The boom in the new digital currencies reaches the classical forms of investment in the financial sector. In Switzerland, a fund will be launched this year with bitcoin, ethers and other cryptic additives.
“We are in talks with Financial Market Supervisory Authority Finma,” says Jan Brzezek, head of CryptoFund AG, headquartered in Zug, who wants to launch the fund. “In the fourth quarter, we want to go live. It will be the world’s first regulated fund for cryptosis. “Negotiations are under way with the future custodian bank in Switzerland. The company is advised by the law firm MME, audit firms are expected to be PWC and EY.
On the project are prominent heads. On the Board of Directors of the CryptoFund, Marc Bernegger, a Fintech specialist and investor, is sitting in numerous start-ups. Chief Jan Brzezek comes from UBS, where he was most recently a business manager at President Asset Management and President UBS Group EMEA and was also part of the innovation team. The co-founder is Tobias Reichmuth, head of Finma-regulated asset manager SUSI Partners. In the summer, the Board of Directors is also to be filled with a further known person from the Swiss banking industry.
For qualified investors
The prices of Bitcoin and Ether have grown massively this year against francs and dollars, partly by more than 1000 percent. The new digital assets are still pioneering and pose a number of risks, including the so-called “blockchain” technology. But the interest of investors is nevertheless enormous. Every day, Swiss banks are asked by wealthy customers how they can invest in the new asset class.
So far, it is not quite trivial to buy bitcoins and ethers in the larger style and, above all, to manage them. This should change with an investment instrument with a common security number. “We want to build bridges between the old and the new world,” says Brzezek. CryptoFund’s fund is open to qualified investors, such as pension funds, insurance companies, banks, family offices and other eligible investors. The reason lies in regulation. There are fewer obstacles when a fund is offered to qualified investors only and not to the general public. “Because of the risks, cryptic investigations should at present only be used for diversification in the Alternative Investments category,” says Brzezek.
«The Cryptocurrency Fund»
The new fund, called “The Cryptocurrency Fund”, will include the most important cryptoscripts, bitcoin and ethers, but will also include others such as ripple or Litecoin. Brzezek, the asset manager, will invest the portfolio into individual currencies and work with several trading venues. Responsibility for the net asset calculation and issue and redemption of units has a FINMA-regulated fund management, and the currencies purchased are not held with CryptoFund AG, but with a FINMA-regulated custodian bank in Switzerland. Specifically, this bank will manage the so-called private keys – a type of passwords – that entitle the transfer of digital assets. Corresponding technical solutions for custodians are in process.
Brzezek is aiming at a fund volume of 100 million Swiss francs in the first year, with around 10 million already being invested by investors. There are limits to the upper limits, since the liquidity of the cryptoscripts is still too small to allow for large commercial orders without a massive movement of prices. After all, they are already worth more than a billion dollars a day. The market capitalization of all cryptos is about 100 billion dollars.
To date, there is no regulated fund, as planned by CryptoFund. In Switzerland, Vontobel only holds a certificate, which follows the course of Bitcoin. In the US, Bitcoin Investment Trust is open to certain investors. In addition, there are a few other financial instruments, which usually only focus on one single currency.
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