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World’s Largest Financial Institutions are Still Placing Big Bets on Crypto

Last Updated March 4, 2021 3:14 PM
Joseph Young
Last Updated March 4, 2021 3:14 PM

Sequoia, Baidu, Nasdaq, and Fidelity are amongst some of the largest VCs, technology conglomerates, and financial institutions to make big bets on crypto in the past week.

Despite the bear market which has led major cryptocurrencies to lose about 80 to 90 percent in value on average, both digital asset-related businesses and blockchain protocols are raising tens of millions of dollars from high profile institutions.

Interest is Still There

On December 4, Nasdaq, the world’s second largest stock market operator in the world, and Fidelity, the fourth largest asset manager in the global market, invested in a cryptocurrency exchange called ErisX.

The company secured a $27.5 million funding round led by Nasdaq Ventures and Fidelity Investments in less than two months after it raised a funding round from TD Ameritrade, the electronic brokerage giant valued at $30 billion.

At the time, J.B. Mackenzie, the head of futures and foreign exchange trading at TD Ameritrade, said that the firm’s investment in ErisX demonstrates its interest in establishing a platform with which accredited investors and retail traders in the U.S. market can invest in cryptocurrencies in a fully compliant and protected ecosystem.

“We wanted to find something that brings cryptocurrency to customers where they can see it on an actual exchange, something they feel comfortable with in regulated space,” Mackenzie said  in October.

With the newly acquired capital, ErisX CEO Thomas Chippas said that the company will begin to aggressively expand its team throughout the country to eventually provide support to institutional and individual investors in all 50 U.S. states.

Chippas said:

“With increasing financial support from leading edge firms, ErisX stands to provide the most robust, secure and regulated digital asset offering available to both institutional and individual participants. Closing this second round of funding enables us to continue building our modern platform and expand our team.”

For Nasdaq and Fidelity, an investment in an emerging sector like the cryptocurrency exchange market, regardless of the success and sustainability of the business, is often approached with caution because deals such as their $27.5 million bet on ErisX demonstrate their confidence in the long-term growth of the sector.

A major investment in a cryptocurrency business during a period of uncertainty and doubt could rekindle the interest from investors in the global market towards cryptocurrencies.

Throughout this year, the cryptocurrency market has shown signs of survivability and relatively high demand from individuals and institutions across the world, showing a glimpse of hope to investors that have bet on the market based on the potential of the asset class in the long run.

High profile deals, like the Nasdaq and Fidelity-led funding round, could serve as a reaffirmation to potential investors that the industry surrounding the asset class is not a fad and that it will survive the bear market as it has over the last 9 years.

Blockchain Protocols Also Raising Money

This week, Sequoia, one of the most influential venture capital firms in Asia, and Baidu, China’s biggest search engine operator, invested $35 million in a blockchain protocol created by a Turing award winner named Dr. Andrew Chi-Chih Yao, an information sciences professor at the prestigious Tsinghua University.

ICOs have also raked in more than $60 million in the month of November amidst increasing regulatory pressure from the U.S.

Featured image from Shutterstock.