Bitcoin Giant Grayscale Bolster Institutional Offerings, Launches Stellar Lumens Trust
While Bitcoin (BTC) and a majority of cryptocurrencies, save for Augur’s REP, have remained in a mundane price lull to start 2019, this industry’s upstarts have forged ahead. Grayscale Investments, a self-proclaimed “global leader in digital asset management,” recently launched an investment vehicle centered around Stellar Lumens (XLM) in a seeming bid to spark Wall Street interest.
Related Reading: Bitcoin Startup BitGo May Spark Wall Street Participation In Crypto
Meet Grayscale’s Trust For “Ripple Competitor” Stellar Lumens
On Thursday, Grayscale, one of crypto conglomerate Digital Currency Group’s foremost branches, launched an in-house Stellar Lumens Trust, slated to centered around XLM, an asset often related to Ripple’s XRP.
1/ We are excited to announce two big developments! First, today marks the launch of Grayscale Stellar Lumens Trust! Investors can now gain exposure to the price movement of XLM through a traditional investment vehicle. For more info go to https://t.co/izJooCsKwS
— Grayscale (@GrayscaleInvest) January 17, 2019
For those who missed the memo, Stellar, backed by the fittingly named, Jed McCaleb-backed Stellar Development Fund, is a blockchain-based project focused on revolutionizing the global banking system from the ground up.
In a recent interview, as covered by algo investing, McCaleb, who founded Ripple Labs (formerly Opencoin) and Mt. Gox, claimed that the cryptocurrency he birthed “should” be used as a “universal payment network,” subsequently touching on the project’s ability to facilitate “cross-border payments and tokenizing value of any time.”
Grayscale’s newfangled offering is reminiscent of its investment trusts for BTC, XRP, among other leading cryptocurrencies. In fact, Grayscale’s XLM trust is the ninth of its kind.
In a company release, Michael Sonnenshein, the managing director at crypto startup, claimed that this novel instrument is a part of Grayscale’s push to offer investors exposure to “established blockchain projects with substantial traction and resources.”
Sonnenshein expanded on his firm’s rationale in an interview with Fortune’s “The Ledger” column. The Grayscale insider claimed that the launch of the Stellar Lumens Trust is a byproduct of client demand. Sonnenshein, formerly of J.P. Morgan, Barclays, and Bank of America, added that he’s optimistic about Stellar’s prospects in finance, especially in the subsectors of foreign exchange and cross-border processes. Referring to Stellar’s technology and proposed use cases, the managing director elaborated:
An American bank may be keeping large amounts of currencies in foreign banks, and to be able to bring those balances of foreign currencies onto a balance sheet as working capital is valuable… [With Stellar,] financial institutions won’t be required to hold balances all over the place. This will improve efficiency and shore up balance sheets for other uses.
Data from Grayscale’s website reveals that the Stellar Lumens Trust starts its life with $0.4 million under management, meaning that ~3,870,000 XLM is currently held by Grayscale’s most recently-launched offering.
The advent of Grayscale’s XLM fund comes months after the organization made a multi-million dollar bet on Horizen’s ZEN, a nascent privacy-centric digital asset for security-conscious investors. Per previous reports from algo investing,
According to the aforementioned press release, Grayscale has also changed the names of all of its “single-asset products.”
Grayscale Still Bullish On Wall Street Bitcoin Foray
In the aforementioned Fortune interview, Sonnenshein also rebutted the sentiment that Wall Street has slowed its entree into cryptocurrencies and blockchain technologies.
Weeks ago, Bloomberg claimed that financial institutions have put their ventures into cryptocurrencies on the backburner. Later, The Block divulged that Coinbase has begun to pivot away from Wall Street due to waning interest.
However, the Grayscale head remarked that this is far from the case. Sonnenshein noted that shortcomings, like Bakkt’s delay, is a byproduct of innovators “trying to get it right.”
His comments come just days after the Winklevoss Twins, two industry insiders behind a preeminent Bitcoin ETF application, revealed that the delay of investment vehicles is acceptable. Twin Tyler noted that the SEC’s hesitance to green light products en-masse is logical, explaining that since a Bitcoin ETF will be the first of many crypto-backed vehicles, “we need to get it right.”
Regardless, in an evident testament to growing demand, Sonnenshein divulged that Grayscale’s asset under management figures continue to swell, attributing this theme to growing interest from “professional investors.”
And the publicly-available numbers corroborate this. In December, reports noted that Grayscale managed upwards of 203,000 BTC, more than 1% of all of the cryptocurrency currently in circulation.
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