https://www.forbes.com/sites/michae...part-of-billion-dollar-spin-off/#16c21fbf9850 5,058 views|Oct 13, 2020,08:39am EDT Stone Ridge Reveals $115 Million Bitcoin Investment As Part Of Billion-Dollar Spin-Off Michael del CastilloForbes Staff Crypto & Blockchain I cover enterprise adoption of blockchain and cryptocurrency. Ribbit Capital participating, bringing the total raised to $100 million. As part of the announcement, Stone Ridge Holdings Group revealed NYDIG is custodying 10,000 of the parent company’s bitcoin, valued at $115 million at today’s price. Behind the sudden burst of activity is none other than the Covid-19 pandemic. As businesses around the world closed up shop as part of quarantine or sought help from their governments, central banks tried to offset the drop in activity by injecting billions of dollars into their economies. While unemployment increased, markets stayed surprisingly stable, resulting in a sense of impending collapse, says Gutmann, speaking in his first interview since taking over as co-founder and CEO of NYDIG. “We've seen a pretty dramatic acceleration in the count of institutional investors who want to participate in the market since March of this year,” he says. “The macro backdrop against the public health backdrop has caused a lot of people to rethink their portfolio composition.” Based in New York, NYDIG spent the $50 million it raised in 2017 to build out the execution and custody services they would need to manage a rafter of custom bitcoin funds, and to acquire two cryptocurrency-specific licenses. The first license, a BitLicense from the state of New York is used by the NYDIG Execution subsidiary to convert dollars into cryptocurrency and back again. Another subsidiary, NYDIG Trust has a New York State limited purpose trust charter allowing them to buy and hold bitcoin and other cryptocurrencies for investors. Few NYDIG customers are public yet, though a representative of the company says Stone Ridge’s $115 million position isn’t the largest it manages. Last month Ripple chairman Chris Larsen revealed he’d moved one of his XRP wallets to NYDIG custody. Currently, the majority of NYDIG’s revenue comes from banks, registered investment advisors to ultra high net worth individuals and institutional allocators. These products are built on a single platform that integrates execution, custody, anti-money laundering and know your customer protection. Specifically, NYDIG builds custom funds, separately managed accounts (SMAs) for middle-income investors, and other services for ultra high net worth individuals. “Different institutional allocators are used to buying fund management services, so that's what we sell them,” says Gutmann. “Macro hedge funds are used to buying prime brokerage services. So that's what we sell them. RIA's are used to buying a set of ultra high net worth advisory solutions. And that's what we sell them.” The two largest funds currently managed by NYDIG are the $190 million Institutional Bitcoin Fund LP, disclosed in regulatory documents in June and the $140 million Bitcoin Yield Enhancement Fund LP disclosed in May. Among what Gutmann calls “several” smaller funds is the NYDIG Basket Fund totaling $2.4 million, including bitcoin, ethereum, XRP, litecoin, and bitcoin cash. While NYDIG isn’t sharing its total assets under management the firm now custodies more than $1 billion, it says, and the number of its clients has quadrupled over the past ten months. The second revenue stream comes from integrating NYDIG’s underlying execution and custody platform into banks, foundations, and university endowments. In September, the Office of the Comptroller of the Currency (OCC), a branch of the U.S. Department of the Treasury, published a letter saying banks and other financial institutions could hold reserves for clients that issue digital tokens on a blockchain, called stablecoins, which are backed by U.S. dollars. “We're having lots of conversations with banks, about various kinds of partnerships all the way from basic sub-custody solutions,” says Gutmann, “up to end consumer products that the banks are providing, where we’re the back end” As part of the preparation for today’s public launch Gutmann and other NYDIG and Stone Ridge executives published a lengthy analysis, in February 2019, called “Buying Bitcoin” about the difficulties money managers face when looking for significant bitcoin liquidity. The 22-page report concludes, for now, that today’s bitcoin market is dominated by retail investors and speculators. From the report: “Given that agents (fund managers, trustees, and other fiduciaries) control the vast majority of the trillions of dollars of investable assets in the world, we expect material institutional purchases of Bitcoin as these agents work their way through the challenges of this burgeoning asset class.” So far, the paper’s conclusion appears to be playing out. Last week payments giant Square invested about $50 million into bitcoin, or about 2.5% of its last reported cash-on-hand. Struggling business intelligence firm MicroStrategy converted a whopping $425 million of its assets into bitcoin, and at least 20 institutional investors have filed paperwork with the SEC showing they invested in the Grayscale Bitcoin Trust (GBTC). Newly launched Canadian digital asset manager 3iQ has $91.2 million in its Bitcoin Fund trading on the Toronto Stock Exchange and institutional investor, Cathie Wood, of New York-based Ark Invest told Forbes she sees bitcoin as an “insurance policy” against inflation. To help bring NYDIG’s in-house execution tools to its clients, the company last Friday also bought New York-based Etale, which specializes in order management software and is integrated with Coinbase Pro, Gemini and itBit. Over the next few months NYDIG plans to further integrate its own in-house execution tools with Etale, making them available to clients for the first time. As part of the deal, NYDIG also obtains a data set including high frequency price, quote and depth data to further refine its own offerings. The firms are not sharing terms of purchase, but all four employees will be joining NYDIG. Further demonstrating institutional interest in the asset class, NYDIG last month hired former Goldman Sachs partners Ronnie Wexler and Tejas Shah to help run the company. Some other notable NYDIG staffers include former New York State Superintendent of Financial Services, Ben Lawsky, former Goldman Sachs managing directors Eric Kramer and Rodney Miller and CEO and co-founder of Stone Ridge, Ross Stevens. Brooks Gibbins, managing partner of lead investor, FinTech Collective, is joining the board as part of the investment. The startup now employs a total of 35 people. The irony of the surge of interest in bitcoin brought about by Covid-19 is the pandemic is also testing one of bitcoin’s earliest value propositions: that it’s uncorrelated with traditional markets. As traditional markets dropped, so have bitcoin, in large part. Same goes for many upwards movements. However, depending on the time one looks, Gibbins argues, correlation, or non-correlation can be found anywhere. As a result, especially in the face of such global uncertainty, the lead NYDIG investor advocates that institutions should allocate between 100 and 500 basis-points of their portfolio to digital assets. “With the unprecedented fiscal and monetary stimulus happening across the globe post Covid-19, portfolio hedging in digital assets will continue to be more and more relevant,” he says. Already, NYDIG’s typical bitcoin investor has between 1% of 5% of its portfolio invested in cryptocurrency, with a few investors more comfortable with the technology exceeding 5%. “If you’re legging into a $5 million to $500 million position in an asset, you are going to want to apply a number of different offensive and defensive capital strategies,” he says.
