Grayscale Reports 'Slow' Business During Q4 2018, Company Still Raises $30.1 Million

Digital Currency Group subsidiary, Grayscale Investments reportedly raised $30.1 million during the last quarter of 2018.

The New York-based investment company had raised a record $95.4 million during the same time period in 2017. Commenting on the considerable decline in the amount of funds Grayscale’s investment packages have attracted, Michael Sonnenshein, the firm’s managing director, told The Block he was not surprised about Grayscale’s performance during Q4 2018.

Sonnenshein, a former associate at JPMorgan and (also previously an) analyst at the Bank of America and Barclays, said the last three months of 2018 were a “little bit slower” - as expected. During Q3 2018, Grayscale managed to raise significantly more funds as the digital asset investment firm received $81.1 million in inflows.

Attributing the decline in investments made in the final quarter of 2018 to “seasonal challenges”, Sonnenshein said he was still confident as Grayscale’s full-year inflows were valued at a substantial $359.5 million. Notably, Sonnenshein revealed that Grayscale’s overall performance for FY 2018 was its strongest, or best, since the firm was established in 2013.

"Majority" Of Clients Prefer Bitcoin (BTC)

According to Grayscale’s asset managers, 50% of the firm’s total inflows in Q4 2018 were from institutional investors who were mostly based in the US. A large percentage of the cryptoasset investment firm’s clients are also retirees, the company revealed.

Despite the sharp decline in bitcoin’s (BTC) price - after recording all-time highs of nearly $20,000 in late 2017 to currently trading at around $3,500, “the majority” of Grayscale’s inflows have been in bitcoin-related investments. Most of Grayscale’s clients prefer to invest in the company’s “passive" Bitcoin Trust, while limited investments are made in altcoins products such as the Bitcoin Cash Trust, Sonnenshein said.

Explaining why most investors continue to prefer bitcoin-related investments, Grayscale’s managing director noted “that’s where investors have spent the most time, hence they’re most comfortable with that asset.” Significantly more investors trust bitcoin over other cryptos because the flagship cryptocurrency has “overcome so much adversity”, Sonnenshein added.

Recently, Barry Silbert, the CEO of the Digital Currency Group (Grayscale’s parent company), had remarked that “bitcoin is king.”

DCG: Involved In 110 Crypto-Related Businesses

Silbert’s comments came during an interview with CNBC - during which he predicted that most “digital tokens” would “go to zero.” Having worked extensively as an investment banker, Silbert is notably one of the earliest and most active investors in the cryptoasset industry.

Established in 2015, the Digital Currency Group (DCG) is focused on "building and supporting the largest early stage investment portfolio in the digital currency and blockchain ecosystem."

DCG is reportedly involved in 110 crypto-related businesses in 30 different countries. Some of the crypto and blockchain firms DCG has invested in include Abra, BitPay, BitPesa, Blockchain, Blockstream, Brave, Chainalysis, Circle, Coinbase, Kraken, Ledger, Ripple, and Xapo.

The Swiss Warm to Crypto Investments

The Swiss are shifting more focus to cryptocurrency investments. This is according to a survey taken on behalf of Migros Bank, which revealed that a growing proportion of Swiss residents are invested or actively looking to invest in cryptocurrencies.

The survey which was conducted by market research institute Intervista showed that 7% of savers between the age of 18-55 already hold cryptocurrencies such as ether and bitcoin. Even more encouraging was the finding that 7% of those aged between 30 and 55 plan to extend their crypto portfolios in the future.

Unsurprisingly, the survey found younger participants to be the most bullish on the long term prospect of crypto. According to 13%, aged between 18 and 29, cryptocurrencies will become more "important" in the future.

Less extraordinary were the results of the older generation. Per the survey, respondents aged over 55 were much less likely to own cryptocurrencies, and only 0.5% thought that it was a worthwhile long term investment. 

Switzerland Ups the Ante on Crypto Regs

This uptick in demand for cryptocurrency comes just after Switzerland imposes more stringent crypto regulations. 

Jumping off recommendations issued within both the Financial Action Task Force (FATF) guidance and the EU's 5th anti-money laundering directive (5AMLD), the Swiss Financial Market Supervisory Authority, or FINMA, recently opted to tighten their travel rule.

The rule, which requires crypto firms to disclose customer information for transfers above $1,000, was initially set by FINMA at a threshold of $5,000 (5,000 CHF) but has since lessened to just $1,000 per the FATF and 5AMLD directives. 

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