Using Crypto Currency in MF Syndications

[Spencer Gray]

This post is not intended to spur debate on whether bitcoin, etc will change the world or is just internet funny money that will go away in a few years.

I'm curious to know if there are any syndicators who have accepted or would accept contributions in Bitcoin (or other crypto currency) for membership in a MF syndication? This assumes an investor would send the sponsor their contribution as BTC which would then immediately be converted into USD at an agreed upon value. Theoretically the sponsor could issue distributions back in Bitcoin the same way. 

The reason I ask is because I have met so many investors investing in MF who also invest in crypto as well as crypto investors who love the idea of finding ways to actually use their crypto. This has lead our team to investigate the feasibility of doing so.

We've also been exploring the concept of holding some reserves in a MF project in Bitcoin instead of USD. The idea being that Bitcoin will hold value better than the USD over time. We would over capitalize the raise to have adequate USD cash reserves in addition to bitcoin reserves. The idea being that if bitcoin goes to 0, you have a defined loss and you still have cash reserves. The loss will add headwind to the investment but not materially. On the flip side if Bitcoin appreciates significantly compared to the USD, you could generate serious alpha.

Companies in the US are already doing this, right now there is over $20B in company reserves held in btc including Square Inc and MicroStrategy to name a few. 

We are in the process of discussing this with our CPA and legal teams (it may not be feasible, or too cumbersome), but wanted to throw the concepts out to the BP community to get your valuable opinion.