Australian bitcoin exchange CoinJar has launched the country’s first cryptocurrency index fund available to wholesale investors.
Announced on Thursday, the CoinJar Digital Currency Fund provides a convenient way for wealthy Australian investors to obtain exposure to cryptocurrencies while offloading the custodial responsibility to another entity.
The Digital Currency Fund has two classes. The first, Bitcoin Class, exclusively provides investors with exposure to bitcoin (BTC). The second, Mixed Class, tracks the market cap-weighted price movements of four of the six largest cryptocurrencies: bitcoin, ethereum (ETH), ripple (XRP), and litecoin (LTC).
“Investing in cryptocurrency carries certain risks and can be an unnecessarily complex process. Traditionally, an individual investor in cryptocurrency has also been exposed to potential loss through cybercrime. We are launching the CoinJar Digital Currency Fund to handle the custody risks, simplify the investment process and provide industry best practice in security for wholesale investors,” said Jordan Michaelides, head of institutional at CoinJar.
The fund is currently restricted to wholesale investors, that is, high net worth investors who have obtained an accountant’s certification that they have net assets of at least AUD$2.5 million or a gross income of AUD$250,000 for each of the last two years. This classification is roughly equivalent to the accredited investor certification that U.S. buyers must attain before they can invest in cryptocurrency funds and many initial coin offerings (ICOs).
First-time investors must contribute a minimum of $50,000 to the fund, while current investors can make subsequent investments in increments of at least $10,000. The fund carries an annual management fee of 1.3 percent of Bitcoin Class and 1.8 percent for Mixed Class.
Though the first cryptocurrency fund available to Australian investors, the CoinJar Digital Currency fund joins a growing list of investment products that present cryptoassets in wrappers familiar — and perhaps more palatable — to sophisticated investors.
The New York-based Grayscale was the leader in this space, launching the Bitcoin Investment Trust (OTC: GBTC) in 2013 and a variety of other investment funds since. Two of these, GBTC and the Ethereum Classic Investment Trust (OTC: ETCG) can now be purchased by retail investors on the secondary market.
The industry has also developed a burgeoning cryptocurrency derivatives market, with products such as futures, options, and swaps available on both established stock exchanges (CME and CBOE) and upstart trading platforms (LedgerX, Crypto Facilities, among others). Earlier this month, two institutional investors completed the first exchange for physical (EFP) involving BTC when they swapped a position in a bitcoin futures contract for an equivalent amount of the physical asset itself.
Images from Shutterstock
Last modified: March 4, 2021 4:06 PM