The Caisse de dépôt et placement du Québec has made its inaugural investment in a cryptocurrency company, even amidst growing scrutiny of the digital-asset world from global regulators.
The Caisse, which is Canada’s second-largest pension fund manager, announced Tuesday that it is participating in a US$400-million funding round for New Jersey-based cryptocurrency lending platform Celsius Network. Investing alongside the Caisse is San Francisco-based WestCap Group, a private equity firm set up by former Airbnb executive Laurence Tosi.
Celsius’s core business is facilitating the lending of cryptocurrency to retail and institutional investors. Users deposit cryptocurrency using the Celsius app, and the company then lends the funds out to borrowers for yields as high as 17 per cent.
“The way we look at Celsius is that it is the bank of the future. They offer lending and deposit services, not just to retail investors but to institutions as well. Plus we really liked the management team and the expertise they offered in the cryptocurrency world,” Alexandre Synnett, executive vice-president and chief technology officer at the Caisse, said in an interview.
The investment values Celsius at more than US$3-billion, a significant jump in the company’s valuation from its previous funding round last June. At that time, the company was worth about US$120-million. The controversial cryptocurrency company Tether International – which issues the stablecoin Tether, and whose executives are being probed by the United States Department of Justice over allegations of bank fraud – was the lead investor in Celsius’s first equity raise.
In a statement announcing the latest financing, Celsius said it would use the funds to double its team from 486 to 1,000 employees, and to expand globally. The company has processed US$8.2-billion in loans and says it has one million users registered on its platform.
Crypto lending has come under heavy pressure from U.S. regulators, who say the services do not comply with securities laws. Last month, the U.S. Securities and Exchange Commission blocked crypto exchange giant Coinbase from offering a new crypto lending product that would have allowed users to earn interest on holdings of a stablecoin called USDC. (A stablecoin is a type of cryptocurrency that is backed by an underlying asset, such as the U.S. dollar, to prevent wild price fluctuations.)
Celsius Network, too, has been targeted by U.S. regulators. Texas and New Jersey recently accused the company of offering residents unregistered securities. The states argue that Celsius markets its products as alternatives to bank savings accounts, and therefore should be registered with regulators for proper oversight.
Celsius used to be based in the United Kingdom, but moved its operations to the U.S. after the U.K.’s Financial Conduct Authority imposed rules that required all crypto asset companies to be registered with it.
Mr. Synnett said that the Caisse is aware of the regulatory pressure on crypto lending companies. But, he said, the pension manager believes blockchain and crypto technology is here to stay, and that the industry needs to be regulated in the right way.
“We made this investment from the perspective that this technology is not going away,” he said. “We are going to keep looking at companies in this space. It’s a good way to diversify ourselves and position ourselves as global investors in the digital asset industry.”
Canadian pension funds have largely appeared to stay clear of major investments in crypto companies, which makes the Caisse’s sizable investment in Celsius an anomaly. The Ontario Municipal Employees Retirement System pension fund (OMERS) has a stake in Purpose Investments, which launched a Bitcoin ETF earlier this year. Its venture capital arm, OMERS Ventures, had previously invested in three other crypto companies – Digital Currency Group, Citizen Hex and OB1 – but has since exited those investments.
With a report from David Milstead
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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
