On Thursday (December 10), Massachusetts Mutual Life Insurance Company (“MassMutual”) announced that it had made a $100 million investment in Bitcoin and bought a minority stake in New York Digital Investment Group LLC (NYDIG).
MassMutual is a mutual insurance company (meaning that it is owned by the policyholders) founded on 15 May 1851. Therefore, its focus is on “long-term interests” of its members and participating policy owners. It is headquartered in Springfield, Massachusetts, and it employs around 10,614 worldwide (with roughly 7,000 of those based in the U.S.). As of 3 December 2019, its assets under management (AUM) stood at $567 billion.
According to MassMutual’s press release, it bought $100 million in Bitcoin “for its general investment account in a transaction facilitated by NYDIG.” These bitcoins are “held on NYDIG’s secure, audited, and insured custody platform.”
It is interesting that NYDIG is the company that helped MassMutual because this is the digital asset subsidiary of Stone Ridge Holdings Group LP (a $10 billion alternative asset manager), which announced on October 13 announced that it had bought over 10,000 BTC (currently, worth over $100 million) “as part of its treasury reserve strategy.”
Robert Gutmann, co-founder and CEO of NYDIG, had this to say:
“The strategic equity investment of MassMutual underscores NYDIG’s role as the leading provider of Bitcoin solutions to institutions, banks, and private clients. It also accelerates our white-label business segment, which provides bespoke implementations of our core custody, execution, financing, and AML/KYC capabilities to a rapidly expanding group of large financial institutions…
“We are proud of this incredible moment in the history of both Bitcoin and the insurance industry. This reflects the expansion of Bitcoin to insurance company general investment accounts, as well as NYDIG’s unique ability to meet the complex needs of the most demanding institutional investors.”
Tim Corbett, Chief Investment Officer of MassMutual said:
“We believe that having an equity stake in NYDIG as well as a Bitcoin position in our general investment account will help us deliver long-term value to our policyowners. We look forward to further exploring additional ways to work with NYDIG, consistent with our ongoing focus on innovation and diversification.”
Alexander Leishman, co-founder, CTO, and CEO of Bitcoin-only crypto brokerage River Financial, explained in a Twitter thread yesterday why this is “massive news for Bitcoin.”
He went on to say:
- “The funds in an insurance company’s general account are usually invested very conservatively, as these funds are used to pay policy holder claims.”
- “By investing in Bitcoin, MassMutual has effectively signaled that Bitcoin is considered safe and liquid enough for the largest, most conservative institutions in the world to make an allocation.”
- If I had to guess, MassMutual management probably realized that as yields trend towards zero, it is very risky to NOT own any Bitcoin.
Ross Stevens, the founder and executive chairman of NYDIG, told the Wall Street Journal that other insurance companies had also bought BTC for their general accounts with the help of his company, explaining that near-zero interest rates and a weaker U.S. dollar were making Bitcoin an appealing asset.
Earlier today, Tyler Winklevoss, co-founder and CEO of crypto exchange Gemini, told CNBC’s “Squawk Box Asia” during Singapore’s FinTech Festival that this Bitcoin bull run is different because unlike in 2017 the current Bitcoin bull run is not mainly driven by retail investors, but by institutional investors:
“This is the most sophisticated investors, the smartest people in the room, buying the bitcoin quietly. It’s not a FOMO thing, so it’s very different than 2017. This cast of characters, these companies, these investors were not in bitcoin back then.”
Billionaire investor Mike Novogratz, the Founder and CEO of Galaxy Digital, agrees with the River Financial CEO on what a big deal this announcement by MassMutual is:
Featured Image by “petre_barlea” via Pixabay.com
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.