Warren Buffett invests $1 billion in a Bitcoin-friendly neobank and divests his holdings in Visa and Mastercard
The “Oracle of Omaha” now has a broader portfolio of firms with direct/indirect exposure to Bitcoin and other cryptocurrencies.
Berkshire Hathaway, led by Warren Buffett, sold a chunk of its Visa and Mastercard assets and expanded its stake in Nubank, Brazil’s biggest fintech bank, which is also popular among the country’s Bitcoin investors.
The industrial giant reported in a late February regulatory filing that it had bought $1 billion in Nubank Class A shares in Q4/2021. On the other hand, it sold $1.8 billion and $1.3 billion of Visa and Mastercard shares, respectively, indicating a move away from credit firms and toward fintech competitors.
Buffett, dubbed the “Oracle of Omaha,” is well-known for his conservative approach to investment, especially in hot industries such as fintech. Additionally, the seasoned investor dismissed developing decentralised financial solutions such as Bitcoin (BTC), mocking it as an asset that “does not generate anything.”
However, Berkshire’s latest interest in Nubank demonstrates that Buffett has recently been more receptive to fintech. In July 2021, the business invested $500 million in the venture. It earned $150 million on the investment in December 2021, after Nubank’s first public offering on the New York Stock Exchange (NYSE).
The Warren Buffett-Bitcoin nexus
Buffett’s further investment in Nubank demonstrates his recognition of the fintech sector’s underlying theme of financial services digitalization, as well as his readiness to collaborate with cryptocurrency firms.
In summary, since June 2021, Easynvest, a trading platform bought by Nubank in September 2020, has been actively marketing a Bitcoin exchange-traded fund (ETF). The ETF, dubbed QBTC11, is backed by QR Asset Management and is listed on the B3 stock market, Brazil’s second-oldest.
Thus, it looks as if Nubank, which continues to be exposed to the developing crypto industry through Easynvest, may leverage the increased income potential to benefit its largest shareholder, Warren Buffett, despite his belief that Bitcoin is “rat poison squared.”
This is mostly due to the anticipated increase of cryptocurrency-related financial products in 2021. Notably, their numbers more than quadrupled in the year, from 35 to 80, according to Bloomberg Intelligence data, while the total value of the assets they owned increased to $63 billion, up from $24 billion at the start of 2021.
Emily Portney, chief financial officer of Bank of New York Mellon Corp. — another company in Buffett’s investment portfolio — remarked that if Bitcoin investment vehicles grow more common, digital assets might become a “substantial source of income” for investment banking businesses.
Meanwhile, Leah Wald, CEO of crypto-asset management Valkyrie Investments, anticipated a rise in capital flows into crypto-related investment vehicles, stating that they had developed into a “phenomenon that is beginning to take off.”
“If you look at inflows in terms of volume, not only has it been consistent despite the price drops that Bitcoin is infamous for, but you’re seeing a lot more institutional investors coming in.”
Buffett’s portfolio is brimming with crypto-friendly businesses
While Buffett may not engage directly in Bitcoin, he is already obtaining indirect exposure to the cryptocurrency business via the forays of firms in his portfolio.
For example, in October 2021, just one month before Bitcoin reached an all-time high of $69,000, the fifth-largest US bank U.S. Bancorp launched a cryptocurrency custody service for its institutional investment managers, citing an increase in demand from their “fund services clients” in recent years.
Similarly, Bank of America announced the establishment of a cryptocurrency research effort in October 2021, claiming “increasing institutional interest.”
BNY Mellon declared months ago that it will store, transfer, and issue Bitcoin and other cryptocurrencies for its asset management customers.
“The Nubank investment might be characterised as Buffett’s method of indirectly assisting the fintech/crypto sector,” claimed Greg Waisman, co-founder and chief operating officer of crypto wallet service Mercuryo. “Even an indirect exposure is certain to boost favourable attitude, which may attract further investors.”