Risk.net: US mutual funds’ crypto holdings doubled to over $1bn in Q1

Cryptocurrency investing is on the rise among US mutual funds, with holdings more than doubling in the first quarter of this year to top $1 billion, an analysis of regulatory filings has shown. BlackRock and Morgan Stanley Investment Management are among the 16 mutual fund managers that have now dipped their toes into the alternative asset’s wild market.

Regulatory filings made to the US Security and Exchange Commission show the mark-to-market value of cryptocurrency-tracking products on the books of US mutual funds hit $949 million in the first quarter, more than twice the total from the previous quarter. Funds also held an additional $54.7 million of notional exposure to CME-listed bitcoin futures.

The risk management and custody challenges presented by trading in the spot markets may also make these synthetic products more attractive to investors.

“It makes sense that institutions are starting with wrapper products, where it’s relatively simple to get risk exposure,” says Justin Schmidt, head of strategy at cryptocurrency platform Talos.