Barclays bank is reportedly set to acquire a stake in crypto company Copper, which counts former UK Chancellor Philip Hammond as an investor. This investment, reportedly amounting to a "few million" dollars, will join Copper's existing funding round, offering custody, prime broking, and settlement services for institutional crypto investors.
Barclays Acquires Stake in Crypto Company Amid Market Turmoil
London, July 24, 2023 - Barclays, the British multinational investment bank, is reportedly investing in Copper, a cryptocurrency company that caters to institutional investors. The investment, reportedly in the "few million" dollar range, comes amidst a challenging year for the cryptocurrency market, marked by price volatility, exchange bankruptcies, and a general downturn in risk assets due to economic uncertainty.
Copper, whose investors include former U.K. Chancellor of the Exchequer Philip Hammond, offers custody, prime brokerage, and settlement services for crypto assets. Barclays' investment is part of a funding round for the company, sources familiar with the matter told Bloomberg on Sunday.
Barclays and Copper declined to comment on the investment when contacted by PYMNTS. The move comes at a time when funding for private crypto companies has declined significantly. Venture capital investments in crypto startups have fallen in recent months, impacted by a combination of economic factors affecting cryptocurrencies, public stocks, and venture capital assets.
Once viewed as a relatively bulletproof sector, propelled by hype and unwavering optimism, the cryptocurrency industry has faced headwinds in 2023. Despite receiving approximately $9.85 billion in venture funding in the first quarter, analysts attribute this to the lengthy lead time required to finalize venture capital deals.
Robert Le, a FinTech analyst at PitchBook, notes that while these deals were initiated in November and December of 2022, the market was already experiencing a slowdown at the time. In the second quarter, crypto companies received $6.76 billion in funding, the lowest level in a year, according to Le.
David Pakman, managing partner at CoinFund, warns of looming challenges for the crypto industry, including layoffs and lower valuations. He estimates that seed valuations have declined by approximately 20%, Series A valuations by 50%, and Series B and beyond by 70%. Pakman advises companies he supports to maintain sufficient cash reserves to endure up to two years of financial hardship.
Despite the current market volatility, Barclays' investment in Copper signals a recognition of the potential for cryptocurrencies and blockchain technology in the financial sector. As the industry navigates these challenging times, it remains to be seen how traditional financial institutions like Barclays will adapt to the evolving landscape and the potential opportunities presented by digital assets.
