Top 10 investors in bitcoin

Institutional adoption of bitcoin is here, you just have to know where to look. While cryptocurrency advocates have long worked to build an ecosystem deemed credible enough for more than just mom and pop investors, nearly 20 institutions already filed paperwork with the U.S. Securities and Exchange Commission last quarter, showing they invested in the Grayscale Bitcoin Trust (GBTC), a product of Barry Silbert’s New York-based Grayscale Investments, LLC.

While many of the names are well-known mutual funds like Ark Invest with $4.5 billion in assets under management and Horizon Kinetic, managing $5.3 billion, according to their investor disclosure forms, the latest filings are also rife with relative newbies to the space including Rothschild Investment Corporation, Addison Capital and Corriente Advisor. “It's very difficult to have a clean one-to-one signal on who's entering and exiting the space,” says Ark Invest crypto analyst Yassine Elmandjra. “But there are some very interesting proxies that can gauge institutional interest.”

The problem is, the vast majority of the institutional investors who filed the paperwork, called a 13F filing, will no longer need to do so if the SEC gets its way and raises the threshold to report from $100 million to $3.5 billion. Though bitcoin represents only a tiny fraction of the total assets that will no longer have to be disclosed if the change is implemented, the nascent industry stands to be disproportionately impacted.

Of the 27 GBTC disclosures Forbes found only nine were more than the new $3.5 billion projection. Only three companies managed those nine funds, meaning much of the diversity of the space, the smaller institutional investors who are just starting to experiment with the new asset, would disappear. The changes are bad timing for the nascent bitcoin industry, which is just now starting to see broad institutional interest in the asset that many see as a hedge against more traditional investments, and a possible safe haven for investors as central banks around the world seem to be printing endless amounts of money.

But as often happens in crypto, every one step back the industry takes, there’s two steps forward. In January, the same Grayscale Bitcoin Trust whose clients had already been filing 13Fs became an SEC reporting company, making it the first bitcoin firm to file quarterly 10-Qs and annual 10-Ks with the regulator, shedding new light on the internal structure of institutional bitcoin adoption.

Today, Grayscale took it up a notch, starting the same process with the SEC for its second crypto fund, the Grayscale Ethereum Trust (ETHE), and revealing exclusively to Forbes its plans to turn each of its 10 products—also including XRP, stellar lumens, ethereum classic, litecoin, zcash, bitcoin cash, zen, and a fund for large cap cryptocurrencies—into SEC reporting companies.

“The model we have is working,” says Grayscale managing director Michael Sonnenshein, 34. “It also continues to hold our team to an even higher standard in how we operate our business and how we diligence our partners and can really serve as a model for other asset managers.” There’ll be a 60-day comment period starting today, before, the trust could also start filing its 10-Ks. If all goes as planned, Grayscale will next work to convert all ten of its cryptocurrency investment vehicles into publicly traded assets, then turn each of those into SEC reporting companies. 

The price of bitcoin has increased by 56% since January, according to cryptocurrency data site Messari, reaching its high for the year, $11,809, earlier this month before dropping slightly to $11,657 at the time of publication. The most recent Grayscale quarterly report saw the trust growing at a rate of $57.8 million a week, reaching a record $751.1 million in the quarter. As of yesterday, assets in GBTC totaled $4.5 billion and Grayscale’s total assets under management have increased 37.5% since the June report to $5.5 billion today.

Due to the dearth of publicly traded investment opportunities for bitcoin, investments in GBTC can serve as a useful proxy for institutional interest in crypto-assets. But it is far from a perfect metric. The highly private New York private equity giant Fortress Investment Group has $41 billion in assets under management for 1,700 institutional investors, and earlier this year offered to buy out the creditor claims in the now defunct MtGox bitcoin exchange. $30 billion pension and endowment advisor Cambridge Associates, has been advocating for its clients to invest in bitcoin since at least 2019. 

Famed Hedge Funders Mark Yusko and Mike Novogratz serve institutional bitcoin investors at their firms, Morgan Creek and Galaxy Digital, respectively, and Forbes30 Under 30 member Hunter Horsley founded Bitwise Asset Management to serve institutional investors. In May Canadian firm 3iQ started trading a bitcoin fund on the Toronto Stock Exchange, joining London-based Coinshares and Switzerland-based Amun, which offer exchange-traded notes similar to Grayscale’s products in other jurisdictions.

The massive inflow of funds to Grayscale sister company Genesis Capital, which added over $2.2B in new loan originations in Q2, is also evidence of institutional interest. But for the most part, the clients of these firms remain incredibly private, making the soon-to-be changed 13F reports on GBTC investment activity a crucial source of investor data.

Earlier this year U.S. attorney general William Barr announced