SkyBridge Capital’s Crypto Pivot Looks to Triple its Assets

Hedge fund SkyBridge founder Anthony Scaramucci said he plans to shift the pace of SkyBridge Capital’s investment to virtual digital assets, according to Bloomberg.

SkyBridge is a global multi-asset class alternative investments firm, specializing in hedge fund solutions and opportunistic investment vehicles.

According to Scaramucci, nearly half of SkyBridge Capital’s $3.5 billion in assets under management is currently invested in cryptocurrencies such as Bitcoin, the Algorand protocol, and Ethereum or related projects.

SkyBridge predicts that cryptocurrencies can help companies triple their assets to $10 billion, with digital assets accounting for the vast majority.

Anthony Scaramucci said in an interview that:

“We feel so strongly about this opportunity that we’ve adapted and repositioned the firm to eventually be a leading cryptocurrency asset manager and adviser.”

The hedge fund, founded by former White House Communications Direction Scaramucci, has a Bitcoin Fund, which demands a buy-in of at least $50,000. The Bitcoin Fund grew rapidly to a size of $370 million within weeks of its launch in December 2020.

The SkyBridge executives claimed that holding Bitcoin is far less risky nowadays than it was a few years ago when regulations and infrastructure were still underdeveloped.

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SEC rejects Skybridge’s application for spot Bitcoin ETF

The United States Securities and Exchange Commission, or SEC, has officially disapproved the application for First Trust SkyBridge’s spot Bitcoin exchange-traded fund after several deferments.

In a Thursday filing, the SEC rejected a proposed rule change from the New York Stock Exchange, or NYSE, Arca to list and trade shares of the First Trust SkyBridge Bitcoin ETF Trust. The SEC said any rule change in favor of approving the ETF would not be “‘designed to prevent fraudulent and manipulative acts and practices” nor “protect investors and the public interest.”

The decision follows SkyBridge first applying to list a Bitcoin ETF on the NYSE in March 2021. The SEC twice designated a longer period to approve or disapprove the proposed rule change for the ETF in July and November before reaching its decision today.

In its rejection, the SEC said that the NYSE had not met the requirements of listing a financial product under its rules of practice as well as those of the Exchange Act. Under these restrictions, exchanges seeking to list a BTC ETF need to have “a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets.”

The NYSE Arca used a $10 million market order example to claim that buying and selling large amounts of Bitcoin (BTC) would have an “insignificant market impact.” The exchange also hinted at Tesla’s $1.5 billion BTC purchase in February as an example of gaining exposure to crypto through the company’s shares, arguing for the need for a different investment vehicle with exposure to BTC as opposed to “imperfect bitcoin proxies” which provide only “partial bitcoin exposure paired with additional risks.”

The commission rejected these claims, citing similar reasons for disapproving Bitcoin spot ETFs from asset manager VanEck in November and WisdomTree in December. To date, the SEC has not approved any ETF with direct exposure to crypto, but has given the greenlight to offerings linked to BTC futures, including ones from ProShares and Valkyrie.

Related: ETFs listed — What’s next for Bitcoin?

A separate decision for a Bitcoin ETF application from the New York Digital Investment Group, or NYDIG, is expected by March 16. The application is still under review after being delayed on Jan. 15.