Blockchain-based trading platform tZERO recently announced an agreement with an energy projects funding platform to digitize approximately $25 million of equity interest in an energy fund that will invest in oil and gas assets throughout the United States. According to a press release, the "digital security" will be "built on the Ethereum Blockchain" and "is expected to become tradeable on the tZERO ATS." The energy projects funding platform reportedly expects to launch its Regulation D 506(c) offering this month.

A major U.S. bank has reportedly announced plans to offer a cryptocurrency investment platform for its wealthy clients by mid-June. The bank's investment institute reportedly wrote that "[c]ryptocurrencies have gained stability and viability as assets, but the risks lead us to favor investment exposure only for qualified investors, and even then through a professionally managed fund."

A Big Four accounting and consulting firm recently issued its annual crypto hedge fund report. Key takeaways from the report include:

  • The estimated total assets under management (AuM) of crypto hedge funds globally increased from US$2 billion in 2019 to nearly US$3.8 billion in 2020.
  • The median crypto hedge fund returned +128 percent in 2020 (vs. +30 percent in 2019).
  • The median management and performance fees remained unchanged at 2 percent and 20 percent, respectively; average management fees were stable at 2.3 percent; and average performance fees increased from 21.1 percent to 22.5 percent.
  • The vast majority of investors in crypto hedge funds are either high-net-worth individuals (54 percent) or family offices (30 percent).
  • The most common crypto hedge fund strategy is qualitative (37 percent of funds), followed by discretionary long/short (28 percent), discretionary long-only (20 percent) and multi-strategy (11 percent).
  • The proportion of crypto hedge funds using an independent custodian decreased in 2020 from 81 percent to 76 percent; the proportion with at least one independent director on their board decreased from 43 percent to 38 percent in 2020; and the proportion using an independent fund administrator increased from 86 percent in 2019 to 88 percent in 2020.
  • Funds tend to be domiciled in the same jurisdictions as traditional hedge funds, with the top three being the Cayman Islands (34 percent), the United States (33 percent) and Gibraltar (9 percent).

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