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.
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.
SkyBridge Capital founder Anthony Scaramucci says one Ethereum competitor is well-equipped to power complex use cases in the real world.
In a new interview with Real Vision, the hedge fund veteran says the decentralized blockchain network Algorand (ALGO) could breathe new life into the consumer goods sector.
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Scaramucci explains,
“If you’re flying American or Delta, you’re accruing miles. You may or may not be using them. They’re on Delta’s balance sheet marked as a liability. And for whatever reason, you’re not using them, but you can’t unlock them.
What if we created a coin that could take those miles out of your account in exchange for this coin? Then this coin had some universality to it where you could buy groceries, or you could buy something [else].
What would be the best blockchain to use for something like that? In my opinion, it would be Algorand.”
Last month, SkyBridge joined the NAX trading platform to form a new partnership called UNLOX.
Scaramucci says the new venture will work with ALGO while pursuing investments in traditional financial services as well as art and other alternative assets.
“We’re identifying assets that have typically been locked, and we’re unlocking them.
I said I want to raise a fund, an ALGO-based fund that participates. We’ve raised $100 million so far, capping the fund at $250 million.
I’ve got a Bitcoin [BTC] fund. I have an Ethereum [ETH] fund. And we will soon have an ALGO fund. And I think those are three major blockchains, cryptocurrencies that are going to win and design the future.”
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Anna Berdnik/Yevhen Vitte/greenbutterfly
Global investment firm SkyBridge Capital has filed with the U.S. Securities and Exchange Commission (SEC) to launch an exchange-traded fund (ETF) focused on cryptocurrencies and other digital assets.
According to the Tuesday filing, First Trust SkyBridge Crypto Industry and Digital Economy ETF will invest at least 80% of their net assets into companies related to the digital economy and the crypto industry ecosystem, but not digital assets themselves.
SkyBridge defines the “crypto industry ecosystem” to be companies involved in servicing the crypto-asset markets, including crypto mining firms, crypto mining equipment suppliers, crypto financial services companies, or other financial institutions with primarily crypto-related clientele.
Companies related to the digital economy, according to SkyBridge, are able to provide online banking services, operate digital payment gateways for businesses and others, provide online asset management and trading platforms, and offer software services.
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The new fund will operate under the ticker symbol CRPT on the NYSE Arca, an exchange where stocks and options are traded.
Last December SkyBridge invested $182 million into BTC, and in March filed with the SEC to open a Bitcoin ETF.
Other firms have also begun investing in the growing digital asset space, including Atlanta-based Invesco.
SkyBridge also invests in hedge funds, private equity, and real estate, with over $6 billion in assets under management as of July.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
New York-based investment firm SkyBridge Capital has filed for a Bitcoin (BTC) exchange-traded fund, or ETF, with the United States Securities and Exchange Commission.
SkyBridge submitted the filing on March 19 in partnership with investment advisor First Trust Advisors. First Trust will act as the fund’s advisor and Skybridge serving as sub-advisor.
The documents state the First Trust SkyBridge Bitcoin ETF will seek to list its shares on the New York Stock Exchange Arca. A ticker symbol is yet to be announced for the fund.
The filing emphasizes the trust will offer a regulated way for investors to gain exposure to Bitcoin without needing to custody the digital asset, and allow investors to execute trades through their brokers.
The First Trust SkyBridge ETF Trust is now one of several applications for a Bitcoin ETF that is currently awaiting a verdict from the SEC.
On March 11, New York-based asset manager WisdomTree submitted its latest application for a Bitcoin ETF, following an attempt to get a fund approved that would hold up to 5% of its portfolio in Bitcoin futures despite being focused on energy and metals in mid-2020.
Leading U.S. investment bank Morgan Stanley filed for a Bitcoin ETF in partnership with crypto-focused financial services firm NYDIG on Feb. 16. The proposed fund would be exclusively available to investors who hold at least $2 million in assets with the firm.
In January, the SEC also received separate applications for Bitcoin ETFs from major exchange-traded product-issuer VanEck and Texas-based Valkyrie Digital assets.
In the absence of an exchange-traded fund, the lack of regulated investment products offering exposure to the price of Bitcoin appears to be driving U.S.-based investors to speculate on the shares of prominent businesses operating in the digital asset sector.
On March 22, Fundstrat’s vice president of digital asset strategy, Leeor Shimron, revealed that shares in the four-largest publicly-traded Bitcoin mining firms had outperformed Bitcoin by 455% on average over the past 12 months. Commenting on the data to CNBC, Shimron, said:
“Until a Bitcoin ETF is approved, investors may view public mining companies as one of the only ways to get exposure to Bitcoin.”
Institutional investment in Bitcoin has many convinced that the pioneer cryptocurrency has already succeeded in its transition into a new form of digital gold—but the debate continues to rage at the highest levels of financial advisory.
As inflationary monetary economics are coming into focus with zero percent interest rates or even negative interest rates throughout the pandemic and the onslaught of central bank money printing many are looking to Bitcoin as an inflationary hedge and a reliable store of wealth.
This Bitcoin defensive hedge narrative has at least broken through with Anthony Scaramucci and fellow SkyBridge executives who recently argued that Bitcoin has become a viable option for long-term investors. The SkyBridge executives claim that holding Bitcoin is far less risky today than it was a few years ago when regulations and infrastructure were still underdeveloped.
Meanwhile, JPMorgan analysts have recently said that while the Bitcoin price skyrocketed last year on renewed Wall Street interest—Bitcoin and crypto is still an unreliable defensive hedge. The analysts make the case that while Bitcoin may have been on this initial safe haven trajectory, market dynamics have changed so much in recent months that BTC could not be expected to serve as a reliable store of value in times of crisis.
