a BBA in Finance from the Frank G. Zarb School of Business at Hofstra University. He received high honors for his research in applying machine learning methods to forecasting equity volatility.

Samson Qian is a Master of Finance candidate at the MIT Sloan School of Management. He was a researcher in the blockchain group at the San Diego Supercomputer Center. He engaged in data science and machine learning at the Halicioglu Data Science Institute at University of California, San Diego. As a quantitative research intern at Rebellion Research, he researched intraday patterns and assessed crypto trading strategies. He holds a BS in Data Science from the University of California, San Diego.

Gabriel Rodríguez-Garnica is an Assistant Professor of Financial Economics, Accounting, and Digital Finance at the Business Department, University Carlos III Madrid, Spain. His research focuses on entrepreneurial finance, behavioral finance, and FinTech, particularly crowdfunding and cryptoassets or blockchain-enabled assets. He was a Visiting Research Fellow at the Questrom School of Business, Boston University, where he continued his research on FinTech. He previously studied at the University of Technology Sydney, Centennial College Toronto, Middlebury Institute of International Studies at Monterey, and the University of La Rioja. He is a PhD candidate in Finance at University Carlos III Madrid, Spain.

Dimitrios Salampasis is the Director, Master of FinTech, and Lecturer, FinTech Innovation and Entrepreneurship, the Swinburne University of Technology in Melbourne, Australia. He is a Visiting Professor of FinTech at the University of Québec at Rimouski, Canada, and a Blockchain and FinTech Fellow at the Singapore University of Social Sciences. He is also a Visiting Faculty at the School of Management in Fribourg, Switzerland. His research interests concern the organizational, human, technological, and societal sides of FinTech innovation. He is a mentor and advisor for start-ups and scale-ups in Australia and abroad. He is regularly involved in speaking engagements and advisory work with international stakeholders. He has a PhD in Industrial Engineering Business and Management from the Lappeenranta University of Technology in Finland and two Executive Program Certificates from Harvard Business School Online and Columbia Business School.

Ibrahim E. Sancak is a Professor of Finance at the ZWIRN-Research Center of the Ostfalia University of Applied Sciences (Germany) with more than twenty years of hands-on experience in finance. He served as the founding director of the Market Oversight and Enforcement Division at the Capital Markets Board of Turkey. Since joining Ostfalia in February 2019, he has been actively conducting scientific research in sustainable finance and digital finance and teaching sustainable finance courses. In 2020, he took part in delivering a sustainability management guide for the “Bankenfachverband,” a key financial industry association in Germany. Dr. Sancak is the lead editor of “Essential Concepts of Sustainable Finance: An A-Z Guide,” a book project approved by the Routledge Editorial Board in February 2022. He holds a BSBA and MBA from Ankara University (Turkey), an MSF from the George Washington University (the U.S.), and PhD in banking from Marmara University (Turkey). Dr. Sancak also holds three certificates from the U.S. Securities and Exchange Commission (SEC) on market regulation and supervision. He is an academic member of the European Corporate Governance Institute (ECGI).

Patrick Schueffel is an Adjunct Professor at Fribourg’s School of Management in Switzerland. His research focus is on banking, finance, and entrepreneurship. He also works as an advisor and founder on crypto projects spanning Europe to Asia. Before a recent three-year stint in Singapore, he worked in banking in Zurich, Switzerland, as the Chief Operating Officer of Saxo Bank. He was a member of the Senior Management at Credit Suisse’s headquarters in Zurich, where he headed a global innovation team. He has published in scientific journals and practitioner outlets. He holds a PhD from the University of Reading and postgraduate degrees from Henley Business School, the Norwegian School of Economics, and the University of Mannheim.

Philip C. Sookram, CPA, is an Assistant Professor of Accounting at the Frank J. Guarini School of Business, Saint Peter’s University, and Director of the Master of Science in Accountancy Graduate Program. He is an active member of the New York State Society of CPAs (NYSSCPA), serving as a Manhattan/Bronx Chapter Board Member and Chairman of the Manhattan/Bronx Chapter NextGen Committee. He is also involved in the New Jersey Society of CPAs (NJCPA), serving as a member of the Emerging Leaders Council. In recognition of his service, he received the Under 40 Award at the NYSSCPA in 2020. He is a recipient of the NJCPA Ovation Award in the Emerging Leader category in 2020. He has an undergraduate degree in Accounting from the University of Miami and a MAcc from Rutgers Business School — Newark and New Brunswick.

