Welcome to the fourth installment of the Monthly Digital Assets Digest powered by Venn by Two Sigma – your guide to the state of capital allocation in crypto.
In this newsletter, we dive into the latest developments impacting advisors, asset owners and managers to help institutional investors allocate capital to digital assets with confidence.
November was a whirlwind for crypto markets. What do allocators need to know? Here are the must-read headlines we’re tracking:
Delivered as a “GICS” for crypto, datonomy was designed to provide a consistent, standardized way to help market participants view and analyze the digital assets ecosystem. Datonomy can be licensed for a variety of use cases, such as the review and assessment of portfolio performance and reporting.
2. Institutions Weigh Exposure to FTX Crypto Exchange
Institutional investors are weighing their potential involvement with FTX after the company filed for bankruptcy last month. Sequoia, a lead investor in FTX, released a statement saying it was going to mark down the value of its FTX investment to $0.
Institutional investors increased their cryptocurrency holdings during the most recent crypto winter. According to Coinbase’s most recent survey of institutional investors, 62% of investors who are currently invested in crypto increased their allocations in the past 12 months, and 58% of investors expect to increase their allocations over the next three years.
The latest on major financial institutions navigating crypto:
1. Goldman Sachs on the Hunt for Bargain Crypto Firms after FTX Collapse
Goldman Sachs plans to spend tens of millions of dollars snapping up crypto companies after the collapse of the FTX exchange hit valuations and dampened investor interest.
2. JPMorgan Gains Approval for Crypto Wallet Trademark
In mid-November, the U.S. Patent and Trademark Office approved a trademark for “J.P. Morgan Wallet,” positioning the largest U.S. bank to possibly expand into crypto custody solutions.
3. Fidelity Rolls Out Access to Retail Crypto Trading
Fidelity Investments announced the launch a commission-free crypto trading product, Fidelity Crypto, for retail investors. The service will allow investors to buy and sell Bitcoin and Ether.
4. SEBA Bank Partners with HashKey for Institutional Crypto Adoption
Swiss-based crypto bank SEBA Bank formed a partnership with financial services firm HashKey Group to accelerate the adoption of digital assets in Hong Kong and Switzerland.
In case you missed it, here’s what we’ve been up to:
When it comes to “capital allocators” and “manager due diligence,” the two have always been like peas and carrots. In our latest deep dive on digital assets, we look at two crypto managers – one in the form of a market-cap weighted cryptocurrency exposure, and the other investing in crypto-associated stocks – to better illustrate how familiar manager evaluation workflows apply to crypto. Check it out here.
For more insights on how to take a quantitative approach to multi-asset portfolio risk and decision making, visit our blog at VennSights.
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This article may include discussion of investing in virtual currencies. You should be aware that virtual currencies can have unique characteristics from other securities, securities transactions and financial transactions. Virtual currencies prices may be volatile, they may be difficult to price and their liquidity may be dispersed. Virtual currencies may be subject to certain cybersecurity and technology risks. Various intermediaries in the virtual currency markets may be unregulated, and the general regulatory landscape for virtual currencies is uncertain. The identity of virtual currency market participants may be opaque, which may increase the risk of market manipulation and fraud. Fees involved in trading virtual currencies may vary.
