Institutional investment in the cryptocurrency market is a topic which for a long time now, has had its fair share of proponents and opponents. At least not until emerging reports indicated that Yale, one of the world’s largest university endowments, had channeled a sizable portion of its endowment to two cryptocurrency funds.
The move was positively welcomed by stakeholders in the cryptocurrency market with experts terming it as ‘a breakthrough’ for institutional investors. During the Bloomberg Invest Summit in New York in June, billionaire investor Michael Novogratz explained to Eric Schatzker that the entrance of just one major institutional investor into the crypto market will be an icebreaker for institutional investment in the crypto market space. This will see other major institutions accumulate cryptocurrencies like Ethereum and bitcoin in bulk.
Five more university endowments invest in cryptocurrency funds
Soon after Yale, the Ivy League school which boasts the second- largest endowment in higher education made its debut in cryptocurrency funds, reports from sources familiar with the matter indicate that at least five major academic institutions have all invested in cryptocurrency fund in one way or the other. The five which include Dartmouth College, Harvard University, Stanford University, The University of North Carolina and Massachusetts Institute of Technology have pumped millions of dollars in cryptocurrency funds which in turn invest in equity in cryptocurrency companies as well as physical cryptocurrencies.
The move by these institutions signals that finally institutional investors, the likes of which Michael Novogratz has perennially referred to as being ‘just over the horizon’ are finally placing a bet, though small, on the nascent asset class.
“A move by endowments into funds that will directly bet on cryptocurrencies signals a major shift in investor sentiments towards the asset class, in the same way, that institutions over the past decade became more willing to invest in private tech companies. Backing from such closely watched institutions could help validate cryptocurrencies, which are still considered too risky by many institutional investors.” John Victor, an information journalist explained
The next major milestone for institutional investors will be investing directly in the cryptocurrency market rather than entrusting their funds to the digital asset investment funds. This has since proved a challenge since there exists a huge deficit of regulated cryptocurrency custodians, especially amongst Wall Street Banks as they are the most trusted when it comes to endowment funds. However, a lasting solution is being sorted for the problem with reports indicating that three major banks, Citigroup, Morgan Stanley, and Goldman Sachs are all creating custody products for crypto assets.