Pension Fund Giant M&G Dives Into Crypto Derivatives With $20 Million Investment

In a significant development for the institutional adoption of digital assets, M&G Investments, the asset management arm of pensions giant M&G Plc, has invested $20 million in a UK-based crypto derivatives trading platform. 

The move represents a step forward in restoring institutional confidence in the crypto market following the collapse of FTX last year, according to a recent Bloomberg report.

Crypto Derivatives Platform Scores Big

According to Bloomberg, M&G Investments acquired the stake as part of a $30 million series B funding round for Global Futures and Options Ltd., known as GFO-X. 

The capital injection was made on behalf of M&G’s £129 billion Prudential With-Profits Fund, a testament to the growing interest of traditional asset managers in the crypto space.

GFO-X, which entered into a strategic partnership with LCH SA, a subsidiary majority-owned by the London Stock Exchange Group (LSEG), earlier this year, is set to utilize LCH’s clearing service, DigitalAssetClear. 

This service is specifically designed to clear Bitcoin (BTC)  index futures and options contracts traded on GFO-X’s platform. The partnership aims to enhance the efficiency and security of crypto derivatives trading, leveraging LCH’s established expertise in clearing and risk management.

While both LCH DigitalAssetClear and the partnership with GFO-X were initially expected to go live by the end of 2023, regulatory approval for LCH DigitalAssetClear is still pending. However, a GFO-X spokesperson told Bloomberg that the platform expects to launch in the first quarter of 2024.

Renewed Optimism In The Market? 

Per the report, M&G’s significant investment in GFO-X serves as a notable indicator of changing tides in institutional support for digital asset infrastructure.

The failure of the FTX exchange in November 2022, resulted in traditional asset managers, including Ontario Teachers’ Pension Plan, Tiger Global Management, and Singapore’s Temasek Holdings, writing down their stakes to zero, amounting to losses worth tens of millions of dollars. M&G’s entry into the sector signals renewed optimism and growing confidence among institutional players.

The report further highlights that M&G Investments’ injection not only provides a significant boost to GFO-X but also reinforces the broader narrative of institutional acceptance and participation in the crypto derivatives market. 

As regulatory frameworks continue to mature and innovative platforms like GFO-X gain traction, institutional adoption of crypto derivatives is poised to enter a new phase of growth and development.

At the time of writing, the global cryptocurrency market remains volatile after sharp price pullbacks, which has caused the market cap to drop to $1.502 trillion. According to data from CoinGecko, this represents a retrace of 5.59% in the last 24 hours and a growth of 82.77% compared to one year ago. 

Among the various digital assets, Bitcoin (BTC) remains a dominant force, with a market cap of $811 billion. This accounts for a Bitcoin dominance of 53.30%, indicating that Bitcoin continues to hold a significant share of the overall cryptocurrency market. 

Featured image from Shutterstock, chart from TradingView.com