Monday 13 September 2021 3:36 pm

All eyes on digital assets: Brevan Howard targets crypto

Hedge fund Brevan Howard will “significantly expand” its focus on crypto and digital assets with the launch of a new unit focused on the sector, in the latest move indicating growing institutional appetite for the asset class.

Brevan, one of Europe’s largest hedge funds, announced it has launched a new division, dubbed “BH Digital”, which will manage cryptocurrencies and digital assets.

The hedge fund giant has appointed Colleen Sullivan, who previously headed up CMT’s specialist digital asset arm “CMT Digital”, to lead the unit.

It’s a sign that Brevan is accelerating its push into cryptocurrencies, four months after the fund announced it would begin allocating to digital assets through its main $5.6bn Master fund and created a separate specialist vehicle for cryptocurrencies.

“Brevan Howard’s belief in the huge diversity of opportunities within the digital asset space and the significance of this to long-term macro investors is the reason we are delighted to welcome Colleen to the firm,” said Aron Landy, chief executive of the fund.

Landy is known as a major backer of digital currencies and recently led an extension of London-based digital asset trading startup’s Series B fundraising, which reached $75m.

Brevan’s foray into digital assets comes hot on the heels of other institutional money managers who have tapped into the sector in recent months, including London-based Marshall Wace and hedge fund chief Paul Tudor Jones.

In January, the world’s largest asset manager, Blackrock, filed with the U.S. Securities and Exchange Commission (SEC) for two of its funds to invest in bitcoin futures. It also joined Skybridge and British fund manager Rugger in investing in the digital asset industry.

And the movement amongst wealth managers is gathering pace. A recent survey by Intertrust found that 98 per cent of hedge fund managers expect to invest in digital assets in the next five years.

Meanwhile, total assets under management of cryptocurrency hedge funds worldwide almost doubled in 2020 to $3.8bn, up from $2bn in 2019, according to an annual report by PwC, Alternative Investment Management Association and Elwood Asset Management.

But as professional investors grow increasingly keen to bet on digital assets, global banks have been relatively slow to catch on and are under increasing pressure to offer cryptocurrency services.

So far, FTSE 100 bank Standard Chartered established itself as a sector pioneer in June when it launched a cryptocurrency brokerage and exchange platform for institutional investors in Britain and the EU.

Following closely behind, last month Citigroup announced it is awaiting regulatory approval to begin trading bitcoin futures contracts on the Chicago Mercantile Exchange (CME), a popular forum for digital asset trading among institutional investors.