“The taboo nature of the asset class has been shrugged off…Goldman Sachs invested with Digital Currency Group in Circle and as soon as they did that it provided enough cover for pretty much every other bank or financial institution to get involved in the space.”
— Michael Sonnenshein
Interview location: London, UK Interview date: Mon 18th Jun 2018
The institutional relationship with Crypto Assets has been one of light touch. Where banks had been dismissive of Bitcoin, but open to the opportunities with blockchain, the demand from institutional investors has contributed towards the changing banking narrative towards Crypto.
There is growing demand from institutional investors to hold Crypto Assets within their portfolio, yet these assets present new challenges from custody to regulation. Still, the need is driving forward a growing industry of solutions for those who want exposure to the market.
Institutions hold the capital but want to avoid the risk of handling the asset, but with companies such as XAPO and BitGo offering institutional custody solutions and the likes of Coinbase and Grayscale offering products which expose investors to the class without the headache of buying, selling and managing, institutions now have viable options to invest in the market.
The banking sector is adapting; Goldman Sachs and JP Morgan have opened trading desks, and the crypto market has gone from enemy to friend. As Crypto Asset and blockchain innovation continues to move at pace, investors do not want to miss out on the opportunity within these market.
With over $1.5bn in crypto assets under management ($3bn before the crash in January), Grayscale is one of the leading companies providing products for institutional investors. Their range of Single Product Investment Trusts and Diversified Large Cap Fund allow institutional investors to place bets on the Crypto market without the risk of custody or challenges associated with buying and selling.
Michael Sonnenshein knows both sides of the market. His career started in the traditional banking sector as an analyst at Barclays before he moved to JP Morgan and then onto Grayscale in 2013, where he is now the Managing Director.
In this interview, we discuss the interest from institutional investors, the impact of the bear market on sentiment and how Grayscale handles custody for $1.5bn in assets under management.
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