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).