Asset management firm IDEG Investment has launched two new bitcoin trust products - Asia Bitcoin Trust I and Atlas Mining Trust I - claiming to have a total size of $200 million for both the products.
Announcing the news on Sunday, Hong Kong-based IDEG said unlike passively-managed products like Grayscale Bitcoin Trust (GBTC), Asia Bitcoin Trust I is an actively-managed product. IDEG will apply “hedging and arbitrage strategies” to seek returns for investors as well as to “effectively control the risk of drawdowns," said Kevin Yang, CEO of IDEG.
The other product, Atlas Mining Trust I, is an investment vehicle that allows investors to participate and share profits from bitcoin mining activities. IDEG said mining of bitcoin offers market participants $4 billion to $8 billion in annualized revenues.
"The mining business is quickly evolving, with more and more institutionalized miners stepping in. Individual miners are dropping out because institutional miners like us can improve in almost every aspect, including capex [capital expenditure], opex [operating expenses], operation, and risk management. That's why we have a much higher return ratio than other miners," said Raymond Yuan, founder of IDEG.
Both the trust products are targeted at institutional investors. It is not clear whether the claimed $200 million funds have been already committed by investors. Yang declined to comment further to The Block.
But he confirmed that IDEG founder Yuan is also the founder of Fundamental Labs, a $500 million-under-management blockchain fund that has backed Binance, Coinbase and Canaan Creative, among others.
Coinbase as custodian
Coinbase Custody, one of the world's largest cryptocurrency custodian holding “over 900,000 bitcoins,” is the custodian for both trust products. A Coinbase spokesperson separately confirmed to The Block, saying: “Correct. We are the custodian.”
Profound Trust Company, on the other hand, is the trustee of the two products. IDEG said Profound has over 1,000 clients in Asia.
Lu Qi, CEO of Profound Trust, said “more and more institutions and sophisticated investors” are seeking exposure to the cryptocurrency market and that they demand “compliance, security, and professionalism. The two trusts are designed to offer such investment vehicles for investors.”
Another notable player currently offering a bitcoin trust product is Digital Currency Group-backed Grayscale. The firm’s GBTC product remains popular, which saw a total cumulative inflow of $304.4 million for the 12 months ending in September. Launched in 2013, GBTC is also one of the top five equity holdings by millennials, according to a recent report from brokerage giant Charles Schwab.
Last month, Grayscale also voluntarily filed with the U.S. Securities and Exchange Commission (SEC) to register GBTC with the regulator. Grayscale is hoping that the registered status will help GBTC tap into a pool of institutions that prefer to invest in SEC-registered products.
It remains to be seen whether IDEG mirrors Grayscale's success in Asia.
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