Three employees of one of the largest investment fund in the world have left to set up a blockchain-focused business, according to Financial News.
The new business is a venture capital fund called Eterna Capital. It aims to raise $20 million from institutional investors to promote blockchain-based products.
The founding CEO of Eterna Capital is Italian national Andrea Bonaceto. The three ex-BlackRock employees joining him are Nassim Olive, Asim Ahmad, and Mattia Mrvosevic.
According to the report, the new fund will invest in products that use blockchain technology to work towards the UN’s Sustainable Development Goals, which are a set of 17 areas of focus with names such as ‘No Poverty’, ‘Zero Hunger’, ‘Gender Equality’ and ‘Clean Water and Sanitation’.
Bonaceto explained the rationale behind focusing on blockchain technology: “One example is the disintermediation of banks in under-banked third-world countries, so people don’t need banks to get a loan, as the money can be held on the blockchain. Or selling solar power between neighbours, rather than relying on an energy firm, is another example of how blockchain can be used for social impact.”
Olive said that large institutions may have an appetite to invest in cryptocurrency ventures but are reluctant to risk their reputations: “This is why more people with an institutional track record are launching their own ventures.”
He clarified his point to Finance Magnates: “We feel that for institutions like BlackRock, the opportunity to enter the space at this stage remains small given the reputational risk trade-off. Though BlackRock and probably most large financial corporations promote the fact that they want to be a student of the market, hence they are likely watching the space very closely”.
This may be why there were similar defections from BlackRock earlier this year. That said, some major institutions are in fact beginning to take notice of cryptocurrency and put money into it, the Rockefeller Foundation and George Soros being notable examples.
BlackRock has a market capitalisation of over $82 billion and manages trillions of dollars of assets. It has been called the world’s largest shadow bank – a term which describes companies that provide services similar to those of banks without being technically defined as such. The Economist reported in 2014 that BlackRock’s assets under management far exceeded those of the Industrial and Commercial Bank of China, which is the most valuable bank in the world.