20 institutional investors in Bitcoin revealed, but the list may soon vanish

Institutional adoption of bitcoin is here, you just need to know where to look. While cryptocurrency advocates have worked extensively to build an ecosystem believed to be credible enough for more than just mom and pop investors, nearly 20 institutions have already filed documents with the US Securities and Exchange Commission last quarter, showing they have invested in Grayscale Bitcoin Trust (GBTC), a product of Barry Silbert’s New York-based Grayscale Investments, LLC.

While many of the names are well known mutual funds such as Ark Invest with $ 4.5 billion in assets under management and Horizon Kinetic, which manages $ 5.3 billion, according to their investor disclosure forms, the latest documents are also full of space newbies including Rothschild Investment Corporation, Addison Capital and Corriente Advisor. “It is very difficult to have a clear and direct signal as to who is entering and exiting space,” says Yassine Elmandjra, crypto analyst at Ark Invest. “But there are some very interesting proxies that can measure institutional interest.”

The problem is that the vast majority of institutional investors who have filed the documentation, referred to as the 13F filing, will no longer need to do so if the SEC succeeds and raises the threshold to bring back $ 100 million to $ 3.5 billion. Although bitcoin represents only a small fraction of the total assets that will no longer have to be disclosed if the change is implemented, the nascent sector risks suffering a disproportionate impact.

Of the 27 GBTC disclosures Forbes found only nine were more than the new $ 3.5 billion projection. Only three companies managed those nine funds, meaning that much of the diversity of the space, smaller institutional investors just starting to experiment with the new asset, would disappear. The changes are bad timing for the fledgling bitcoin industry, which is just beginning to see broad institutional interest in the asset that many see as a hedge against more traditional investments and a possible safe haven for investors as companies seem to do. central banks around the world. print endless amounts of money.

But as is often the case with cryptocurrencies, each industry step back takes two steps forward. In January, the same Grayscale Bitcoin Trust whose clients had already deposited 13F became an SEC reporting firm, making it the first bitcoin firm to deposit quarterly 10-Q and annual 10-K annually with the regulator, shedding new light on the internal structure. of institutional adoption of bitcoin.

Today, Grayscale took a quantum leap, starting the same process with the SEC for its second crypto fund, the Grayscale Ethereum Trust (ETHE), and disclosing exclusively to Forbes plans to transform each of its 10 products, also including XRP, stellar lumens, ethereum classic, litecoin, zcash, bitcoin cash, zen, and a large-cap cryptocurrency fund, into SEC reporting firms.

“The model we have is working,” says grayscale chief executive Michael Sonnenshein, 34. “It also continues to hold our team to an even higher standard in how we run our business and how we diligate our partners and can truly serve as a role model for other wealth managers. 60 days from today, before the trust can even begin depositing its 10Ks. If all goes as planned, Grayscale will work to convert all ten of its cryptocurrency investment vehicles into publicly traded assets, then transform each of them in SEC reporting firms.

Bitcoin’s price has risen 56% since January, according to cryptocurrency data site Messari, hitting its annual high, $ 11,809, earlier this month before dropping slightly to $ 11,657 at the time of publication. The most recent quarterly grayscale report saw confidence grow at a rate of $ 57.8 million per week, reaching a record $ 751.1 million in the quarter. As of yesterday, GBTC assets amounted to $ 4.5 billion and Grayscale’s total assets under management increased 37.5% from June’s report to $ 5.5 billion today.

Due to the scarcity of publicly traded investment opportunities for bitcoin, investing in GBTC can act as a useful proxy for institutional interest in crypto assets. But it is far from a perfect metric. New York-based private equity giant Fortress Investment Group has $ 41 billion in assets under management for 1,700 institutional investors, and earlier this year it offered to take over creditors’ claims in the now defunct bitcoin exchange MtGox. Cambridge Associates, a $ 30 billion pension and endowment consultant, has been asking its clients to invest in bitcoin since at least 2019.

Famous Hedge Funders Mark Yusko and Mike Novogratz serve institutional bitcoin investors at their companies, Morgan Creek and Galaxy Digital, respectively, and Forbes 30 Under 30 member Hunter Horsley founded Bitwise Asset Management to serve institutional investors. In May, Canadian firm 3iQ began trading a bitcoin fund on the Toronto Stock Exchange, joining London-based Coinshares and Switzerland-based Amun, which offer exchange-traded notes similar to Grayscale’s products in other jurisdictions.

The massive inflow of funds to grayscale subsidiary Genesis Capital, which added over $ 2.2 billion in new loan originations in the second quarter, is also evidence of institutional interest. But for the most part, the clients of these firms remain incredibly private, making the soon-to-be-edited 13F reports on GBTC investment activity a crucial source of data for investors.

Earlier this year, U.S. Attorney General William Barr announced that President Trump intended to appoint SEC President Jay Clayton as the next U.S. attorney for New York’s influential Southern District. One of the last things Clayton did as he prepared to step down as the nation’s top regulator was to publish a plan that would increase the minimum fortune. “A lot of transparency is lost in the market,” says Daniel Collins, founder of WhaleWisdom, a data provider specializing in analyzing 13F forms. “That’s why people look to the US market, to build trust in the market for potential investors, foreign investors. And suddenly you hide all of these resources every quarter that were revealed. “

The SEC adopted Form 13F in 1978 as a way to monitor the investment behaviors of major US investors. At the time, the stock value of US public companies was $ 1.1 trillion, according to a SEC statement, and the minimum size of a company deemed influential enough to track was $ 100 million. Between then and the announcement of the proposed changes earlier this year, the total number of such shares has grown to around $ 35 trillion. The proposed minimum of $ 3.5 billion is designed to be proportionally equal to the total stock of public companies when the form was first adopted.

Clayton was named SEC president by Trump in January 2017 and is known in the cryptocurrency community for cracking down on several initial coin offerings (ICOs) where tokens issued on a blockchain were sold in a similar way to traditional securities. Given Trump’s close relationships with private companies, it is perhaps unsurprising that the alleged candidate to become a US attorney for the Southern District of New York seeks such a favorable change to the regulations on his exit. However, according to Collins, retail investors risk losing a lot of valuable data as 5,200 13F filers are reduced to around 500 in the last quarter if the regulatory change goes into effect. “You’re looking at $ 2.3 trillion in assets, which are no longer disclosed,” he says.