Original author: Fairy, ChainCatcher
Original editor: TB, ChainCatcher
Last night, Abu Dhabi’s state-owned capital MGX announced a $2 billion investment in Binance, directly setting a record for the largest single investment in the crypto field to date.
Unlike the uncertainty brought about by regime changes in North America, the sovereign funds of Middle Eastern countries such as the UAE, Saudi Arabia, and Qatar have been stable in the long term, with assets spread all over the world. Investing in them means entering a higher-dimensional capital circle.
What is even more intriguing is that Binance co-founder He Yi said: We welcome sovereign funds, but financial investors are fine. This makes people wonder why sovereign funds are so popular? Have they already made plans, or have they just entered the market? Which sovereign fund will invest heavily next time?
The magic of sovereign funds: the game of national capital
Sovereign funds are financial assets or funds established and owned by some sovereign governments for long-term investment, usually managed by specialized government investment institutions. Compared with private capital, sovereign funds have stronger financial stability and strategic goals, and are often used to promote national economic growth, hedge financial risks or ensure intergenerational wealth inheritance.
There are significant differences between sovereign funds and traditional financial investors in investment logic and investment goals:
In recent years, with the changes in the global capital market, sovereign funds have increasingly invested in emerging fields such as technology, AI and Web3, becoming important players in the global capital market.
Currently, the worlds largest sovereign wealth funds are mainly distributed in the Middle East, Northern Europe and Asian countries. These funds often manage hundreds of billions of dollars or even more than one trillion dollars in assets. According to Wikipedia data, ChainCatcher compiled the top sovereign wealth funds of major economic countries or regions:
Sovereign funds have already dived deep into the crypto market
The sovereign funds bet on the crypto market is not a whim, but a layout that has lasted for many years.
As early as 2021, Khaldoon al-Mubarak, CEO of Abu Dhabi sovereign fund Mubadala, publicly stated: From our perspective, we are paying attention to the ecosystem around encryption and are actively investing. This may involve areas such as blockchain technology and energy use.
In fact, Mubadala entered the crypto market in 2019 and invested in MidChains, the UAE’s first regulated crypto exchange.
Other sovereign funds have also taken action in the crypto space:
Singapores sovereign fund Temasek has invested in FTX and Web3 gaming service provider Immutable.
In 2018, Singapore’s sovereign fund GIC participated in Coinbase’s financing
In December 2022, digital asset platform Amber Group announced that it had raised approximately $50 million from a new sovereign fund.
In April 2023, Saudi Arabias sovereign fund Sanabil disclosed a number of investments in the Web3 field, including well-known institutions such as a16z and Polychain Capital.
Abu Dhabis sovereign fund already holds approximately 4,700 bitcoins in the BlackRock IBIT ETF, and the scale is expected to expand further.
Sovereign Funds Enter the Crypto Market: A “Rite of Passage”
Abu Dhabi sovereign fund MGX invested $2 billion in Binance, ushering in a significant coming of age ceremony for the global crypto market. Sovereign fund investment not only means capital inflow, but also a kind of official recognition.
Crypto KOL 0x cult bluntly stated that Abu Dhabi’s investment in Binance is a key milestone in the development of the industry, as the entry of sovereign funds is often seen as a signal of the maturity of the industry.
More importantly, sovereign funds can also bring in real hard currency. According to Global SWF statistics, sovereign wealth funds (SWF) manage $11.09 trillion worldwide. BlackRocks CEO once said that if sovereign funds and companies invest 2% to 5% of their funds in cryptocurrencies, Bitcoin will reach $700,000.
In addition, sovereign funds mainly hold for the long term and have risk resistance far exceeding that of general institutions. They can reduce short-term speculation in the market and enhance overall stability.
Who is the next big player?
The UAE has taken the lead, so who will be the next country to spend the most? Here are a few potential sovereign funds for your reference.
Singapores Temasek announced a suspension of crypto investment after the collapse of FTX, but if the market matures further, especially when more sovereign funds enter the market, Temasek may consider returning.
There have been rumors that the Qatari sovereign wealth fund is interested in buying Bitcoin. Considering that the acceptance of crypto assets in the Middle East is rapidly increasing, sovereign funds in the Middle East may follow suit and further deepen their investment in this field.
At the same time, Trump recently signed an executive order to establish a U.S. sovereign wealth fund within a year. Under his vision of a crypto capital, if the fund is formed, the crypto field may also be included as part of its investment portfolio.
The next invisible whale to make a move may be revealed soon.
