As others depart the US, CoinShares expands via new hedge fund unit
Europe-based crypto ETP specialist looks to offer qualified US investors bitcoin and ether strategies amid “the long-awaited return of interest rate-driven volatility”
T. Schneider/Shutterstock modified by Blockworks
Europe-based CoinShares has launched a hedge fund division as part of its expansion into the US.
It’s a notable move, given that other industry firms are departing the US as regulatory uncertainties around crypto persist.
The expansion marks the first time the crypto investment firm will make its products available to qualified American investors, though CoinShares itself isn’t new to the hedge fund space.
The Jersey-based firm began as a commodity hedge fund called Global Advisors that founded the regulated Global Advisors Bitcoin Investment Fund in 2014. That fund operated until 2017.
CoinShares is perhaps better known today for its crypto ETPs, as well as its research and venture arms.
Lewis Fellas is set to lead the new unit, called CoinShares Hedge Fund Solutions. Fellas joined CoinShares in March after founding and working as chief investment officer of Larks Leaf Asset Management, according to his LinkedIn profile.
CoinShares CEO Jean-Marie Mognetti said in a statement that the demand for actively managed exposure to digital assets is a “natural progression” amid a macro environment marked by inflation.
The Federal Reserve has raised the federal funds rate repeatedly over the last 18 or so months to tackle inflation. Though the US central bank chose this week to keep rates steady, it signaled the possibility of another rate increase by the end of the year.
“The long-awaited return of interest rate-driven volatility is a great opportunity that we plan to capture with our novel fund products,” Fellas said in a statement. “Each product that will be offered is designed to mitigate counterparty risk whilst providing investors with clearly defined asset class and strategy exposures.”
Funds being made available to US investors include vehicles based on Bitcoin and Ethereum, a spokesperson told Blockworks.
The bitcoin fund, called Bitcoin Integrated Strategies, “deploys multiple strategies such as call overwrite, quantitative and arbitrage to generate alpha above the performance of bitcoin,” according to the company’s website.
CoinShares’ Ethereum Integrated Strategies fund uses the same methods, “but optimized for Ethereum.”
A spokesperson did not immediately comment further on the company’s plans in the US.
Expansion to the US market comes as others have abandoned their plans in the country.
Crypto exchange Bittrex said in March it would shut down its US operations, citing “regulatory uncertainty” and an unwillingness by lawmakers to embrace innovation.
The US Securities and Exchange Commission sued Coinbase and Binance in June in part for allegedly operating as unregistered securities exchanges — claims the companies deny.
Dave Hirsch, the crypto unit chief within the SEC’s enforcement division, said that month the regulator intended to continue “pursuing claims for the unregistered offer and sale of securities.”
CoinShares had signaled in a July filing that it was laying the groundwork for hedge funds open to accredited US investors.
“Today’s investors seek more than passive exposure to digital assets and are demanding increasingly sophisticated investment alternatives,” the company wrote in its first quarter report.
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