London-based pension giant M&G Plc. has invested a substantial $20 million in GFO-X, a UK-based crypto derivatives trading platform. This investment comes as a positive signal following the collapse of FTX last year, with M&G’s bold move showcasing a potential reversal in institutional support for cryptoasset infrastructure.
About M&G Investments
M&G Investments, the asset management arm of M&G Plc., manages a portfolio of assets totaling £129 billion, including the Prudential With-Profits Fund. The pension fund’s recent investment in GFO-X is part of a larger $30 million series B funding round, with M&G’s Crossover strategy playing a significant role.
About GFO-X and its Strategic Partnership
GFO-X, the recipient of M&G’s investment, had previously formed a strategic partnership with LCH SA, a London Stock Exchange Group-majority owned entity. The collaboration aims to launch a service called LCH DigitalAssetClear by the end of 2023, clearing Bitcoin index futures and options contracts traded on GFO-X. Despite facing some delays due to client demand, the service is anticipated to go live in the first quarter of 2024.
About the Funding
M&G’s investment not only reflects a strategic move in supporting GFO-X but also underscores a potential shift in institutional sentiment toward cryptoasset infrastructure. The collapse of FTX in November 2022 prompted traditional asset managers to write down their stakes to zero. However, M&G’s injection of $20 million into GFO-X marks a departure from this trend, indicating renewed confidence in the sector.
Crypto Investments by Pension Funds
This move by M&G aligns with the broader trend of traditional institutional players increasing their involvement in the crypto space. Analysts anticipate a further expansion with the introduction of a spot Bitcoin ETF, projecting increased exposure of traditional financial institutions to the crypto market.
Other Instances of Pension Fund Crypto Investments
In addition to M&G, other pension funds are venturing into the crypto realm. South Korea’s National Pension Service, the country’s largest investment group, made a notable investment in Coinbase during the third quarter of 2023. This marked the first instance of the National Pension Service including a virtual asset-related company in its U.S. stock portfolio, procuring 282,673 shares of Coinbase stock valued at approximately $19,934,100.
M&G‘s bold investment in GFO-X signals a turning point in institutional support for cryptoasset infrastructure. As traditional players increasingly recognize the potential of the crypto market, such investments could pave the way for further integration and growth. The move also underscores the broader trend of pension funds diversifying their portfolios by entering the crypto space.
Why did M&G invest in GFO-X?
M&G’s investment in GFO-X is a strategic move to support the UK-based crypto derivatives trading platform, indicating renewed institutional confidence in the crypto market following the collapse of FTX.
What is the significance of GFO-X’s partnership with LCH SA?
GFO-X’s strategic partnership with LCH SA aims to launch a service called LCH DigitalAssetClear, clearing Bitcoin index futures and options contracts. This collaboration enhances the platform’s offerings and contributes to the overall growth of crypto infrastructure.
How are other pension funds getting involved in the crypto space?
Pension funds, including South Korea’s National Pension Service, are increasingly seeking exposure to crypto firms. This diversification strategy reflects a broader trend of traditional financial institutions entering the crypto market.