Three prominent financial firms unite in a joint venture – Twenty One Capital –with 42,000 bitcoins in assets.
Japanese tech giant SoftBank, the most popular stablecoin provider Tether, and a major U.S. financial services firm, Cantor Fitzgerald, have launched a $3,6 billion Bitcoin investment entity called Twenty One Capital.
The new firm is going public via a reverse SPAC merger with Cantor Equity Partners specifically established to facilitate mergers and acquisitions. This venture accumulates over 42,000 bitcoins in its treasury, positioning it as one of the largest corporate holders of the cryptocurrency. Reportedly, SoftBank provides a $900 million investment, while Tether is contributing around $1.5 billion to the joint initiative. Another $600 million will come from Bitfinex and additional $585 million are raised via bonds and equity.
In this equation, Tether is a key to crypto liquidity of the investment venture. Most BTC for the company will be bought and sold via USDT rather than directly exchanged to fiat. This strategy suggests a plan to leverage stablecoin infrastructure for custody, liquidity, and possibly yield generation.
The project is designed in response to what its supporters say is a growing appetite for substantial bitcoin investment and institutional exposure. Members of the group said the goal is to replicate the investment approach taken by MicroStrategy — a tech company that pivoted to holding large amounts of bitcoin and experienced a major boost in its market value as a result.
Twenty One Capital in its structure is also a Bitcoin treasury like MicroStrategy, but bigger and more diversified. Its initial holding fund of $3.6 billion signals serious institutional confidence in Bitcoin. In fact, it is the third biggest reserve of the cryptocurrency at inception globally, the significance of which cannot be easily overlooked.
Naturally, today MicroStrategy owns over ten times more Bitcoin than Twenty One Capital – about 538,200 BTC. However, its bitcoin stack was built gradually over a multi-year period, funded through successive stock offerings and ATM sales, rather than in one single, pre-funded vehicle. At the outset of its Bitcoin strategy, in August 2020, MicroStrategy’s initial holding was 21,454 BTC – the number Twenty One Capital doubled at launch. Besides, MicroStrategy remains a single publicly-listed software company using its own stock-issuance programs to fund purchases, with no external consortium of strategic partners, which gives it less financial potential.
One more factor to take into account is the involvement of legacy financial titans in this new massive venture, which gives Bitcoin and the broader crypto industry a level of mainstream legitimacy that retail investors alone could never achieve. At the same time, it is estimated that MicroStrategy already owns over 2,5% of the total BTC on the market. If Twenty One Capital grows to its full potential, it may accumulate much greater share. That might effectively undermine the whole decentralised nature of the cryptocurrency market and lead to a certain monopoly or market manipulations. Therefore, the public attitude to the new venture is twofold.
Besides, the companies involved in the merger have a troubled history of questionable investments (SoftBank and WeWork, a company that went bankrupt two years after its IPO), tensions with the law (Tether trading withdrawal in Europe to comply with the MiCA Regulation), and close ties with the U.S. government (Wall Street brokerage’s chair is Brandon Lutnick, a son of the U.S. Secretary of Commerce Howard Lutnick, formerly a head of Cantor Fitzgerald).
The partners adopted quite an aggressive market strategy. Going public via a SPAC instead of a traditional IPO allows them to move quickly and bypass some of the red tape involved in such processes. Therefore, investors in public markets could gain exposure to Bitcoin through this company much sooner than it could be expected with other business types.
