According to a Forbes report doing the rounds, Stone Ridge Asset Management is holding a massive Bitcoin investment worth nearly INR 850 crores. Using its New York Digital Investment Group (NYDIG) arm created in 2017, the company is acting as a custodian to 10,000 bitcoins.
What is the Stone Ridge NYDIG?
Stone Ridge Asset Management is a New York based investment advisory service for private and registered funds exclusively — and not individuals. Managing more than $13 billion in assets, the company says it focuses on “delivering valuable, diversifying streams of returns sourced solely from alternative risk exposures – not alpha (the difference between market returns sand an asset’s returns)”. As it turns out, these ‘alternative risk exposures’ seem to be featuring quite a bit of Bitcoin.
In 2017, the Stone Ridge Asset Management company created the New York Digital Investment Group, with the objective to offer execution and custody services. Complying by regulatory mandates, NYDIG can purchase and hold cryptocurrencies on behalf of all clients. Behind the creation of NYDIG worked the company’s own interest in the cryptocurrency Bitcoin; as NYDIG Co-founder and CEO Robert Guttman put it, the company’s aim was “the long-term growth of an open-source monetary system—in assets like bitcoin.”
In 2017, NYDIG raised around INR 367 crores in an investment and put its mind to shaping a spinoff. On October 9, NYDIG brought up a similar amount through a growth equity fundraiser spearheaded by Fintech Collective in association with Bessemer Ventures and Ribbit Capital.
The Advent of Institutional Bitcoin
The primary reason for many global companies suddenly investing in digital assets is, of course, the COVID-19 pandemic. As companies around the world cease to function and the global economy stands at the precipice of crumbling down, digital assets like Bitcoin have emerged as a safer investment option. As Guttman puts it: “We’ve seen a pretty dramatic acceleration in the count of institutional investors who want to participate in the market since March of this year… The macro backdrop against the public health backdrop has caused a lot of people to rethink their portfolio composition.”
According to a Stone Ridge representative, the position isn’t even the largest cryptocurrency one NYDIG manages. In September, Ripple’s Executive Chairman Chris Larsen mentioned how he’d moved one of his own XRP wallets under NYDIG. The two largest funds managed by NYDIG so far are the about INR 1400 crores worth of Institutional Bitcoin Fund LP, and the Bitcoin Yield Enhancement Fund LP valued at about INR 1030 crores. Even though NYDIG hasn’t shared its total assets under management, the firm now manages assets worth more than INR 7350 crores.
If you take a look at the recent news from the financial world, it seems the governments themselves are getting used to the idea of blockchain technology and cryptocurrencies. So it’s not surprising at all that more and more companies around the world are putting their money behind the burgeoning asset class.