Blockstream scores billions in investment to launch 3 Bitcoin funds and lending

Bitcoin developer Blockstream has received an investment worth billions of dollars to launch three institutional-grade Bitcoin investment solutions, the company has confirmed. Two of the funds will enable lending.

Canada-based Blockstream announced plans for the funds in January. One fund will underwrite Bitcoin-backed loans. Another will use U.S. dollars as collateral for purchases of cryptocurrency. The third will function like a hedge fund, Bloomberg reported in March, citing unidentified sources.

Blockstream’s makes its asset management debut

Blockstream confirmed the Bloomberg story on X shortly after it appeared. The funds will go live on April 1, and the firm will begin adding external capital on July 1. 

Blockstream announced the formation of two of the funds in January. They mark the debut of Blockstream’s asset management division. The company said the funds were made possible by a $210 million investment round led by Fulgur Ventures in October that was intended to accelerate the company’s layer-2 development. 

Funding from Fulgrum boosted Swiss crypto bank Sygnum into unicorn status.

The Blockstream Income Fund will loan U.S. dollars against Bitcoin collateral and focus on loans ranging from $100,000 to $5 million, a sector the company says is underserved, according to the company. Blockstream has a network of Bitcoin-native startups and other businesses are beginning to establish Bitcoin treasuries that will create a pipeline of borrowers. The fund targets yields in the high single digits to low teens.

The Blockstream Alpha Fund will combine uncorrelated strategies to provide “consistent, risk-adjusted outperformance within the Bitcoin ecosystem.” The Bitcoin Yield Fund is described on the Blockstream website as “coming soon.” Its post on X implied that all three funds would launch at the same time. The funds are intended for institutions and qualified investors.

Blockstream loans will fill a wintry gap

The crypto winter of 2022 diminished the liquidity available in the system with the closure of lenders BlockFi, Genesis Global Capital, Voyager Digital, Three Arrows Capital, and Celsius, as well as numerous smaller lenders. The collapse of FTX also shook the entire industry. 

Today, some centralized and decentralized exchanges offer loans. Credit can be obtained from other decentralized finance apps as well.

Blockstream also made a $75 million strategic investment in digital asset services and custody provider Komainu in January. The investment aimed to integrate Blockstream’s Liquid Network asset management platform into Komainu’s off-exchange margining & settlement solution to cut transaction times from hours to minutes. It will also integrate Blockstream’s HSM wallet, among other things.

Blockstream was co-founded by its current CEO Adam Back in 2014. Back is a specialist in cryptography and one of the cypherpunks who originated Bitcoin and much-related technology, especially related to privacy and censorship resistance. Back has been identified as Bitcoin inventor Satoshi Nakamoto. He denies that he is Nakamoto.

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