Announcing a Return to our Roots: The All-New Bitcoin Magazine
Verified on Created with Sketch. Verified on

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.


Report: Crypto Exchanges Saw Trading Volumes Plummet in January

Blockchain and cryptocurrency research firm Diar has released a report that reveals a sizeable drop in crypto trade volumes in January 2019 for popular crypto exchanges Binance, Gemini, OKEx and Coinbase.

Jimmy Aki

Morgan Creek Bags $40M Raise, Attracts Industry First Funding From Pensions

Two pension plans from Fairfax County, Virginia, the $1.43 billion Police Officer’s Retirement System and the $3.9 billion Employee’s Retirement System, were the lead investors.

Colin Harper

Bitcoin Price Analysis: Strong Rally Set to Test Overhanging Resistance

There are major resistance levels to consider when viewing the health of the bitcoin market, but given the strength of the current move, it seems likely we will see a continuation of the uptrend in the price of bitcoin.

Bitcoin Schmitcoin

Abra Users Can Now Buy Stocks and ETFs Using Bitcoin

According to Abra CEO Bill Barhydt, everyone should have access to capital markets, regardless of where they live in the world or the amount of capital they have at their disposal. This is where Bitcoin comes in.

Jimmy Aki