Point72 ventures into crypto world
STAMFORD — Billionaire hedge fund investor Steven Cohen’s venture capital firm has announced its first cryptocurrency-focused investment, a sign of investors’ increasing confidence in digital currencies.
Stamford-based Point72 Ventures is leading a $21 million funding round in Manhattanbased Messari, a provider of cryptocurrency market intelligence. The commitment comprises the latest of about 75 investments made by the firm and reflects its focus on financial technology, artificial intelligence and machine
learning.
“While investor participation in the crypto industry has grown exponentially over the past three years, current crypto research and analysis tools are still lacking the sophisticated signals and data that more advanced investors need,” Point72 Ventures operating partner Adam Carson, who has joined Messari’s board of directors, said in a statement. “Messari is filling that muchneeded space, creating a central access point for reliable information for the entire crypto ecosystem.”
With the new funding, Messari said it plans to expand the global reach of its Pro and Enterprise product suites, triple the size of its engineering and research teams and introduce new offerings that “streamline participation in decentralized projects and their communities.”
“Point72 Ventures is an ideal partner for us as we work to onboard new legacy financial institutions to our products,” Messari co-founder and CEO Ryan Selkis said in a statement. “At the same time, the support from a wide range of crypto’s leading strategic investors puts us in a strong position to expand our product suite for token creators
and provide services that help their projects get better integrated into core industry infrastructure.”
The investment in Messari comes about five years after the founding of Point72 Ventures by Cohen, a Greenwich resident who is also the founder of the Stamford-based hedge fund Point72. Point72 Ventures’ launch was in response to the large volume of deals pitched to Cohen, he has said.
“I think that P72’s investment marks an important milestone for crypto in that it is now undeniably a mainstream fintech investment,” said David Noble, director of the Peter J. Werth Institute for Entrepreneurship and Innovation at the University of Connecticut. “Coinbase, Kraken, FTX, Gemini, etc., are all leading crypto exchanges, so the tools, data, research, etc., coming from Messari make real sense for them to support as the greater access to trading tools equals greater trading (and) equals increased revenue.”
According to the definition on investopedia.com, “A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology — a distributed ledger
enforced by a disparate network of computers.”
Confidence and concerns in crypto
In addition to Cohen, several other leaders of Connecticutbased investment firms have signaled their interest in cryptocurrencies.
“I like bitcoin as a portfolio diversifier,” Paul Tudor Jones II, founder of Stamford-based hedge fund Tudor Investment Corp., told CNBC in June. “Everybody asks me what should I do with my bitcoin? The only thing I know for certain, I want 5 percent in gold, 5 percent in bitcoin, 5 percent in cash, 5 percent in commodities. At this point in time, I don’t know what I want to do with the other 80 percent until I see what the Fed is going to do.”
Ray Dalio, founder of Westport-based hedge fund Bridgewater Associates, recently told CNBC that he owned “a very small amount of bitcoin … There are certain assets that you want to own to diversify the portfolio, and bitcoin is something like ... digital gold.”
Greenwich-headquartered Interactive Brokers Group allow users to trade futures contracts for cryptocurrencies, enabling them to gain exposure without having to hold the cryptocurrencies themselves. Later in the third quarter of this year, it plans
to allow customers to directly trade cryptocurrencies, the group said.
Crypto’s growing popularity, however, has sparked concerns about a potential regulatory clampdown.
“Every country treasures its monopoly on controlling the supply and demand. They don’t want other monies to be operating or competing because things can get out of control,” Dalio, a Greenwich resident, said in an interview earlier this year with Yahoo Finance Editor-in-Chief Andy Serwer. “So I think that it would be very likely that you will have it under a certain set of circumstances outlawed the way gold was outlawed.”
In response to Dalio’s comments, U.S. Rep. Jim Himes, DConn., told Hearst Connecticut Media that he agreed that the “United States gets massive benefits from having the dollar being the reserve currency.” He was less convinced about the possibility of a ban on cryptocurrencies.
“I’m not sure you could prohibit a cryptocurrency, especially in a country like the United States,” said Himes, a Greenwich resident and member of the House Committee on Financial Services. “I don’t know that that’s either technologically or politically feasible.”