University of Michigan to Increase its Investment in Million Dollar Crypto Fund

Omar Faridi

The prestigious University of Michigan’s financial endowment fund has joined a growing number of institutional investors that have made substantial investments in the nascent digital asset market.

Similar to how many other new investors gain exposure to the cryptoasset market, the University of Michigan’s crypto-related endowment is backed by giant venture capital firm, Andreessen Horowitz. Although not as large as Yale’s $25.4 billion endowment (another top-ranked university fund that invested in Andreessen Horowitz’s $300 million crypto fund), University of Michigan’s $11.9 billion endowment consists of thousands of individual contributions.

Andreessen Horowitz Manages Crypto Separately From Other Investments

Proceeds earned from the multi-billion dollar endowment are used to pay for various university-related expenses such as grants and scholarships, professorships, and other educational initiatives. As mentioned in an “item for information” document posted on University of Michigan’s official website (on February 21st), the higher education institution’s endowment will increase its investment in a cryptocurrency venture fund.

In June 2018, the University of Michigan had invested $3 million in a crypto network fund called CNK Fund I, L.P.. This fund focuses on “technology companies across the spectrum of seed, venture, and growth stage opportunities.” Moreover, Andreessen Horowitz (or a16z) reportedly decided to allocate a significant portion of its investments to a cryptocurrency-focused fund because the VC firm believes digital assets have “become an important area of innovation and entrepreneurship that warrants focused attention.”

As explained in University of Michigan’s document: 

As opportunities related to cryptonetworks transition from being undefined to becoming more visible and sharply defined, the need for a separate thematic fund may recede.

US Pension Funds Participate In $40 Million Crypto Fund 

However, the announcement noted that the current regulatory framework for cryptocurrency-related projects is “potentially more cumbersome” than the more traditional types of IT investment funds. At present, the crypto space is categorized as a “distinct type of technology” by developers, funding sources, and businesses, the University of Michigan’s notice stated. This is why Andreessen Horowitz is managing its crypto-related investments through a separate fund (for now).

On February 12th, Morgan Creek Digital Assets announced that it had managed to secure $40 million for a new VC fund focused on crypto and blockchain-related initiatives. For the first time, several notable American public sector pensions participated in Morgan Creek’s Blockchain Opportunities Fund. They included funds invested by the FairFax County, Virginia Police Officer’s Retirement System, and the Employees’ Retirement System for government employees.

Neutral Dollar Stablecoin Founder Explains How to Access Shared Liquidity Pools

Matthew Branton, the Founder and Chief Technology Officer at Neutral, a smart contract-enabled platform that provides various financial instruments for the cryptocurrency industry, has predicted that stablecoins will have “a tremendous impact on the future economy.”

Branton, a computer science graduate from Lafayette College, told CryptoGlobe that stablecoins offer “access to a digital currency that can enable payments, credit, and banking services which many people don't have access to.”

According to Branton:

[Stablecoins are] innovative digital assets [that] will help lower the barriers for [major financial] applications and [they will also] help people transact in value [systems] they are familiar with, such as the USD [and other fiat currencies.]

“Cultivating Healthy Dialogue to Help Build Wider Understanding” of Stablecoin Market

In response to a question about how the traditional financial system could be upgraded (in terms of both the regulatory framework and technological infrastructure) so that it can allow users to legally acquire stablecoins and other digital assets, Branton remarked:

In order to ensure that regulation evolves in tandem with advances in financial technology (FinTech), dialogue between regulators and innovators is essential. Cultivating a healthy dialogue among fintech project [developers], stakeholders and regulators of traditional finance will help build wider understanding of the benefits of stablecoins, and in turn accelerate the creation of regulation and infrastructure that accommodates stablecoins in the global economy.

Neutral Dollar Aims to Provide “Diversified Exposure” to Investors at “Lower Risk”

When asked what unique value proposition the Neutral Dollar stablecoin offers, which may not currently be available in the cryptoasset market, and how this is supposed to be relevant and useful, Branton said:

The Neutral dollar provides diversified exposure, presenting a lower risk alternative against other stablecoins (which contrary to their name, may not exhibit stability) in the market. In addition, the Neutral Dollar functions in a way that creates an additional layer that allows for shared liquidity amongst constituents stablecoins, a property that isn't inherent in their design. Given the fragmented and nascent nature of the crypto market structure right now, this solution is particularly relevant and unique in the marketplace.

Responding to a question about the potential impact he expects his company’s line of products to have on the cryptoasset market, Branton stated:

The impact of our products is to not only give end-users a better means to invest, trade, or hedge cryptoassets, but to also facilitate liquidity and engage in better portfolio management practices through our products. In order for the digital asset space to reach its full potential, the industry needs reliable financial instruments that take us beyond the limitations of fiat currencies, while also upholding the highest standards in stability and transparency. In the longer term, we plan to explore the launch of a suite of financial products to improve market infrastructure and activity.

Digital Asset Security Is “Quite Solid”

Commenting on how we can ensure the security of our assets, including stablecoins users might acquire, since the technology used to transact in these assets is highly technical, Branton noted:

Given that collateral is on-chain and smart contract based, security is decentralized in nature and quite solid. Asset safety is still the responsibility of the end-user — crypto-storage extends beyond the case of stablecoins and Neutral Dollar itself.

He added: “Ultimately, once a Neutral Dollar token is deployed on smart contract networks, it will function completely autonomously. The math and algorithms that govern its operation will operate independently of a centralized entity and in a transparent manner, and provide continuous services on the network.”