Many parties are “getting in on the action” when it comes to cryptocurrency and one of the latest that seems to be increasing its investment strategy in the market is venture capitalist.
This is an odd turn of events, especially because traditional venture capitalists have a policy of investment in only public and private companies and of course, crypto does not fall into either of these categories. In 2017 though, the crypto sector experienced some huge returns, sparking venture capitalists’ interest in the market.
There have been reports concerning top tech investors who have met up to discuss various issues such as legal and financial consequences of cryptocurrency. There are two options currently available for venture capitalists – either create or invest in a fund. Additionally, the option provides more freedom by allowing the opportunity to raise capital that is exclusively for investment purposes. The latter allows for investments in startups, ICO, and currently digital currencies.
The separate fund may allow capitalists to avoid one of the toughest challenges concerning investments. Under the present law, capitalists are not allowed to retain over 20 percent of funds in liquid securities and unfortunately, cryptocurrencies and ICOs may be classified in that area.
On the other hand, the second investment opportunity focuses on digital currencies. Rather than starting a capital pool, the funds will be investment in six token funds. Various firms are applying the same approach, which may require less time and energy.
Firms that lean toward a conservative investment strategy may have a strategy of patience. This may come in handy, especially because crypto tends to be a volatile market. Over time, volatility may decrease and as a result, more venture capitalists may enter the space. In addition, if regulations become more accommodating, it may become even more likely.