Bermuda-based, CrossTower to Launch a Bitcoin Fund for Accredited Investors

Bermuda-based, CrossTower to Launch a Bitcoin Fund for Accredited Investors

  • Digital assets trading and investment firm, CrossTower, launches a crypto hedge fund to compete with Grayscale’s Bitcoin Trust (GBTC) and other institutional crypto hedge funds.
  • The fund gains its competitive advantage by offering a lower management fee and no lockup periods for its client’s assets.

In an announcement on Wednesday, CrossTower, a Bermuda-based crypto investments firm, plans to launch its bitcoin hedge fund at the end of February for accredited investors. The fund will not be tradable in the secondary market but aims to compete with other Bitcoin-based hedge funds such as GBTC in management fees and liquidity.

The fund will only accept accredited investors with the minimum fund requirement set at $100,000. The fund has already raised $20 million in assets under management (AUM) from early-stage investors, most of the demand coming from family offices and high net worth individuals.

Kristin Boggiano, CrossTower co-founder, and president confirms the fund will charge up to 60 basis points (0.6%) in management fees, lower than GBTC’s 2%, and have no lockups for clients’ funds. The fund trades Bitcoin on a Net Asset Value (NAV) basis. Notwithstanding, CrossTower is also planning to include different crypto-based instruments in the future, Boggiano further confirmed.

“This is the most plain-vanilla of the suite of offerings that we expect to be popular.”

“We’re building infrastructure at CrossTower so that entities that want to shape their risk have different instruments whether they want to use an exchange, they want a loan, they want to go short.”

Anchorage, which recently acquired the first license to become a crypto bank, will be the custodian of CrossTower digital assets and Apex as the fund’s legal counsel. Grant Thompson will lead accounting for the firm.

As alluded to, the fund will focus on accredited investors from the U.S. and across the globe. This will allow investors with offshore accounts to easily invest in Bitcoin without the tax implications set in the U.S. However, the fund is limited to a maximum of 99 U.S. investors. Still, it is open to an unlimited number of offshore investors due to the daily liquidity provisions set on the fund.

The fund is starting its journey of a thousand steps (pun intended) towards reaching Grayscale’s GBTC $20 billion AUM and is looking for ways to add more U.S. based investors to its fund. The fund will also be competing with BlockFi who recently filed for a Bitcoin Trust with the US Securities and Exchange Commission (SEC).

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Author: Lujan Odera

CrossTower to Launch a Digital Asset MarketPlace for Institutions With Innovative Pricing Model

CrossTower, a Jersey-based crypto exchange started a phased rollout of its services in April and led by former AlphaPoint executives Kristin Boggiano and Kapil Rathi.

The exchange aims to build a new marketplace especially catering to institutional clients with its innovative pricing model along with taker rebates.

Both the co-founders boast quite extensive experience in the trading field, where Boggiano made herself a well known figure in sessions with regulatory bodies such as CFTC and SEC. While Mr.Rathi has held senior positions at the NYSE, Bats, ISE, and Cboe.

At one point in their lives, both co-founders were working at AlphaPoint, holding high positions as the chief legal officer and chief operating officer, individually. AlphaPoint is known for developing white-label exchange software.

The newly launched CrossTower is currently available to a select few individuals and firms, but the exchange aims to disrupt the institutional market with its innovative business approach. At the time of launch, the exchange supported some of the key cryptocurrencies such as Bitcoin, Ether, Litecoin, Bitcoin Cash and ZCash.

The Interest of Institutional Clients Top Priority of Crypto Businesses

After the 2018 bear market, the volatility of the crypto market was reduced significantly which was one of the key reasons behind institutional clients overlooking the crypto space. Once that issue was resolved, there was a significant surge of high-end investors, which led to the popularity of crypto derivative products and the futures market.

CryptoTower co-founders are well-aware of this fact and believe this influx would not only continue in the future but also increase. Boggiano explained that this is one of the key reasons their exchange is focusing on creating a new innovative marketplace for these institutional players. She explained:

“It’s not just your typical high-net-worth individuals, we’re seeing significant open interest at the CME. It’s generally not individuals that trade on the CME; it’s institutions. Institutions trading wheat and oil, for example, are moving into crypto futures. We are seeing an institutional shift in my opinion, as indicated by the numbers being printed.”

The crypto markets focusing on institutional clients is evident from the fact that, up until now, just over two billion dollars has been devoted to firms accommodating institutional customers.

While new players like CrossTower are launching special pricing models to attract the bigwigs of the game, even existing players have ramped up their efforts in luring Wall Street players. For example, Coinbase retained an executive from Barclays to attract big traders from Wall Street, and Blockchain.com gave a new makeover to their exchange.

How CrossTower Aims to Stand Up to the Competition?

CrossTower is planning to offer a novel fee schedule for the crypto market where the exchange would pay the takers to trade on their platform. In the traditional scheme of things, the platform offers a small discount to market makers and charge the takers who take liquidity. Most of the crypto exchanges have both take and maker fees with a few exceptions.

Available to all the players on CrossTower, is the taker discount and the firm states per Rathi,

“has lined up a number of liquidity providers and market makers — which have been attracted to the firm’s risk controls — to compliment robust retail flow”.

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Author: Silvia A