While pension funds and other investors may still be on the sidelines due to regulatory uncertainties, some university endowment funds have begun investing in cryptos according to John Lore, founder of Capital Fund Law Group which specializes in providing legal services to hedge funds.
“I can’t say the names of [the academic institutions] because that’s attorney-client but we have people mostly on the East Coast that have begun doing investments in this space on a fairly modest basis,” he said before further adding:
“We see academia as a tie between these somewhat young and enthusiastic fund managers and capital raising.”
Just five of the top US university endowment funds hold more than $120 billion in combination according to 2014 data.
They represent money donated to universities and are meant to be invested to grow the principal as well as to provide additional income for future investing and expenditures.
Only a small amount, however, is being invested, with Lore stating they are “getting involved on a limited basis for strategic reasons.”
What those strategic reasons are, is unclear. Diversification, presumably, would be one as cryptos tend to be uncorrelated with any other asset class. Securing some of the very limited supply may be another.
That’s especially the case as crypto exchanges and investment products are now becoming a lot more mature.
LexisNexis Risk Solutions, for example, just recently announced they are working with a crypto exchange, Blockbid, to provide them with the “type of bank-grade capabilities” they’ve offered to “banks around the world for decades.”
While more widely universities are making a different sort of investment in this space by training the next generation of blockchain developers.
Many of them already offer university level courses, and some even masters or higher. A trend that may accelerate following Ripple’s commitment of $50 million towards the University Blockchain Research Initiative.
That involves 17 universities around the world to which Ripple has said they will donate those funds for open ended blockchain research projects.
One such participant is University College London (UCL), with Dr Paolo Tasca, Executive Director at the Centre for Blockchain Technologies at UCL, stating:
“To improve technology literacy and drive the adoption and integration of blockchain into a range of business processes, we are dedicated to groundbreaking scientific research and teaching in this field.”
Direct investment into crypto ownership by such huge endowment funds, however, is very much a new development and may well suggest the institutional investment stage has now begun.