New $3.6 Billion Bitcoin Company 21 Capital Aims to Rival Saylor’s Strategy

Tether, SoftBank, and Cantor Fitzgerald have launched 21 Capital, a $3.6 billion Bitcoin accumulation company, with plans for a SPAC merger. Led by CEO Jack Mallers, the company aims to rival Michael Saylor’s Bitcoin Strategy with direct corporate investments in Bitcoin, raising $2.4 billion from major investments. Concerns about the powerful consortium’s implications and Tether’s regulatory challenges persist, but the market is keen to see how 21 Capital will impact the broader crypto landscape.

In an ambitious move within the cryptocurrency market, a coalition involving Tether, SoftBank, and Cantor Fitzgerald has launched a new Bitcoin accumulation company, aptly named 21 Capital, with a staggering $3.6 billion valuation. Jack Mallers, CEO of Strike, will take the helm at 21 Capital, and the company is planning a public listing via a merger with Cantor Equity Partners.

The company is entering the arena with a hefty asset backing of 42,000 bitcoins, thanks in part to substantial financial contributions — $900 million from SoftBank, which will hold a minority stake, and an impressive $1.5 billion from Tether. This funding could position 21 Capital as a significant rival to Michael Saylor’s Bitcoin Strategy, given the bold acquisition of assets at the outset.

Instead of typical crypto ETFs, 21 Capital is set to facilitate corporate engagement with Bitcoin investments directly. They’ll adopt unconventional metrics like “Bitcoins Per Share” and “Bitcoin Return Rate,” which could shake up the traditional methods of investment. They are currently trading as CEP but are working on changing their ticker to XXI in the near future, aiming to rival existing firms.

Mallers highlighted their intention to continuously create shareholder value in Bitcoin terms, stating, “Our Bitcoin per share will grow… we plan on blending Bitcoin with the traditional financial sector.” His words certainly paint a bullish picture for the company, but naturally, there’s some skepticism regarding another player that offers clients access to Bitcoin without direct ownership.

The consortium’s sheer power raises eyebrows. SoftBank, notorious for past missteps, faced a fine in 2021 for anti-monopoly violations. Tether has battled allegations of manipulation and lack of audits, while Cantor Fitzgerald’s chairman, Brandon Lutnick, has solid political ties, being the son of the U.S. Secretary of Commerce.

Jeff Park at Bitwise Invest referred to 21 Capital as an “ultimate exorbitant privilege joint venture,” hinting at deeper implications in the financial system. Others in the crypto community see potential risks associated with Tether’s connections and how they might affect dollar valuations and global demand.

SoftBank’s investment legacy is mixed, with founder Masayoshi Son renowned for both his monumental wins and catastrophic losses. Following a push into several tech industries, he suffered major setbacks during the dot-com bubble, though not all was lost; his investment in Alibaba paid off incredibly well. Still, doubts linger about whether 21 Capital could follow a similar fate.

Tether holds the title of the largest stablecoin, USDT, but it’s not without challenges. As regulatory scrutiny intensifies, especially in the U.S., Tether aims to diversify its operations. Their ongoing project in Africa attempts to solve electricity shortages, which could be seen as a way to pivot amid uncertain regulations at home.

In conclusion, Strategy has been the dominant player in the Bitcoin sector for a while, but the emergence of 21 Capital signals a shift in the landscape. It’ll be interesting to observe how this new competitor affects the crypto sector as a whole and whether it will indeed challenge Saylor’s established model or contribute to a more complex financial ecosystem.