Verified on Po.et Created with Sketch. Verified on Po.et

Financial Services Firm Opens Doors to Crypto Hedge Funds


        Financial Services Firm Opens Doors to Crypto Hedge Funds
Financial Services Firm Opens Doors to Crypto Hedge Funds

The crypto industry has received another boost with the entry of financial services giant Northern Trust in a quiet but significant move. The firm, which manages over $10.7 trillion in assets, has added blockchain features into its private equity workflow, while extending its administration services to a select group of hedge funds betting on digital assets.

Institutional Entry at Long Last?

For months, the cryptocurrency market has waited for the expected entry of institutional finance, an event which is expected to herald its coming-of-age as a bona fide investment asset class with a long-term future. By and large, a torrent of banks and funds pouring money into crypto assets has not materialized, driven in part by fears of regulatory uncertainty, and the erratic and unconventional behavior of the asset.

This series of quiet but deliberate moves by Northern Trust, however, could signify the beginning of a significant investment influx to crypto markets. In an interview with Forbes, Pete Cherecwich, president of corporate and institutional services at Northern Trust confirmed that a shift is indeed taking place, and he highlighted the reason why.

“You can take anything today. You can take movie rights, you can take all sorts of entities, and you can create a token for those. We have to be able to figure out how to hold those tokens, value those tokens, do those things,” he said.

While Northern Trust didn’t reveal the identity of the hedge funds it's working with, in this new area of engagement, Cherecwich dropped a tantalizing hint, by mentioning that the project is with three “mainstream hedge funds” who are adopting a significant investment position in digital assets.

Northern Trust as the Lodestar

At the moment, few recognized financial services firms are offering their services to crypto-related activities. A few notable exceptions to this are the so-called “Big 4” accounting firms, namely KPMG, Deloitte, EY and PwC, who have variously embarked on individual crypto-related projects and client engagement.

Other vital exceptions are Goldman Sachs, which recently launched a bitcoin trading desk, and Bloomberg, which launched the Galaxy Crypto Index alongside hedge fund investor Mike Novogratz earlier this year. By adopting a crypto-positive position early on, Northern Trust hopes to become the premier financial services provider servicing hedge funds that choose to invest in crypto assets.

The firm’s strategy, however, doesn’t include taking direct custody of crypto assets. Instead, it's focused on helping its customers account for their crypto investments. Effectively, it is providing the proverbial picks and shovels during the crypto gold rush without actually taking on crypto assets or the risk therein. According to Cherecwich, this comes as part of a broader strategy to prepare for a time when cryptocurrencies effectively disrupt fiat currencies and become the accepted global norm.

Describing such a time, Cherecwich says, “I do believe that governments will ultimately look at digitizing their currencies and having them trade kind of like a digital token — a token of the U.S. dollar — but the U.S. dollar [would still be] in a vault somewhere, or backed by the government. How are they going to do that? I don’t know. But I do believe they are going to get there.”

The new crypto management solution which has been demoed to “well over 100 clients” is yet to be launched publicly, but Cherecwich believes it will be a success.

"We have determined that we will be able to go out and sell it," he concluded.


Adamant Capital: BTC Price Bottom Is Likely In, Accumulation Phase Has Begun

Adamant Capital's new report argues that the bottom of the bear market is in and that bitcoin is undervalued at its current price.

Colin Harper

Bitcoin Price Analysis: Daily Resistance Level Tested Following Strong Buying Pressure

Bitcoin’s macro-bullish market structure remains intact, a test in the $5,700 to $6,000 range is likely before any meaningful, macro pullback takes place and a key price to watch is the $5,250 level.

Bitcoin Schmitcoin

Gemini Exchange Announces Full Adoption of the SegWit Protocol

Gemini Trust has confirmed full integration of Segregated Witness addresses to its wallet infrastructure, potentially improving processing times and lowering bitcoin withdrawal fees.

Jimmy Aki

Binance Delists Bitcoin SV

The cryptocurrency exchange Binance is officially removing Bitcoin SV from its trading options, potentially prompted by Craig Wright's legal actions.

Colin Harper