(Bloomberg) -- Modular Asset Management is developing an environmental, social and governance framework for investing in cryptocurrencies, an asset class that often runs into trouble on all three counts.
Singapore-based Modular, which manages $1 billion under its Asian Macro Strategy, is working with crypto asset-class specialist Daniel Liebau and his firm Lightbulb Capital to develop a strategy that integrates proprietary ESG metrics into the crypto investment process. Modular's partners have started deploying their personal capital into the portfolio, which may open to external investors next year, according to a statement.
“Sustainability and crypto are the two dominant investment themes of our times and we believe they have to be compatible,” said Matthew Cannon, co-founder at Modular, in the statement. “We are building a strategy that rethinks ESG metrics for crypto investing and integrates them with recognized indicators for the value and suitability of different tokens.”
Crypto has taken off in the past year in terms of both price and development, with areas like non-fungible tokens (NFTs) and decentralized finance (DeFi) soaring in popularity. However, the space is subject to significant debate about issues like concentration of ownership for many tokens as well as energy consumption and gender imbalance, making it ripe for evaluation from an ESG perspective.
Modular's crypto portfolio is separate from its Asian Macro Strategy fund, according to the statement, and its investment objective is to outperform the broader crypto asset class over a medium- to long-term time frame.
Read more: Crypto Advocates Call for Clarity Amid Climate Summit
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