Der Finanzprodukt Blog

Global Advisors (Jersey) Limited has announced new custodians and extended trading powers for its flagship fund, Global Advisors Bitcoin Investment Fund PLC (“GABI”), that are detailed in the new prospectus.

Co-founder and CIO, Daniel Masters says that 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, LLC and itBit, both US-domiciled New York State-charted limited purpose trust companies that are regulated bitcoin custodians.

In addition to meeting the capitalization, 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 also maintains an account with leading prime broker, Interactive Brokers LLC 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% 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 essentially 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 (“CRYDO’s”). CRYDO’s 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.

Mr. Masters says that the new powers could potentially allow the manager to add 6-10% in alpha return generation alongside the strong beta growth of bitcoin as a rising digital currency.