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A cryptocurrency startup is investing cryptocurrency in a cryptocurrency fund that invests in other cryptocurrency startups

The startup Ripple is spending $25 million of its own currency to back a venture firm, Blockchain Capital.

Bitcoin Futures Traded On Chicago Board Options Exchange Photo by Scott Olson/Getty Images

As the world of investing in cryptocurrencies grows more interwoven and sophisticated, expect to see more stories like this:

Ripple, the company associated with the digital currency XRP, said Wednesday that it would invest $25 million in one of the leading venture capital funds that specializes in blockchain-related deals, Blockchain Capital.

Two things are unusual about this: This is a rare example of a startup funding a venture capital firm, as opposed to the reverse, and it’s a venture capital firm that has previously funded it, too. Ripple is part of Blockchain Capital’s portfolio, and the company said this is the first fund that it has ever backed.

And even more fascinating is that Ripple is not making this fund investment in U.S. dollars but in the XRP currency itself. That’s a new possibility for investors who have digital assets in their war chest — an increasingly common though still rare circumstance — and requires them and the funds they back to make a series of decisions about how much faith they have in the particular cryptocurrency being invested.

Now, this isn’t an option at most venture capital firms, which are making investments in crypto-related projects but don’t typically accept fundraising contributions in the actual cryptocurrencies. Blockchain Capital is a rare breed — it has set up a $75 million fund that runs in parallel to its own fund that reportedly only takes contributions made in crypto.

Only $25 million has been committed so far, according to SEC filings, so expect to see at least $50 million more in venture capital allocations made in not-so-usual ways.

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