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Singapore Govt’s Wealth Fund Invests in Coinbase’s $300 Million Round

Last Updated March 4, 2021 2:54 PM
Mark Emem
Last Updated March 4, 2021 2:54 PM

GIC Private Limited, the sovereign wealth fund of Singapore, was one of the investors in Coinbase’s $300 million fundraising round last year, it has now been revealed.

While there were other investors in the Series E round, GIC’s participation was closely guarded until now, per Bloomberg . Other investors who took part in the fundraising round included renowned Silicon Valley venture capital firm Andreessen Horowitz. The Series E round gave Coinbase a valuation of approximately $8 billion.

Funds Allocation Reveals Coinbase’s Global Expansion Plans

The fundraising round was led by Tiger Global Management as CCN.com reported at the time. As the president and COO of Coinbase, Asif Hirji , said then, the funds raised were earmarked for global expansion.

Additionally, they were to be invested in the development of utility applications such as a planned stablecoin. Coinbase also announced that the funds would be used to develop features that would attract institutional investors to crypto. Among these features included custodial services for cryptocurrencies.

While sovereign wealth funds are typically conservative, GIC has not shied away from investing in nascent tech niches. As GIC explains on its website, the fund’s investments in technology span all the phases of a firm’s financing life-cycle. The sovereign wealth fund invests directly as well as via external fund managers.

Going by its Investing Philosophy, What does GIC see in Coinbase?

As one of the investment firm’s guiding philosophies, GIC looks for startups that are disruptive in nature:

First, as technology is reshaping entire industries, we need to look beyond traditional investment categories. Incumbents are constantly challenged by disruptors from outside the traditional verticals.

GIC’s investment in Coinbase is not the sovereign fund’s first in a cryptocurrency company though. According to Business Insider , GIC was one of the investors that raised $450 million for Bitmain while it was preparing to list on the Hong Kong Stock Exchange. Other investors included IDG Capital and Sequoia.

GIC in the ‘Cryptocurrency Firms but not Cryptocurrencies’ Bandwagon

However, GIC has avoided cryptocurrencies despite some institutional investors such as pension funds dabbling in the nascent asset class. According to the chief investment officer of GIC, Jeffrey Jaensubhakij, this is because cryptocurrencies are not issued by governments. Additionally, the lack of regulatory safeguards among other issues has been a put-off, according to The Straits Times :

Cryptocurrencies are not issued by any government and are not backed by any asset or issuer. There is no regulatory safeguard for investments in cryptocurrencies. We consider the surges and changes in prices of cryptocurrencies to be driven by speculation.

Interestingly, the sovereign wealth fund recently undertook a joint investment  with Mizuho, a Japanese bank that has embraced cryptocurrencies. As CCN.com reported recently, Mizuho is set to launch a stablecoin coin pegged to the Japanese yen in March. In their joint investment, the two organizations pumped $265 million into Vietcombank.