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C R Y P T O C U R R E N C Y
He believes many of them are being careful
and cautious, but work is being done in the
background.
What has become abundantly clear are the
gaps between the cryptocurrency service
offerings and traditional asset classes where
the infancy and complexity of digital assets
are causing problems as interest is outpacing
infrastructure.
As custody offerings are beginning to
emerge in the form of established players
such as Nomura, SIX and some exchange
platforms, the new most-talked about miss-
ing puzzle piece in the hedge fund world
appears to be prime brokerage.
Stonegate Global Fund Services outline
the issues around prime brokerage perfect-
ly. “Unlike the traditional prime brokerage
model that bundles services including cus-
tody, consolidated counterparty reporting,
trade execution, technology, margin lending,
and risk management services, crypto-as-
set funds lack a centralised platform for
these services. Fund administration firms
rely heavily on this data to provide its suite
of services. Without such a solution, fund
administration requires the import of data
from disparate sources, numerous exchang-
es, etc,” adds Stonegate’s Barnett.
A D M I N I S T R AT I O N ]
Know you customer
Another example of the complexity is how
KYC/AML challenges are different for
cryptocurrency, with regulators expecting
sufficient screening to have been completed
and weak KYC is a common complaint.
Omri Ross, the CEO of Firmo, a company
specialising in security in financial contracts
to crypto exchanges, stresses there are a
“We must remember that hedge funds are
entrusted by pension funds, endowments
and additional large-scale investors to ensure
their money and investments are safe.”
WAYNE LLOYD, SENIOR MANAGER AND CRYPTO
ADVISOR, PUBLICIS.SAPIENT
number of factors institutional investors
need to be aware of when going through the
KYC process.
Ross says: “KYC is a commonly known pain
point for institutional investors, generating
costs north of $500m annually for the in-
volved parties. Due to fragmented legislation
and lack of standardised KYC/AML proce-
dures across APAC, EU, and the Americas,
The Hedge Fund Annual 2018
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