Following reports that Yale invested in the cryptocurrency investment fund Paradigm, a group of other prominent university endowments have reportedly invested in cryptocurrency funds. Harvard, Stanford, Dartmouth, UNC Chapel Hill, and MIT have each invested in at least one cryptocurrency fund through their respective endowments.
University endowments participating in cryptocurrency investing is a significant step forward that represents a larger move by institutional money entering the cryptocurrency markets. University endowments can be enormous, with Yale’s total assets totaling $29.4 billion, making it the second largest university fund in the world behind Harvard’s $39.2 billion.
Institutional Money on The Move
There has been a general reluctance on the part of institutional investors to enter the cryptocurrency market due to its volatility, lack of clear regulations, and complexities at both the technical level and market landscape. Major universities gaining exposure to the cryptocurrency market is a signal that proponents of the industry like Mike Novogratz have been pointing to as the start of institutional money entering the space.
The investments by notable universities also help bring legitimacy to the asset class that is widely regarded as immature and high-risk by the mainstream and media. The universities have reportedly invested tens of millions into cryptocurrency funds, which are not direct investments into digital assets themselves, but nonetheless, give them exposure that many other institutions have not felt comfortable with yet.
Yale was the first university endowment fund to invest in the space, investing in the cryptocurrency fund Paradigm that is comprised of Coinbase co-founder Fred Ehrsam, Sequoia Capital’s Matt Huang, and Charles Noye of Pantera Capital. Yale’s fund is led by David Swensen, and nearly 60 percent of their investments are targeted towards alternative investments such as VC and hedge funds.
Earlier this year, Ari Paul speculated that many university funds were waiting for prominent university funds like Yale to enter cryptocurrency markets before committing themselves. The move by Yale, Harvard, and MIT could potentially jumpstart that trend where a flurry of lesser-known universities dive into the markets over the coming months.
All of this comes with some significant developments on the regulatory front for digital assets. The SEC recently requested more comments for the recently rejected 9 Bitcoin ETFs that it is reviewing. Further, Circle — the payment and cryptocurrency investing app — moved to acquire SeedInvest, which if approved by regulators, would allow startups to raise funds through digital token sales on its platform.
Parallel with developing initiatives by major exchange players Coinbase and Gemini to attract institutional money to the industry, the move by university endowments to enter cryptocurrency markets is another sign that the end of 2018 is shaping up to have a substantial impact on the future landscape of cryptocurrencies in the U.S.