https://finance.yahoo.com/news/fidelity-report-says-portfolios-consider-202607071.html Fidelity Report Says Bitcoin’s Market Cap is ‘Drop in the Bucket’ of Potential Danny Nelson Tue, October 13, 2020, 1:26 PM PDT·1 min read CORRECTION (Oct. 14, 2020, 04:25 UTC): This article originally said Fidelity recommended that portfolios consider a 5% allocation in bitcoin. The language used was a hypothetical. CoinDesk regrets the error. Fidelity Digital Assets said bitcoin’s market cap has plenty of room to grow in a Tuesday report on the benchmark cryptocurrency’s uncorrelated nature. Director of Research Ria Bhutoria wrote that the crypto’s current market capitalization “is a drop in the bucket compared with markets bitcoin could disrupt.” Bhutoria argued that while institutional inflows may damp bitcoin’s uncorrelated performance, the crypto is “fundamentally less exposed” to the “economic headwinds” that other assets will likely face. Bitcoin is therefore a “potentially useful” asset for uncorrelated return-seeking investors. “In a world where benchmark interest rates globally are near, at, or below zero, the opportunity cost of not allocating to bitcoin is higher,” the report said.
Below is the entire entire Thesis. I'm not a Fidelity customer but it would be interesting to know if that went out to their 25+ million customers. If so that is a big Bitcoin advertisement, considering GOOG & FB are still banning crypto ads on their platforms https://www.fidelitydigitalassets.c...ments/FDAS/bitcoin-alternative-investment.pdf
This confirms what was being discussed in another thread of entities using futures not just for hedging but for entering into the cryptosphere; https://www.elitetrader.com/et/thre...-national-security.351163/page-3#post-5224176 https://cointelegraph.com/news/reco...delivery-exposes-institutional-frenzy-for-btc
[QUOTE="They, post: [/QUOTE] Interesting idea floating on twitter. Bitmex is severely "crippled" and announced massive AML/KYC requirements and deadlines. Tens of thousands of bitcoins have been withdrawn from the exchange. It's a platform used for whales dumping and shorting. This break to the upside, $12K might just be the beginning of this bull market. The recent news and momentum of the idea that bitcoin is a safe asset during this economic environment ZIRP is still growing, MSTR, SQ, Stone Ridge, Paul Tudor Jones, Fidelity (FIDAS), etc.... Anyway, last time bitcoin went above 12K it went down in a hurry so we'll find out soon enough
Another Listed Company joining the BTC as an asset bandwagon... Mode Global Holdings adopts Bitcoin as treasury reserve asset LONDON: Mode Global Holdings has allocated up to ten percent (10%) of its cash reserves to purchase Bitcoin and adopt it as a treasury reserve asset. The move is part of Mode’s long-term goal to protect investors’ assets from currency debasement. With UK interest rates at a record low of 0.1%, Mode is also seeking to diversify away from low-interest money market instruments in order to maximise the value of returns from its recent fundraising. Mode is the first publicly listed company in the UK to officially announce a significant purchase of Bitcoin as part of its treasury investment strategy. This follows announcements by Square Inc. and Microstrategy Inc. which disclosed significant purchases of an aggregate value of $475m worth of Bitcoin. Since inception, Mode has recognized the potential of Bitcoin as a reliable store of value and an attractive investment due to the asset’s asymmetric risk/reward attributes and safe haven status. As one of the first companies with a consumer-facing Bitcoin offering to list on the LSE Main Market, Mode’s mission is to bring further transparency and credibility to the digital asset space and offer everyday investors the opportunity to buy shares in an early-stage fintech building next-generation products. To support its vision, Mode has built an easy-to-use mobile application that allows people to easily buy, sell and hold Bitcoin and grow their holdings via one of the highest-yielding and most flexible interest-generating Bitcoin products in the market. Mode’s consumer products enable everyday investors to access the benefits of Bitcoin in a secure and seamless way. Jonathan Rowland, Executive Chairman at Mode, commented: “This decision to allocate part of our cash reserves to Bitcoin is a further step in our mission to build a truly digital financial services business, combining the best of digital assets, payments, loyalty and investment. “We truly believe that Bitcoin is a vehicle for financial empowerment and, through Mode, investors can gain exposure to this highly attractive asset class through a listed and fully compliant company. Faced with the challenges of COVID and with UK interest rates at the lowest level in the Bank of England’s 326-year history, our confidence in the long-term value of Bitcoin has only increased. “Today’s allocation is executed through a modern, forward-looking but prudent treasury management strategy.” https://newsnreleases.com/2020/10/21/mode-global-holdings-adopts-bitcoin-as-treasury-reserve-asset/