Four years after the debut of the bitcoin, a Maltese firm has launched a hedge fund investing in the digital alternative currency.
Hedge fund platform and brokerage Exante has raised US$3.2 million for its Bitcoin Fund, it told Forbes. While Exante's Anatoliy Knyazev said last year that he hoped his firm's would be "the first hedge fund to take advantage of using bitcoins," the fund is less a hedge fund and more a vehicle that allows institutional investors to invest in bitcoins. The fund simply buys the peer-to-peer crypto-currency, arguing that its value will increase as more and more people use it. The fund is denominated in dollars and euros, allowing institutional investors who would not be permitted to buy bitcoins themselves to access the market.
The Bitcoin Fund's fees are also very unlike a hedge fund's: It charges no performance fee and only 0.5% for management, a fee that is paid monthly and used to cover security costs for the fund. There is also a 0.5% subscription fee.
At the moment, the fund is not available to U.S. investors; Knyazev told Forbes, "the U.S. jurisdiction is tricky." He did say that Exante is looking into creating a feeder fund in Delaware that would open the Bitcoin Fund to U.S. clients.
The Bitcoin Fund requires a US$100,000 minimum investment.
The monetary base of bitcoins is currently estimated to be more than US$400 million, making it the most widely-used alternative currency in the world. Critics have claimed it is a Ponzi scheme due to its strictly-limited inflation program, which is set to run until 2140.