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administration on a “very selective and
risk-adjusted basis” and that the company
turns away over 90% of the opportunities
they look at.
On-request service
Stonegate said it believed itself to be one
of the first firms to begin providing fund
formation and fund administration services
to crypto funds back in 2015.
“Fund administration of crypto funds is a
highly complex process. From what we’ve
seen, of the more than 600 global fund
administration firms in the world, only a
small handful (perhaps five to seven firms)
service crypto funds,” says Carmen Barnett,
managing director at Stonegate Global Fund
Services.
Other players such as Triple Leo Consult-
ing, NAV Fund Administration Group and
Theorem Fund Services are also offering
services.
Technology provider Libra has said it is
currently providing services to 12 fund ad-
ministrators, with another five in contract-
ing for its middle- and back-office services,
suggesting many more traditional players are
also looking at entering the space.
“I certainly get the impression it’s an
on-request type of service,” adds Gouldstone.
“I get the impression it’s not easy to fit into
a normal book of business. Many are not
quite ready to bang the drum on selling it as
a service. From a fund admin point of view, it
depends on your niche and your area at the
“We have seen just as much crypto fund
formation and investing activity outside the
US as we have seen in the US.”
ALEX MASCIOLI, CEO, NORTH STREET GLOBAL
moment, there are a lot of fund management
firms who like to work with a generalist.
Whether it’s global, regional, fixed income
or equities, some want to work with a small
number of firms to cover the entirety of what
they do.”
Understanding the game
In July, North Street Global established the
first crypto fund-only administration service,
launching with $700 million in cryptocur-
rency assets under administration from
around the world.
22
Global Custodian
The Hedge Fund Annual 2018
A D M I N I S T R AT I O N ]
The offering will include full-service cryp-
tocurrency hedge fund administration, mar-
ket data services and AML/KYC compliance.
North Street Global’s CEO, Alex Mascioli,
explains that they are targeting clients in the
US, and also Asia and Europe.
“We have seen just as much crypto fund
formation and investing activity outside
the US as we have seen in the US,” explains
Mascioli. “We anticipate the greatest initial
take-up for new launches will be from those
jurisdictions whose regulations are currently
either the most lenient or organised.”
A big challenge for fund administrators has
been adding crypto expertise and intel-
lectually understanding the new market.
Speaking to a handful of the players offering
services, it became clear they had invested
significant time into educating themselves,
speaking to experts, lawyers, regulators and
auditors. Perhaps none so much more than
the team at Trident Trust.
“We always took the approach that we
could dig into any particular asset a manag-
er wanted to invest in and understand the
economics,” says Dan Smith, president at
Trident Trust.
“Our office in Atlanta had always taken a
fairly entrepreneurial approach to private
funds and things private fund managers
want to invest in.”
Smith highlights that Trident Trust began
with the first client back at the start of 2017,
before the infamous Bitcoin bull run. Just
over a year and a half later it has around 50
funds signed up across its Cayman, Malta,
Dubai and Singapore offices, along with
Atlanta.
“Anything you want to be good at, wheth-
er its playing the trumpet, riding a bike or
crypto hedge fund accounting - it takes time
to learn, but it has been nice that we’ve got
to know the other providers in this space,
the custodians, lawyers and auditors for
example,” he explains.
Crypto fund vs traditional
Trident says that some of the funds at the be-
ginning were smaller – by hedge fund stand-
ards – at around $20 million, while some of
the administrator’s newer clients have man-
aged more than $100 million, proving that
larger investors are entering the space.
“All the business has been new managers as
clients, but having said that we have engaged
with some existing firms who think they can
implement their strategy in this asset class,”
adds Smith.