By
Chimamanda U. Martha
April 25th, 2024
Wells Fargo has floated the bitcoin fund to be managed by both firms and will receive a sales cut through two of its own subsidiaries.
Wells Fargo & Co (NYSE: WFC) launched on Thursday a passive Bitcoin investment fund for its most wealthy clientele, according to filings from the SEC. The multinational financial services company has become the latest megabank to offer crypto investments to high-net-worth individuals. For this initiative, Wells Fargo is enlisting the services of New York Digital Investment Group LLC, and Franklin Square Holdings, L.P. (FS Investments). The partners called the new fund “FS NYDIG Bitcoin Fund I, LP”.
According to regulatory documents, both financial firms will help Wells Fargo actively manage the fund. Furthermore, Wells Fargo will get a sales cut through two of its subsidiaries namely, Wells Fargo Advisors Financial Network and Wells Fargo Clearing Services. Both the NYDIG and FS Investments have prior experience with Bitcoin funds but were yet to record any sales as of Thursday.
Earlier this month, JPMorgan Chase & Co (NYSE: JPM) also launched an in-house private Bitcoin fund for wealthy investors. The company filed an application on Thursday with the Securities and Exchange Commission (SEC) for a passive Bitcoin fund. Furthermore, the leading New York investment bank is also collaborating with NYDIG for this initiative and will receive a sales cut through its subsidiaries. At the time of filing, the fund was also yet to record any sales.
JPMorgan’s decision to foray into crypto investment offerings for its clients raised a few eyebrows. This was because the company’s CEO Jamie Dimon, is popular for his crypto aversion. However, Dimon maintains that clients are interested in safely investing in the sector despite his reservations on crypto.
Wells Fargo Bitcoin Fund Previously Stifled by the OCC
The Office of the Comptroller of the Currency (OCC) once forbade banks from holding digital currencies until July last year. However, a new policy by a federal banking regulator stated that national banks and savings associations could engage in so-called custody services for their clients. The OCC wrote a letter to that effect to an unnamed bank, and many big banks started to explore custody services within the crypto space. These banks are now beginning to offer services in crypto similar to Coinbase and BitGo. It’s not uncommon to hear about major banks contemplating whether to start ETFs.
Many banks are also considering crypto’s potential advantages, including a bankless future. Wells Fargo, Goldman Sachs, and JPMorgan Chase are funneling huge amounts into crypto startups and betting big on the sector. Also, BNY Mellon announced that it is developing a custody and administrative platform for traditional and digital assets. Furthermore, an investment unit in JPMorgan is contemplating how best to bet on Bitcoin.
Meanwhile, much earlier this year in February, NYDIG filed for a Bitcoin exchange-traded fund with the SEC. The firm did this through its parent company, Stone Ridge Asset Management.