Royal Bank of Canada Allocators Cut Most Crypto Stocks Last Quarter

Portfolio managers tied to the Royal Bank of Canada — the nation’s largest bank — slashed stakes across the majority of their crypto-related portfolios last quarter.

Blockworks analyzed the RBC’s SEC filings totaling 34 affiliated entities (including outside asset managers that do business with RBC), to get a pulse on institutional sentiment on equities linked to cryptocurrency operations.

(A number of outside asset managers that do business with one of RBC’s affiliates, including the state-run pension fund Alaska Permanent, were represented in the SEC disclosures. It’s likely as a result that this analysis includes stocks owned by third-party managers running limited partner or proprietary capital.)

Some crypto stocks were cut entirely. Embattled crypto-friendly bank Signature through RBC’s most recent SEC stock disclosure has fallen off from RBC’s institutional portfolio list — same with bitcoin mining firms Argo, Mawson Infrastructure and Iris Energy.

All are publicly traded on major exchanges, with the exception of Signature, considering the company’s stock now trades over the counter (OTC) for pennies on the dollar after its collapse.

RBC allocators held more than 41,000 Signature shares at the end of last year, worth nearly $4.8 million at the time. The bank would collapse less than two months later. It’s unclear exactly when the shares were sold, and the holdings appear to have represented a fraction of the bank’s overall holdings at the time.

Their stakes in the three bitcoin miners were far smaller, only worth a few thousand dollars altogether. SEC filings are denominated in US dollars, not Canadian dollars.

Other bitcoin miners are holding on, despite being slashed significantly. Funds doing business with RBC sold shares in 11 mining stocks. The selling activity for Riot, Cipher, Hive and Marathon were all cut by upwards of 40% in share count terms.

Financial services firm Bakkt was also shed by two-thirds,
bitcoin-heavy MicroStrategy by one-third (although $6.8 million in bonds were added),
and SEC favorite Coinbase by 11%.

If Block were on this chart, it would dwarf all other positions

RBC institutional investment portfolios now contain $4.8 million in COIN, per the SEC filings.

Not all moves made were bearish. RBC allocators boosted positions across 10 crypto and crypto-adjacent stocks. Hut 8 scored a near-55% boost, going from 21,745 shares ($43,000) to 33,171 ($65,600) quarter on quarter.

Jack Dorsey’s fintech Block, the firm behind BTC-friendly Cash App, was also bumped by half, with RBC portfolio managers altogether disclosing 2 million shares ($137.5 million), and an additional $9.2 million in corporate bonds.

Robinhood was more than doubled (now at 156,300 shares worth $1.35 million), as was ProShares’ bitcoin strategy ETF, BITO, although RBC funds still only disclosed $10,000 of the stock.

One surprise is Silvergate, the other crypto-friendly bank that faced an untimely demise earlier this year.

As of March 31, RBC portfolios held 84% more Silvergate shares than the previous quarter — 16,335 shares compared to 8,878.

Crypto exposure still minimal for Royal Bank of Canada

Altogether, RBC allocators held $108 million in crypto and crypto-adjacent stocks at the end of 2022. They, through their most recent disclosures, held $156.5 million — although Block makes up nearly 94% of that exposure (these figures also contain options as expressed via puts).

One year ago, that figure was closer to $200 million, and two years ago it was more than $754 million.

But again, those stats were skewed by RBC’s enormous stake in Block, worth $703 million. Block’s share price has since collapsed by three quarters.

Block hasn’t performed very well over the year to date, either

Bitcoin miner Greenidge has proven a manager favorite, with total share count popping more than 350% year on year, from 535 to 2,459, but the stake is tiny, just $9,000.

In fact, all of RBC’s disclosed crypto exposure is miniscule compared to its overall holdings. RBC itself managed $1.5 trillion in assets as of the first quarter, while its institutional funds disclosed a US-listed stock portfolio of almost $354 billion.

That puts RBC’s crypto exposure weight at just 0.04%.

Just for the record.

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