Digital Currency Group to receive investments from MasterCard, slows down Bitcoin deals
The past couple weeks have been exciting for Barry Silbert. Last week, the financial guru sold his first company, SecondMarket Solutions, to Nasdaq. Earlier this week, Silbert announced the launch of his next startup, Digital Currency Group (DCG). According to an article by Forbes, the goal of DCG “is to accelerate the development of a better financial system and we do that by building and investing in bitcoin and blockchain companies and leveraging our insights, our network and our access capital.” DCG has received investment backing from a number of prominent companies including Bain Capital, MasterCard, New York Life and Transamerica.
Despite the progress made by Silbert’s companies, DCG’s investment arm will be slowing down on Bitcoin deals. The Wall Street Journal reported that Ryan Selkis, director of investments at DCG, expressed concerns about the Bitcoin sector.
“Recently, we haven’t made as many investments in bitcoin,” said Selkis at the Money20/20 conference in Las Vegas. He expressed particular concerns about the Bitcoin startup environment, including difficulties in raising Series A funding and increased compliance costs related to starting digital currency businesses. “The costs to start a company without going to jail have gotten significantly higher,” Selkis said.
For those still looking to get involved in the industry, Selkis recommended using the term “blockchain.”
“We advise, cross out ‘bitcoin’ where you can and put in ‘blockchain.’ It’ll solve most of the problems,” Selkis said.
Despite these concerns, DCG is moving forward. Silbert decided to set DCG up as a company rather than a fund to allow flexibility to buy, invest in and start companies.
“If we had gone down the path of creating a fund or a few funds, we would have had different stakeholders in different funds, and we wouldn’t be able to make decisions around capital and business allocations without potentially having conflict issues. Lastly, by being a company, we can take the company public,” Silbert explained.
The company’s subsidiaries will be over-the-counter trading firm called Genesis Global Trading and digital currency asset management firm Grayscale Investments.