Andrew C. Spieler, CFA, CAIA, FRM, is the Robert F. Dall Distinguished Professor of Finance in the Frank G. Zarb School of Business at Hofstra University. He has published in Real Estate Economics, Journal of Real Estate Finance and Economics, Journal of Real Estate Portfolio Management, Global Finance Journal, Journal of Applied Finance, and other journals. He served as Chair of the Derivatives Committee at the New York Society of Securities Analysts. He also serves as Co-Director of the annual real estate conference sponsored by the Wilbur F. Breslin Center for Real Estate Studies. He received a BA in Mathematics and a BS in Economics from Binghamton University (SUNY), an MS in Finance from Indiana University, and an MBA and PhD in Finance from Binghamton University (SUNY).

John Ward is a Managing Director in Kroll’s New York office and is a member of the Alternative Asset Advisory Group and the Portfolio Valuation practice. He has more than 30 years of financial and investment management experience. He evaluates operational risks for hedge funds, private equity and private credit funds, cryptocurrency funds, real estate funds, and venture capital funds. He has experience in various investment strategies and large institutional investment advisors and emerging managers. He works with endowments, foundations, public and private pensions, sovereign wealth funds, and family offices to undertake due diligence projects supporting their investment mandates. He develops best practices in investment due diligence and supports their efforts to implement institutional best practices throughout their organizations. He has a BSBA in finance and marketing from the University of Florida. He is also a Certified Due Diligence Analyst and a Board Member of the Investment Management Due Diligence Association.

David M. Waugh is the Managing Editor at the American Institute for Economic Research (AIER). He is also a Don Lavoie Fellow with the Mercatus Center at George Mason University. Before joining AIER in 2020, he worked as an Associate at S&P Global Market Intelligence. His work focuses on cryptocurrencies, financial markets, political economy, and higher education. RealClearMarkets, the Future of Freedom Foundation, the James G. Martin Center for Academic Renewal, ZeroHedge, and other outlets have featured his work. He received a BA in Economics from Hampden-Sydney College. While at Hampden-Sydney, he was a Senior Fellow with the Center for the Study of Political Economy and worked in the Economics Department as a Teaching Assistant.

Giga Zukhubaia is a graduate student in Operations Research at Fun Foundation School of Engineering and Applied Science, Columbia University. He worked as a Trading Research Analyst for the GreenEco Interments in Moscow, Russia. He also served as an Acting Chief Operating Officer for Country Cleaners Corporations through the Hofstra IdeaHub Startup Incubator, Center for Entrepreneurship. He received a BBA in Finance from Hofstra University and the Dongbei University of Finance and Economics in China.

Acknowledgments

“To write is human, to edit is divine.”

Stephen King

Publishing a book is a team effort. Therefore, we have several major players to thank for their roles in this book project. For this edited book, the chapter authors created the content. We are grateful to them for devoting countless hours to writing and revising their chapters. Our role as editors was to honor their intention while helping to enhance each chapter’s clarity. We wanted the book’s format and style to be internally consistent so that it is more than just a collection of chapters from different authors. Michael Lee notes, “The first draft reveals the art; revision reveals the artist.” We also appreciate the high degree of professionalism exhibited by Emerald Publishing’s staff, especially Charlotte C. Maiorana (Vice President, Emerald Books), Kirsty Woods (Contact Development Editor), and Pavithra Mutha (Production Manager). We also thank S. Rajachitra, Lead Project Manager, KnowledgeWorks Global Ltd. We appreciate the support provided by our respective institutions: Kogod School of Business at American University; ESE Business School at Universidad de Los Andes, Chile; Frank G. Zarb School of Business at Hofstra University; and Lehman College at the City University of New York. We thank our families for their support. Finally, we dedicate this book to Linda and Rory Baker; Pascale and Luciano Benedetti; Parvin, Auzin, and Daniel Nikbakht; Ximena Romero; and Frederick Smith, Kathleen Stein Smith, Patrick Stein Smith, and Frederick Stein Smith.