Daniel Loeb’s Deep Dive Into Cryptos & Custody Deal With Coinbase.
2021-04-10 | Robin Williams
Billionaire investor Daniel Loeb’s “deep dive into cryptocurrencies” last month led his $17.6 Bln hedge fund to
a well-known place: a custody
deal with Coinbase.
Loeb’s Third Point LLC presently holds cryptocurrency from five of its funds with Coinbase, consistent with regulatory documents obtained. Some tout billions of dollars in underlying assets, but
it's not clear
what proportion of
that's in crypto, which assets, or
for a way long they’ve invested.
Within less than a week, prior to Coinbase’s Nasdaq debut, the custody tie-up underscores how Brian Armstrong’s 9-year-old firm has transformed itself from a bitcoin-only digital wallet into
a huge vault for Wall Street’s
cryptocurrency bets.
Coinbase
outlined that it held $122 Bln in institutional assets within this week’s voluntary earnings call. It expects “meaningful growth” driven
partially by custody revenue
within the year ahead.
As reported earlier
this week that fellow hedge fund titan Paul Tudor Jones
is additionally a Coinbase client, offering a glimpse at the deep-pocketed investors behind the exchange’s institutional assets beneath management.
At the reporting time, Third Point
has not officially outlined anything.
The hedge fund’s true exposure to cryptocurrencies remains more opaque.
Within a brochure accompanying the 31
st March filings, Third Point said it can invest directly in crypto assets or indirectly via derivatives contracts.
Notably,
it's hospitable staking and lending any cryptos
also, the documents added.
“This
is among the primary big traditional hedge fund that
I do know of
that's doing staking,” added Tim Ogilvie, who runs
a firm called Staked
that gives staking services to institutional investors, after reviewing the documents.
“On the one hand, I’m surprised. While on the opposite hand I’m unsurprised,” he added. “If you would like to carry a crypto asset that's POS, I feel you've got a fiduciary responsibility to stake.”
Proof-of-stake blockchains like Tezos, Cosmos, Solana. reward token holders with payouts like interest for securing the network with their contributed holdings.
Institutional investors are slowly
awakening to staking, Ogilvie said. With staking, there are two gains generators: the token price
and therefore the staking payout. It’s a guaranteed reward on top of a speculative bet. Ogilvie outlined that there is $4.5 Bln in cryptocurrencies on Staked.
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