October 27, 2015 / 11:05 PM / 2 years ago

Bitcoin firm raises funding from Bain, New York Life, MasterCard

NEW YORK, Oct 27 (Reuters) - Digital Currency Group, a holding firm focused on investing and developing businesses that deal in bitcoin and other cryptocurrencies, has raised funding from some of the biggest U.S. financial names, founder and chief executive officer Barry Silbert said on Tuesday.

Bain Capital Ventures, the Boston-based venture capital unit of private equity firm Bain Capital, credit card company MasterCard, insurance giant New York Life Insurance Company, and Canadian bank CIBC were four of the company’s new investors.

The holding company (DCG) is currently building and supporting the largest early-stage investment portfolio in digital currencies and the blockchain, the underlying technology behind bitcoin.

Silbert, a prominent bitcoin advocate and investor, declined to disclose the amount of funding raised from the new investors.

The other investors in DCG include a range of venture capital firms and family offices such as FirstMark Capital, Novel TMT, Oak HC/FT, RRE Ventures, Solon Mack Capital, and Transamerica Ventures.

Bain, CIBC, New York Life, Mastercard, FirstMark, Novel, Oak, and Transamerica are investing in bitcoin for the first time, Silbert said.

Structuring DCG as a company and not a fund is a strategic business decisions, Silbert said, and the business model is similar to that of Berkshire Hathaway, founded by billionaire investor Warren Buffett.

“Setting it up this way gives us flexibility,” said Silbert, in an email to Reuters. “We can start companies, invest in companies, buy companies, etc and it gives us patient, permanent capital.”

There is therefore no need to raise a bunch of different funds with different investors, he said, adding that this gives the company the opportunity to go public down the road.

DCG was formed this year with the merger of two SecondMarket Solutions companies: Genesis Global Trading, a bitcoin over-the-counter trading firm, and Grayscale Investments, a digital currency asset management firm that manages the publicly-traded Bitcoin Investment Trust.

SecondMarket, an entity that has helped private companies facilitate trading in their shares, was founded by Silbert. It was acquired last week by Nasdaq Private Market. Financial terms were not provided.

Silbert has invested in some of the biggest bitcoin companies: Coinbase, BitPay, Circle, itBit, Ripple, Xapo, and Coinsetter.

Bitcoin is a virtual currency bought and sold on a peer-to-peer network independent of central control. The digital currency is used for retail purchases and investments. Other virtual currencies include litecoin and dogecoin.

One bitcoin is currently worth around $296.01 on the BitStamp platform. (Reporting by Gertrude Chavez-Dreyfuss; Editing by David Gregorio)

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