“Heavens! A Yale man!”
— Thurston Howell III, “Gilligan’s Island”
Despite how Harvard man “Thurston Howell” feels about Yale, the people running the university — especially the people running its $30 billion endowment fund — are no dummies.
This fund is Yale’s largest source of revenue. This year, it’s expected to contribute 34% of the university’s net revenues. And for fiscal 2019, it’s directing almost 60% of its assets into alternative investments like venture capital, hedge funds and leveraged buyouts.
One of those assets is digital currencies.
Specifically, Yale is investing a chunk of that $30 billion endowment in a new cryptocurrency fund that invests in “early stage” crypto-focused projects, new blockchains and digital asset exchanges, according to Bloomberg News.
It is one of the few big institutions to invest in cryptocurrencies. But Yale is doing more than just dipping its toe in crypto assets. It previously invested in a $300 million crypto fund run by Andreessen Horowitz.
No question, the brain trust at Yale believes there is big money to be made in cryptocurrencies.
At the same time, Wall Street is rushing to make it easier to invest in cryptocurrencies …
TD Ameritrade (AMTD) and high-speed trading giant Virtu Financial are developing a crypto exchange called ErisX, which will create cryptocurrency derivatives that you can buy in your regular brokerage account.
“We wanted to find something that brings cryptocurrency to customers where they can see it on an actual exchange, something they feel comfortable with in regulated space,” said J.B. Mackenzie of TD Ameritrade.
They plan to roll out direct trading in Bitcoin, Ethereum, Bitcoin Cash and Litecoin early next year. CME Group Inc. and the Chicago Board Options Exchange rolled out Bitcoin futures late last year. And this new TD Ameritrade-backed exchange will offer futures contracts and “spot” trading of digital coins as well.
TD Ameritrade has 11 million customers with more than $1 trillion of assets. So we’re talking about a mountain of potential crypto investors, along with a potential mountain of investing dollars.
Even if you are reluctant to invest in cryptocurrencies directly, there are dozens and dozens of publicly traded stocks that have made blockchain (the encryption technology behind all cryptocurrencies) a substantial — if not major — part of its future business plans.
And these cryptocurrency-related stocks are not high-risk, garage-type startups that are almost certain to lose money.
Some of the biggest blue-chip companies in the world are spending serious dollars to morph their businesses into blockchain superpowers. Within this transformation is a huge investment opportunity.
What household names am I talking about? Here are four (out of hundreds) of examples …
- IBM (IBM): IBM is going all-in on blockchain. A Bank of America analyst estimates that IBM’s blockchain initiatives already contribute more than $7 per share in value.
- Microsoft (MSFT): Microsoft has been quietly expanding its blockchain offerings since 2015. And it is using its blockchain-as-a-service offerings to help other companies improve the security of their business transactions.
- Nasdaq (NDAQ): Nasdaq announced it now processes some of its securities transaction on the Nasdaq Private Market, which utilizes blockchain technology. It has a blockchain platform called Nasdaq Linq that it hopes can open the private securities market to global investors.
- Oracle (ORCL): Oracle offers a service called Blockchain Cloud Service. This uses blockchain technology to securely perform identity authentication, information sharing, single sign-on, and smart contract creation. Oracle is collaborating with Infosys (INFY) to expand its BCS service on the enterprise level.