Scaramucci and SkyBridge Believe in Bitcoin
Head of SkyBridge Capital and former White House communications director—Anthony Scaramucci believes that Bitcoin’s status as an inflationary hedge is steadily increasing as governments are ramping up crypto regulation and addressing many of the risks associated with BTC.
Scaramucci and fellow SkyBridge executive Brett Messing argued in an opinion piece on CNN that holding Bitcoin is safer today than it was just a few years ago when digital asset regulations and infrastructure were still severely underdeveloped.
In reference to the decision by the Office of the Comptroller of Currency (OCC) to allow banks to facilitate cryptocurrency services, the SkyBridge executives argued that Bitcoin’s spectacular growth has forced governments to take a more serious approach to cryptocurrency’s legitimacy and address the risks associate with digital assets.
In the opinion piece, the SkyBridge executives argued, “…increased regulations, improved infrastructure and access to financial institutions, like Fidelity, that hold investors’ money have made bitcoin investments as safe as owning bonds and commodities like gold, which are also used to balance portfolios.”
Institutional capital flowing into Bitcoin was a major catalyst behind the crypto’s 300% rally in 2020, which peaked at a new all-time high near $42,000 in early January. SkyBridge reportedly invested in Bitcoin during November and December, allowing the firm to accumulate a large position in the BTC just weeks before its parabolic bull run. At the time that the SkyBridge Bitcoin Fund LP fund was launched, in the first week of January, the firm claimed its BTC exposure was worth over $300 million. The SkyBridge Bitcoin hedge fund has Fidelity serving as custodian and Ernst & Young handling its auditing.
JPMorgan thinks BTC Market Dynamics Have Changed
According to JP Morgan analysts, although Bitcoin has been used heavily as a hedge by institutional and retail investors in 2020, it may not be the ideal way to secure one’s wealth and should therefore not be the defensive market hedge of choice.
Per market experts, Bitcoin’s popularity among retail investors has served to increase the cryptocurrency’s correlation with the rest of the market. This makes the asset an unreliable defensive hedge, especially when the market experiences a crash. JP Morgan strategists John Normand and Federico Manicardi said:
“Bitcoin is the least reliable hedge during periods of acute market stress. The mainstreaming of crypto ownership is raising correlations with cyclical assets, potentially converting them from insurance to leverage.”
The strategists explained that while Bitcoin may be used to protect against the uncertainty surrounding traditional financial systems and fiat currencies, it is unlikely that BTC will behave like a traditional defensive asset, such as gold, anytime soon.
Should investors diversify their portfolio with Bitcoin?
When it comes to comparing a new asset class with a traditional one, investors have a tendency to ask, “Is it really comparable?” Reportedly, asset portfolio managers have started to recognize the value of Bitcoin. While it has been previously considered a risk to hold the asset in one’s portfolio, the underlying narrative surrounding BTC has quickly shifted to it being a career risk to not have Bitcoin in one’s portfolio as an investment expert. Bitcoin has been slowly but surely gaining traction, as institutional support has backed the mainstream cryptocurrency and led the Bitcoin bull run, the digital asset’s full potential has yet to be uncovered.
However, as its full potential has yet to be uncovered, it has been speculated by some that Bitcoin is currently in bubble territory, threatening to plunge drastically in value. The sentiments of market analysts seem to be divided on that level. JPMorgan analysts, Normand and Manicardi commented:
“Whether cryptocurrencies are judged eventually as a financial innovation or a speculative bubble, Bitcoin has already achieved the fastest-ever price appreciation of any must-have asset.”
The Bitcoin price is currently trading at around $32,682.20 and is up 2.36% in the last 24hrs according to CoinMarketCap.
Following the impressive list of institutional investors who have put their funds into bitcoin in 2020, it appears that more big names are showing interest in the number one crypto asset, after a global investments firm filed with the U.S. SEC to launch a bitcoin fund for accredited investors.
According to an SEC document on Monday (Dec. 21, 2020), Anthony Scaramucci’s billion-dollar hedge fund, SkyBridge Capital, filed a Form D with the U.S. securities watchdog for its first bitcoin fund.
The fund, known as SkyBridge Bitcoin Fund L.P., will have Scaramucci serving as manager. Also, SkyBridge registered the new fund under Rule 506(c), meaning that the issuer can advertise its offering with the condition that the buyers are verified, accredited investors.
Founded in 2005 by Scaramucci, SkyBridge earlier noted in a previous SEC filing that it could “seek exposure to digital assets.” A part of the November document stated thus:
“Investment Funds may invest in digital assets without restriction as to market capitalization or technological features or attributes (including lesser-known or novel digital assets known as “altcoins”) and may invest in initial coin offerings, which have historically been subject to fraud.”
If the SEC approves the proposal, it could mean that more institutional investors would get exposed to bitcoin through the SkyBridge Bitcoin Fund L.P. Also, while the filing does not disclose the revenue range, the minimum investment for participants is set at $50,000.
Institutions Pour Into Bitcoin
Indeed, 2020 has been a good year for bitcoin, with institutional interest in BTC showing no signs of slowing down. As reported by CryptoPotato in November, financial services behemoth Guggenheim filed an application with the SEC to buy $500 million worth of BTC through its Macro Opportunities Fund.
Another company, Microstrategy, which has been on a bitcoin purchasing spree, recently announced another BTC buy worth $650 million. Other big firms like MassMutual and Ruffer Investment also invested in the top cryptocurrency.
Apart from companies, wealthy individuals like the billionaires Paul Tudor Jones and Stanley Druckenmiller also bought bitcoin. Meanwhile, JPMorgan analysts state that the institutional investment wave in bitcoin has kept the price of the crypto asset from correcting.
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