With asset management documented on blockchain, an investment platform achieves a world-first.
Despite their role in simplifying investment, index funds in the crypto market require comprehensive oversight in order to withstand the impending regulatory onslaught.
Index funds have acquired popularity in traditional finance as a cost-effective and simple approach to invest in a diverse collection of assets. As the world evolves to the digital realm, these vehicles that have a track record of improving investor experiences are now available for cryptocurrency assets.
A bitcoin index fund makes sense on paper, especially when you consider the additional complications of buying and storing digital assets. In practise, however, a lack of restrictions prevents widespread implementation. Many institutional clients demand the same assurances typical in traditional offerings when looking for new investment alternatives, such as audits and third-party oversight in assessing fund assets, which are all standard in traditional offerings.
Invictus Capital, an investment platform, is addressing regulatory problems head-on. Since 2017, Invictus has been working with a team of financial specialists with extensive crypto experience to build a bridge between traditional finance (TradFi) and decentralised finance (DeFi). The team now has a solid five-year track record as a digital asset sector pioneer and trusted participant.
Invictus just launched Crypto20, the world’s first tokenized crypto index fund, an offering meant to last long after regulators begin to crack down on cryptocurrency initiatives. “Missing regulation has always been a problem for any company in the crypto area, and previously establishing this kind of regulated framework was not achievable for any crypto asset management,” says Haydn Hammond, CEO of Invictus. Invictus currently has a range of institutional-grade cryptocurrency investing products.”
As the first security token sale of its kind, Invictus relies on a blockchain-based distribution strategy and a number of close collaborations, including auditor MHA Macintyre Hudson, fund administration by the Catalyst Group, custody by Copper, legal assistance by Appleby, and pricing by Coin Metrics.
Why is regulation important?
Investors have legal ownership in the fund under the Crypto20 model, which replaces the previous model’s unregulated tokens with tokenized participatory shares that provide holders more and clearer rights. Prior unregulated tokens were not intended to reflect actual equity, but rather a contractual right to redeem against the fund that could only be exercised under certain conditions.
The fund is required to function within the constraints of the fund offering documents and to report on the fund’s operations on a regular basis as tokenized participation shares. This means that investors will always know which fund strategies are being pursued, if and how leverage is being used, and what type of crypto assets are held in the fund. Investors also benefit from professional auditors confirming the fund’s assets and the general soundness of the offering.
Regulations provide further peace of mind for institutions by ensuring that they are investing with properly vetted investors who have all undergone stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) standards.
As a result, investors will be protected in the same way that they would be in a regular mutual fund, such as an accurate price decided by independent administrators and a corporation with a completely independent board of directors. Each of the funds also has an International Securities Identification Number (ISIN), which institutional investors may follow and recognise in all markets across the world.
The way forward for premium services
Over the next several months, the company plans to extend its fund offerings, including the much-anticipated introduction of a DeFi fund focusing on the emerging decentralised finance area and the expansion of the product suite to a new breed of institutional investors. A new Institutional Sales Office in Zurich, Switzerland, will serve the latter goal. Zurich is a significant European financial centre. Family offices, high net worth individuals, and other asset managers will be the primary clients of this office.
Invictus aspires to be a premier digital asset management that is trusted by both institutional and retail investors around the world.
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