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Point72 hedge fund founder Steven Cohen plans launch of crypto asset management firm

Crypto reporter David Hollerith breaks down the outlook surrounding Steven Cohen's investment into the crypto asset management space.

Video Transcript

AKIKO FUJITA: Crypto has rallied over the last month, along with the stock market. Let's see how the sector is trading today. We're seeing Bitcoin up there as well as Ethereum. Ethereum seeing some big gains there, up nearly 2%.

There's been a lot of activity in the space this week, as large funds like Schwab, BlackRock, and now Point72 are reportedly dipping their toes into crypto. Let's bring in David Hollerith, who covers the space for us. And, David, Steve Cohen name gets a lot of attention here with his bet in crypto.

DAVID HOLLERITH: Sure, yeah. And this looks to be a report about Steve Cohen, hedge fund billionaire and Mets owner, not necessarily Point72 the company. There are reports that have come out today that sort of indicate that Cohen is looking to build a crypto-specific investment firm.

Now, this comes after "Bloomberg" confirmed that Cohen had pulled out an investment he'd put into another crypto market-making startup called Radical, which, without more at the time, it looked like Cohen was getting out of the sector, so to speak. So while the plans for this latest venture appear to be in their earliest innings, the yet to be formed or named company sounds like it would trade cryptocurrencies in the spot and derivatives market and would also potentially make seed investments into companies. And that comes from anonymous sources reported by "Block Works."

So Cohen's future asset manager, the company, sorry, excuse me, is obviously coming along with this news about BlackRock. And it is definitely changing the latest on the institutional narrative given that we've seen crypto prices decline so much, and some early indications earlier in the summer that institutions might want to hold back on the space. It's also interesting, although we don't have more details, just to sort of pay attention to how larger banks and asset managers sort of consider getting into crypto-- usually, it's about outsourcing investments into other, younger crypto startups.

And so it is interesting that Cohen is actually looking to build out his own type of firm. So we don't have more info about that at the moment. But, obviously, always interesting to see what big players like Steve Cohen are doing in the sector.

RACHELLE AKUFFO: So when you see this sort of concentration in some of these larger institutional investors, does it essentially take away the spirit of what crypto and being decentralized is all about, when, potentially, it's going to be these large institutions that have the biggest stake?

DAVID HOLLERITH: Well, you know, Rachelle, it's an interesting point. I think that there's a lot of that going on right now since we've seen asset prices fall a lot. And we've seen these bankrupt firms, and there's obviously been a lot of discussion about what went wrong with crypto during that period. As far as institutional investing goes, I think there is sort of this side of it where if these larger players, even though they have the capital, if they want to get involved, they have to get involved the same way in these other products.

So something like decentralized finance, that would mean actually participating in the Discord channels, something as specific as that. So I think that even though we do see something like them coming in and sort of trying to financialize the sector, I think they'd still have to play by the rules that are set. And the rules are pretty wide open right now. That's also why they've sort of delayed in actually getting involved directly.