UK Regulators Approve Their First Crypto Hedge Fund

  • Prime Factor Capital Ltd. becomes first crypto hedge fund to gain FCA approval.
  • Fund reports 147 percent YTD return as bitcoin's price continues to rise. 

London-based Prime Factor Capital Ltd. has just become the first cryptocurrency hedge fund to gain approval by UK regulators. 

FCA Approves Their First Crypto Hedge Fund

According to a report published by Bloomberg, Prime Factor Capital has received approval from the Financial Conduct Authority (FCA) to manage alternative investment funds which will focus on cryptoassets.

The hedge fund was originally established by former employees of BlackRock Inc. and RWE AG, bringing a substantial amount of experience to the table for the relatively new management group.

On July 1, the fund issued a statement informing clients it will be regulated as any other alternative investment hedge fund under European Union rules. According to the release, Prime Factor Capital is now able to manage more than $100 million euros in assets and can broaden their offering to institutional investors. 

Regulators have been slow to grant approval to cryptocurrency-related funds. While cryptoassets command a market capitalization of more than $300 billion, they have also exhibited massive volatility relative to traditional markets. Crypto and the exchanges that fuel the industry have thus far managed to operate in unregulated waters, which has led to the abundance of hacks and other shady dealings. 

Cryptoassets on the Rise

However, Prime Factor’s chief operating officer (CEO) and former BlackRock investor Adam Grimsley believes the FCA is being proactive in its decision. As cryptoassets gain popularity with retail and institutional investors, the need for some form of market oversight has increased. 

Grimsley told Bloomberg, 

“Most vehicles for investing in cryptocurrencies are outside the scope of regulators and that’s a big problem in a market that has such a bad reputation,”

As the first cryptocurrency hedge fund to gain approval by the UK’s regulatory watchdog, Prime Factor is now beholden to a set of requirements to remain in compliance. The management group will have to appoint an independent depository for oversight, cash flow reconciliation and safekeeping of assets.

In return, Grimsley says clients receive “assurance” on the fund’s returns and that the value of assets under management is consistent with what is being reported. 

Prime Factor Capital Crypto Hedge Fund Market PerformancePrime Factor 10 hedge fund performance | Source: Prime Factor Capital

According to the market performance indicator on their website, the Prime Factor 10 fund has generated a 147 percent Year-To-Date (YTD) return, closely tracking the rise of bitcoin. 

Deloitte Luxembourg to Trial Bitcoin Payments for Staff Lunches

Neil Dennis

Deloitte, one of the so-called "Big Four" audit and consulting firms is to allow its staff to pay for their lunch in bitcoin, the Luxembourg Times reported on Tuesday.

While the firm does not plan to allow clients to pay for its services in bitcoin in the near future, the company said it was pleased to allow the lunchtime trial for its staff to "assess this new technology" in the company canteen.

While it doesn't transact in bitcoin, Deloitte has been active in developing blockchain technology for its fund management business.

PwC to Accept Bitcoin

The Luxembourg branch of Big Four rival, PwC, announced in early September it would accept bitcoin payments from its clients from the beginning of October. 

PwC said in a press release it was making the move to acknowledge the needs of its clients and the increasing adoption of crypto in Luxembourg. It added:

Our role is to lead and it is only by being an active leader with exposure that we at PwC Luxembourg can understand the challenges inherent to the crypto world.

 

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