Galaxy Digital Launches New Institutional DeFi Fund

Galaxy Digital, in partnership with Bloomberg, has launched a DeFi index to track nine tokens, including Uniswap and Aave.

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Steve Kurz, global head of asset management and partner at Galaxy Digital

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key takeaways

  • Galaxy partners with Bloomberg on a fourth index, this one focusing on the DeFi space
  • Exposure to a DeFi index fund allows investors to protect themselves from risks associated with holding one asset, Galaxy global head of asset management said

Galaxy Digital has partnered with Bloomberg to launch a fourth joint index, this time focusing on the decentralized finance (DeFi) space. Mike Novogratz’s Galaxy has also created the Galaxy DeFi Index Fund, which will track the performance of the Bloomberg Galaxy DeFi Index (ticker DeFi). 

“Why now? It really comes from client inquiries,” said Steve Kurz, global head of asset management and partner at Galaxy Digital. “DeFi, which is in many ways one of the most revolutionary aspects of the space, has become much easier for institutions to understand intuitively versus bitcoin or ethereum because there’s a model; there is lending, borrowing, synthetics. swaps and derivatives. So as much as it’s an early part of the asset class, it’s something that I think institutions have been able to dig their teeth into, and so we were being reactive to that.” 

The new index will track nine tokens, including Uniswap, Aave, Maker, Compound and Sushi. These tokens were selected based on quality of pricing, liquidity and market capitalization, Kurz said. 

The launch of the idex and Galaxy’s new DeFi fund come amid an uncertain time in digital asset regulation. US Securities and Exchange Commission Chair Gary Gensler has made it clear that DeFi projects are not immune to regulatory crackdowns, the Wall Street Journal reported Thursday. Kurz however says that greater attention from policymakers will help bring attention and legitimacy to the asset class. 

“The crypto piece of the Senate Bill was extremely positive. I think for the first time Washington heard the very important, focal 10s of millions of voters, speaking on this issue in this asset class,” He said. “We certainly feel that there are nested interests who are worried about DeFi, the banks being one of them. The banks have a lot of power in DC, so this is not a topic that’s going to be resolved in a month or even a year, but it is something that I think is now being taken seriously.” 

Exposure to an index fund is also a way for investors to diversify their portfolios into DeFi without significant risks associated with holding one particular token, Kurz said.  

“One of the reasons you own an index, and you have diversification, is that you’re making a bet on the space, and in this case you’re making a bet on the DeFi space as opposed to one asset,” said Kurz. “Some components of DeFi may be here tomorrow, others won’t be.” 

The Bloomberg Galaxy DeFi Index is Galaxy’s fourth index with Bloomberg. Galaxy teamed up with Bloomberg in 2018 to create the Bloomberg Crypto Index, which tracks tokens such as bitcoin and ethereum.

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