UK fintech Mode jumps 9% on joining the Bitcoin bonanza, following the lead of US tech firms Square and Microstrategy
fintechMode jumped 9% after announcing it would hold cash reservesin Bitcoin, following recent investments made by US tech firms Squareand Microstrategy into the digital currency.
- Mode, which has its own digital banking app, is looking to restyle its long-term strategy by moving away from low-interest market products.
- "We said 'let's hold 10% of our assets in Bitcoin to start with,' because it made sense, and yesterday it made sense," said Jonathan Rowland, Mode's founder, referring to Bitcoin's leap after PayPal said it would let users buy and sell cryptocurrencies on its network.
- Rowland told Business Insider that once he started reading up on Bitcoin, he realized its potential to be a global currency that becomes the "money of the internet."
- Mode said it made over 5% on its Bitcoin reserves after announcing its allocation.
UK-based fintech Mode Global Holdings will convert 10% of its cash reserves into Bitcoin, becoming the first publicly-traded British company to announce a notable purchase of the flagship
The company's stock rose 9% in afternoon trading on Thursday.
Mode, which recently raised £7.5 million ($9.8 million) through a London Stock Exchange listing in early October, plans to hold Bitcoin as part of its corporate reserve assets, according to a press release. The company said it made over 5% after announcing the allocation. Its market capitalization stands at about £37 million ($48 million).
The Bank of England has set interest rates at near zero, and Mode is looking to branch out from low-interest market products to protect investor assets under a long-term strategy. The company could seek to expand its weighting in Bitcoin in the coming year, Jonathan Rowland, Mode's founder and executive chairman said in an interview with Business Insider.
"We said let's hold 10% of our assets in Bitcoin to start with, because it made sense, and yesterday it made sense," he explained, referring to digital payment company PayPal's announcement on Wednesday that it would open its platform to cryptocurrencies, triggering a rally in the price of Bitcoin to its highest since July 2019.
"I think over twelve months, if we raise further capital, or if we have excess capital, I'd like to increase it. I had a board of directors who held me back a little bit. I wanted to go a bit more than 10%, but that's fine to start with — we can dip our toe in."
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Mode's Bitcoin purchase follows investments made by Square, founded by Twitter CEO Jack Dorsey, and US tech firm Microstrategy, which recently disclosed a combined $475 million holding. The trend suggests tech firms are less reluctant to hold Bitcoin reserves as the security is used to hedge against uncertainty throughout the coronavirus crisis.
"Bitcoin for me was an interesting concept ten years ago. I didn't believe it particularly, I thought it was a scam, I thought it was a Ponzi scheme, but I started to read," Rowland said.
"I started to read for about two or three years on the subject and I then decided that, for Bitcoin in particular, there was a case for a global currency that was the money of the internet," he added.
Mode, which has its own digital banking app, recognizes Bitcoin's potential as a safe haven and reliable store of value, it said in the release.
"Faced with the challenges of COVID and with
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