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Sometimes there are some real perks to being General Counsel for Horizen. One such perk was being invited to attend Digital Currency Group’s (DCG) executive summit in Lake Tahoe in October.
Spending time with industry leaders put me at the heart of the crypto movement and I wrote about my time there in this article.
However, following the article’s publication I was surprised by how many messages I received from Insiders asking “Who is DCG?”
Considering that DCG is one of the most important and influential groups in the crypto ecosystem, everyone in this space should know who it is and what it’s about. In fact, going forward I plan to write a description of all the major players in crypto. But for now, read on to learn 5 things you should know about Digital Currency Group.
1. Barry Silbert is its Founder
At the head of DCG is Barry Silbert, a proven investor with an impressive ability to bring the ideas of the best and brightest entrepreneurs to fruition. He’s made it to the ranks of Fortune’s prestigious “40 Under 40” list and earned Ernst & Young’s “Entrepreneur of the Year” award.
Barry began his career in investment banking at Houlihan Lokey in New York and went on to found SecondMarket, a venture-backed technology company that was later acquired by Nasdaq.
Seeing the potential of Bitcoin early on, Barry was one of the most active investors in the industry by 2013. Two years later, he founded DCG, which now backs over 120 crypto-related companies.
Despite his impressive accolades, if you meet Barry in person, you’ll find he’s incredibly down to earth. I was very surprised by how accessible Barry made himself and how actively he participated in the summit.
2. A Strategic Partner For Your Project
DCG builds, supports and invests in blockchain and digital asset companies globally, with a mission to drive positive global economic and social change through its investments. Among its portfolio companies you’ll find an array of prominent names such as those of Ripple, Coinbase, Kraken, Xapo, ShapeShift, BitPay and Circle.
Despite DCG’s prominence as an investor in the cryptocurrency ecosystem, don’t look to them to fund your next capital round.
Unlike many VCs that want to lead rounds and take an active management role via board seats, DCG does not generally make large initial investments in their portfolio companies or take board seats.
Instead, their strategy is to place numerous, but smaller, bets in the industry by spreading their investments across many companies.
While its limited investment sizes may make DCG relatively less important to an individual project during funding rounds, DCG can still add tremendous value. Through DCG’s wide interests across the ecosystem, it has developed an unrivaled network in the industry.
Having the right connections and partners for your project, can pay off more than capital in the long-run. So while DCG might not be the ideal financial partner for your project, it can be an excellent strategic partner.
3. The Largest Crypto Asset Manager in the World
One of the key subsidiaries of DCG is Grayscale Investments, which is already the largest crypto asset manager in the world with around $2bn in assets under management.
In addition to making direct investments in portfolio companies, Grayscale offers a number of investment trusts in leading cryptocurrencies that bring traditional investment vehicles to the world of crypto. These financial trusts make it easy for institutional investors to buy and securely store crypto without having to learn how to do it on their own.
This September, Grayscale launched a single-asset investment vehicle comprised of ZEN, the native cryptocurrency that powers Horizen. Personally, I think Horizen is the best project in the market so it’s nice to see that the folks at Grayscale think there will be institutional demand for ZEN.
4. The Biggest Providers of Crypto Loans to Institutional Investors
Another subsidiary of DCG is Genesis Trading, one of the largest, regulated, over-the-counter traders for buyers and sellers of crypto. Genesis caters to institutional investors and high net worth individuals who want to buy or sell large blocks of crypto.
The firm is also one of the largest lenders of cryptocurrency on the market, allowing institutional investors the ability to borrow crypto in large sizes over fixed-terms. According to a third quarter report, the company facilitated more than $500M in crypto loans in 2018.
Interestingly, there is so much demand for borrowing crypto right now that Genesis is actively seeking holders of crypto who are willing to lend their cryptocurrency for a fee. So if you’re a crypto whale sitting on bitcoin, you might consider earning a fee by lending it to Genesis. Lending out bitcoin is a winning proposition for those who believe the price of bitcoin will rise because they get to keep their crypto and earn interest.
5. The Most Well-Known Crypto News Outlet
Last but not least, in mid-2016 DCG acquired the pre-eminent crypto news and media outlet, CoinDesk. This is one the most well-known publishers in the crypto news space with 5 million unique visitors a month. It is also the authority on the overall Bitcoin price with their CoinDesk Bitcoin Price index, which averages BTC prices across the world’s key exchanges.
And, as can be expected from DCG, CoinDesk hosts the largest blockchain gathering in the world in NYC with its annual Consensus summit. Last year it had 8,800 attendees. It also publishes The State of Blockchain, an amalgamation of all the best information on the growth of blockchain globally.
On a personal note, CoinDesk is one of the few daily emails I look forward to receiving for news and opinion. If you’re not on its email list I encourage you to sign up. It’s a must read for industry participants.
What Does this Mean for Insiders?
In short, DCG is a unique and important player in the world of crypto. It has a solid and unwavering commitment to build the industry and back the best teams. Moreover, it has the balance sheet to back it up and get the job done.
To be fair, its limited investment amount per project does put a damper on how important DCG will be to your project. If you’re trying to raise $10M+, you’ll have to find other VC funds to invest the vast majority of it. So in that sense, DCG does take a backseat to many of the other funds currently investing in the space.
However, if you’re launching a new crypto-related project, I’d heavily recommend you try and get DCG on board with your business. This isn’t just because it’s a reputable investor, but because it genuinely wants to add value and see your business grow. And as is the case with many industries, knowing the biggest and best people will open up a lot of doors for you through the vast network of contacts it holds.
And, if you play your cards right, I may see you at its annual summit in Tahoe next year!
Dean Steinbeck is the Managing Director of Crypto Law Insider, the leading legal authority for entrepreneurs and investors in the cryptocurrency and blockchain ecosystem.
Dean is a US corporate lawyer with a focus on data privacy and technology. With over 15 years of experience representing VC-backed software development companies, Dean has found himself at the center of multiple blockchain projects and is currently recognized as one of the top attorneys in the cryptocurrency space.
Dean currently serves as General Counsel for Horizen (formerly ZenCash), a privacy-oriented cryptocurrency and cutting-edge blockchain platform. Prior to Horizen, Dean was General Counsel at TigerConnect, the leading communication platform in the US healthcare market. His experience gives him an in-depth knowledge of the legal intricacies within blockchain technology, data privacy, intellectual property, venture capital funding and regulatory compliance. Click here to learn more about Crypto Law Insider.