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Sequoia Capital, the $80-billion U.S. private equity firm, will put $500 to $600 million into a new fund that will invest in crypto tokens on third-party exchanges, the company announced.
Sequoia previously had invested in DeSo, a crypto social media start-up and Filecoin, a data storage network.
“The area in crypto where we have the most opportunity for improvement is in the liquid stuff,” Sequoia partner Shaun Maguire told the Financial Times. “We just haven’t been able to deliver in the traditional venture capital model.”
Traditionally, venture capital firms take seats on the boards of companies they invest in. However, many crypto firms have abolished the board structure and instead issue tokens to investors, allowing coin holders to vote on key issues.
About 20 percent of Sequoia’s new U.S. and European investments in 2021 were in the crypto industry. The new fund will allow the company to take a larger part in the crypto projects it funds, the FT said.
Sequoia will view its crypto holdings through “a 20-year lens,” Maguire said, making investments to hold long-term and will trade tokens only in “exceptional circumstances.”
Regulators in several countries are taking a close look at cryptocurrencies with an eye toward regulating them as securities.
The Securities and Exchange Commission and the Commodities Futures Trading Commission in the U.S. are vying to regulate digital assets, as we have reported in “SEC Push to Regulate Crypto” (21 Dec 2021) and “CFTC Chief Seeks Authority to Regulate Crypto” (8 Feb 2022), among other articles.
“We expect regulation but there’s a balance between protecting consumers and maintaining innovation,” Maguire added.