Blythe Masters is perhaps the most maligned human being on earth by silver investors due to suspicions of JP Morgan’s manipulation in the silver market. Well she’s back in the news, but it has nothing to do with silver. Rather, the news relates to the fact that her ex-husband and commodities traders, Daniel Masters, has just launched a Bitcoin hedge fund from the island of Jersey, a British Crown dependency.
We learn from Newsweek that:
Daniel Masters, a 50-year-old veteran commodities trader, started working for some of the largest companies in the world right out of university, trading in London, New York and Zug, Switzerland, for JPMorgan Chase and Phibro before moving on to the New York Mercantile Exchange, a short walk from Wall Street. By all appearances, it was your standard Wall Street career.
Then, in 2008, he moved to a tiny island off the coast of France called Jersey, which this week opened its doors to the island’s first fully regulated Bitcoin hedge fund—run by none other than Masters himself—as part of a push to create a nascent Silicon Valley in the heart of the English Channel, replete with government-funded entrepreneurial hubs and startup accelerators.
No sooner did word of the offshore Bitcoin fund get out than Reddit spluttered to life, devoting two pages, here and here, to debating whether the virtual currency’s baby steps into the institutional investing realm is really good news or bad news for Bitcoin, whose meteoric rise has thus far been mostly successful in eschewing traditional finance.
Masters, co-principal of Global Advisors Jersey Ltd.—which trades up to $2 billion of energy and equities—is the latest of a handful of fund managers trotting out new Bitcoin investment funds in recent months, as investors clamor for innovative ways to skim the froth off the digital currency’s impressive, if often unpredictable, price pops and drops and, occasionally, collapses.
He believes Bitcoin’s prices will stabilize as the currency and technology mature—similar to what has happened over the past decade with oil—but in the meantime, he estimates the value of Bitcoin could rise to $2,000 or more. “Right now, Bitcoin has about 1,000 percent annualized volatility,” he says. “Compare that to oil at 15 to 20 percent and stocks at 10 to 15 percent.” In other words, the potential upside, in the eyes of an experienced trader, are too appealing to resist.
Speaking from CoinSummit in London, Simon Hamblin, CEO of Netagio, a year-old U.K. company that specializes in secure Bitcoin storage and is a custodian for the Bitcoin fund being launched by Masters, says any fund must take numerous precautions to guard against the loss of Bitcoins. “We keep our Bitcoin in cold storage, in different forms both physical and media, and always keep it offline, heavily encrypted and in multiple locations,” he told Newsweek.
This week, Netagio, based in the Isle of Man—a Crown dependency, like Jersey—announced the debut of a London-based Bitcoin exchange that will allow individuals to trade Bitcoin against the British pound and gold. Netagio spun off this spring from Jersey’s GoldMoney Network Ltd., which stores $1.4 billion of metals in five undisclosed locations for clients across Europe.
I covered GoldMoney’s move into Bitcoin earlier this year in the post: GoldMoney Adds Bitcoin to its Suite of Services.
Hamblin, who says he stumbled into finance from a more technical field, sees Bitcoin as the “perfect merger between technology and finance.”
Masters, the former spouse of another commodities kingpin—JPMorgan Chase’s recently departed global head of commodities, Blythe Masters—says the Jersey Bitcoin fund will target up to $200 million in Bitcoin investments in the first six months to a year and ramp up from there. The fund went through a yearlong approval process via the island’s regulator, the Jersey Financial Services Commission, which offers a more streamlined process than New York and London do, Masters says. He adds, “In Jersey, you have one person playing sheriff instead of a dozen.”
“Imagine being able to walk into a car dealership, scan your phone over the price tag of the vehicle you want, and, in an instant, you’ve paid, you’ve updated your car’s ownership information, insurance, vehicle registration,” Masters says. “You jump in the car, you drive off, you never have to speak to a single person.” Because a Bitcoin wallet can be attached to inanimate objects, as well as carried on phones, the possibilities are endless, he says.
“Finance is one of the few industries that is still in need of a disruption,” he told Newsweek.
He’s exactly right. All year, I have maintained that Bitcoin was unlikely to make a major move higher until the summer. Well summer is here, and whether you like it or not, Wall Street is moving in.
Full article here.
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