Crypto Wallet Abra pushes into funds as battle looms with Wall Street firms
Cryptocurrency wallet Abra is getting into fund management, putting it in competition with Wall Street as more institutional money enters the space.
Abra, supported by
(ticker: AXP), on Tuesday announced the launch of a capital management arm with five funds available to accredited investors willing to invest at least $250,000. Three of the funds cover opportunities to earn interest by lending cryptocurrencies, while the others include equity investments and early-stage bets on new crypto tokens.
Abra Capital Management will also offer trading services as well as actively managed and structured products in the future, the group said in a statement. ACM’s plans include venture capital funding for start-up companies focused on computing in Web3, which is being hailed as the next iteration of the internet based on decentralized technologies.
This is just the latest push to capture money entering the digital asset space in a race that sees the rapidly changing world of crypto collide with Wall Street.
Within two days of March, the investment bank
announced a new digital asset arm offering crypto-trading services to clients, while Grayscale, a digital asset manager, unveiled a new fund holding tokens aimed at more traditional equity investors.
Abra’s fund offerings are slightly different in their focus on yield generation, which is a key element of decentralized finance. Holders of
and other tokens, including stablecoins – which are pegged to assets like fiat currencies – are able to earn a relatively attractive yield or interest rate by lending their crypto.
It is a service integrated into Abra’s core offering as a crypto wallet or digital asset storage facility. And it’s critical to how company founder and CEO Bill Barhydt sees their point of difference from other fund options.
Abra’s argument is that these lending products allow institutions to allocate some of their cash to stablecoins, which are less volatile than Bitcoin, and earn outsized returns compared to bank cash. normal business.
“Given the high yields today, even a 10% allocation of these funds to this product can more than double, triple or quadruple your cash returns,” Barhydt said. Barrons.
But crypto lending remains a part of the nascent digital asset industry that is coming under increasing regulatory scrutiny. It also comes with its own risks, including lending assets like Bitcoin that are historically volatile and could drop in value quickly.
In February, BlockFi Lending agreed to pay a $100 million fine to settle charges with the Securities and Exchange Commission and 32 states over its own retail investor lending products. This was the heaviest penalty ever related to an enforcement action on digital assets.
At the heart of the case was the regulators’ argument that BlockFi’s lending products were securities. As such, they should have been registered with the SEC before being made available to a wider audience of retail investors beyond accredited investors.
Abra is in talks with regulators, Barhydt said, and has received no explicit concerns about its retail or institutional loan offerings.
“I don’t agree with the way the law is structured around the definition of accredited investors, but that doesn’t matter. Those are the rules,” he said. Barhydt added that Abra had discussed the possibility of registering the products with the SEC, but “we’re not that far off yet.”
Abra’s CEO noted that his group issues its interest-bearing crypto products through a trusted bank; accounts for its Abra Earn product are not issued or managed by Abra but rather by Prime Trust.
“We took a much heavier approach for ourselves,” Barhydt said. “We delayed the initial launch of Abra Earn for a very long time in order to get this banking-based model in place.”
Write to Jack Denton at firstname.lastname@example.org