The Financial Conduct Authority (FCA) has granted an operating license to the first crypto hedge fund. Titled “Prime Factor Capital,” the firm is London-based. A report disclosed this information on July 2, noting that the company is set to operate as a full-scope alternative investment fund manager.
According to a report, the firm would work under the European Union (EU) rules. In so doing, it would be in a position to hold more than €100 million in assets under management (AUM).
This news comes as the $300 billion crypto market remains widely unregulated. A recent publication unveiled that criminals have traded $515 million worth of BTC this year. Due to the risks associated with the crypto space, financial firms have avoided buying into the sector.
Speaking about regulation in the industry, Adam Grimsley, Prime Factor Capital’s COO said,
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,
He further noted that EU rules would require the firm to name an independent custodian. This custodian would provide oversight, cash flow reconciliation, and keeping assets safe. According to him, these measures would assure investors that the fund’s returns and the value of its assets is real.
Bond Traders Onboard the Crypto Bandwagon
Prime Factor Capital was founded two years ago by two former bond traders at Blackrock and a former energy derivatives trader at RWE AG. At the moment, the traders’ team comprises four individuals who used to work at Blackrock, Legal & General, Goldman Sachs, and the Deutsche Bank.
The firm’s primary target is institutional investors that seek to buy into the crypto sector.
Prime Factor Capital’s founders believe they can stay ahead of their competitors by focusing on one asset class. According to them, concentrating on crypto will help the company become a trusted entity in crypto investing.
Prime Factor Capital also manages a fund called Prime Factor 10. Per the firm’s site, this fund gained $151 percent over the past two years. Over the last three months, the fund surged 121 percent. As at the time of writing, the hedge fund has not unveiled the digital assets that are available on its platform.
Prior to this news, the firm announced that it had received funds from a financing round from Speedinvest and Entrepreneur First.
Do you think FCA’s approval of Prime Factor Capital will help institutional investors adopt crypto? Let us know in the comments section below.