Bitcoin asset manager Global Advisors (Jersey) has appointed custodians and extended the trading powers for its flagship fund, Global Advisors Bitcoin Investment Fund (GABI).
Co-founder and chief investment officer Daniel Masters says the new developments pave the way for the GABI to list on the Channel Island Securities Exchange, which is anticipated to occur this November.
The bitcoin custodians for the fund are Gemini Trust Company and itBit, both US-domiciled New York State-charted limited purpose trust companies that are regulated bitcoin custodians. In addition to meeting the capitalisation, reserve, compliance, consumer protection and cyber-security requirements of the New York State Department of Financial Services, the custodians will provide secured IT storage systems and cold storage vault systems for GABI’s bitcoin holdings. The use of dual custodians adds further de-risking in the storage of the fund’s investments.
In addition, the fund has added new powers allowing the manager to engage in cross-market arbitrage, futures-to-cash arbitrage, coin lending and leverage. The manager maintains an account with prime broker Interactive Brokers in order to be able to supplement the portfolio with interests in certain non-bitcoin commodity futures contracts such as oil, metals and currency pairs, with the aim of protecting and where possible enhancing returns by creating pair-trading and hedging opportunities. No more than 25 per cent of the NAV (net asset value) will be allocated to non-bitcoin based commodities.
Bitcoin lending is an emerging area. The added feature of coin lending with authenticated counterparties allows the manager to enhance yield on bitcoin holdings in a similar manner to traditional stock and metal lending.
The manager has also added the ability to trade in Crypto Delta One securities (CRYDOs). CRYDOs are securities traded on an electronic trading platform that offer indirect or synthetic exposure to the underlying price of bitcoin while not conveying explicit ownership of bitcoin. In this way they work similarly to CFDs (contracts for difference) in the equity world and can offer the benefits of cost saving and leverage – both as risk management and yield enhancement tools.
Mognetti says: “It was a pleasure to work with Elliptic as a custodian for the last two years. The fund is ready to enter a new cycle thanks to the evolution of its mandate and its two new custody partners based in NYC. The group is expecting to deliver an extra six to 10 per cent of alpha performance alongside the strong beta growth of the digital asset.”
