Grayscale Investments, the firm which runs Bitcoin Investment Trust, announced Thursday that it will setup a fund that will provide professional investors an exposure to Stellar blockchain and its digital currency Lumens.
Stellar, the sixth largest cryptocurrency by market cap, was the pet project of Jed McCaleb, an inspirational figure in the crypto world who originally founded Ripple and the popular, defunct exchange, Mt. Gox.
The project, which is backed by the Fintech giant Stripe, pushes its Lumens digital currency to become part of global banking activities. The policy decision by Grayscale to establish a committed fund for Stellar is likely to promote the currency, as the company, which is a subsidiary of the crypto giant Digital Currency Group, has a team of well- informed customers, including hedge funds and family businesses.
The recently launched Stellar Lumens Trust is the ninth single asset product of Grayscale. The list includes its flagship product based on Bitcoin and funds based on XRP, Ethereum and more specialized cryptocurrencies such as Zen.
According to Michael Sonnenshein, Managing Director, Grayscale established the new product as an answer to investor demand. He added that he is seriously bullish about everyday use case of Stellar, which acts as a bridge currency between fiat currencies of different countries.
Michael Sonnenshein said “I think the theory is a sound one. An American bank may be keeping large amounts of currencies in foreign banks, and to be able to bring those balances of foreign currencies onto a balance sheet as working capital is valuable. Financial institutions won’t be required to hold balances all over the place. This will improve efficiency and shore up balance sheets for other uses.”
The idea of using digital currencies to release locked capital in nostro accounts is not distinctive to Stellar. Ripple promoted almost the same concept and encouraged lenders to use a solution called XRapid to conduct cross- border transactions using the XRP crypto.
For now though, the use of XRP and Stellar Lumens as an intermediate currency by financial institutions is still in a testing stage, but so many believe it could gain momentum, which investors believe will lead to an increase in the value of cryptocurrencies.
In the meantime, the release of the new Stellar Fund is even more proof for Sonnenshein that news reports of a prolonged slump in the crypto markets have been poorly overestimated. He said that net capital inflows into Grayscale continue to climb, attributing this to the increasing interest of professional investors in cryptography and the availability of crypto products with the new regulatory checks and balances necessary by institutions.
Sonnenshein also dismissed recent studies from the mainstream media that indicated that crypto firms struggle to get their ideas to Wall Street. He explained that reports of product delays and other delays simply reflect the efforts of crypto industries to “try and make it right” and get ready for a long match.
