Sean Lippel, a VC and crypto-asset investor at Fintech Collective, a New York-based firm backing initiatives that “reimagine” how money moves in a digital environment, says that the future of institutional digital asset management has already arrived.
Lippel claims that if portfolio managers allocate around 200bps of the world’s $73 trillion worth of professionally managed assets to major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and a few other altcoins, then these investments should grow to about $1.5 trillion in value (or more).
Lippel predicts that even more traditional financial institutions will start distributing digital asset products. He also thinks that foundations, endowments, RIAs, and sovereigns will begin using crypto-assets as a store of value and “macro hedge.”
He further notes that hedge fund managers and family offices will “find much-coveted yield opportunities and structured cash-on-cash returns” by strategically allocating funds to digital assets.
“Public and private corporates will look to hold a portion of their Treasury reserves in digital assets as a currency / inflation hedge. While this will not be a ‘winner take all’ market opportunity, the winners that emerge in the institutional digital asset management space…[will most likely be] … highly tailored … solutions enabling institutional clients to build into positions and construct offensive and defensive strategies.”
He argues that the future of crypto-asset management “must be grounded in a foundational layer of secure custody.” For NYDIG (a digital asset management, prime brokerage, private wealth manager, and white label solutions provider), this means “at all times all private keys are generated and stored completely offline, using specialized hardware and adhering to the highest cybersecurity standards.”
“Over the next decade, institutions will not enter the digital asset market because of the store of value thesis alone, or on the assumption that the Bitcoin price will only go up over the coming decade. A nuanced, high-touch approach will be needed to properly service institutional clients and capitalize on this transformational opportunity.”
He also mentions that his company thinks NYDIG is well-positioned to “deliver upon this vision.” That’s why his firm, Fintech Collective, decided to lead NYDIG’s oversubscribed $50 million growth equity round, Lippel noted.
He confirmed that the latest NYDIG round brings the total outside capital raised to $100 million. He also says his company is proud to work with world-class investors such as Bessemer, Ribbit, Starr, and Stone Ridge.
Stone Ridge Holdings Group is reportedly allocating 10,000 BTC with the institutional asset manager’s digital asset focused subsidiary NYDIG, which has confirmed that it has secured $50 million in additional funding.
The private firm has referred to Bitcoin as its new “primary treasury reserve asset.”
NYDIG is notably one of just a few New York-based crypto firm’s to have acquired the state’s BitLicense. The firm has several multi-million dollar digital asset funds and provides prime brokerage and custody services to institutional investors.