FCA Grants License to First Crypto Hedge Fund

Prime Factor Capital, a London-based crypto asset management firm, has received approval from the Financial Conduct Authority (FCA) to operate as a full-scope alternative investment fund manager, according to a Bloomberg report.

It is the first crypto-focused hedge fund approved by the United Kingdom’s market watchdog. The company will operate under the guidelines of the European Union and will be allowed to hold more than 100 million euros ($116 million) in asset under management (AUM).

“Most vehicles for investing in Cryptocurrencies are outside the scope of regulators and that’s a big problem in a market that has such a bad reputation,” Adam Grimsley, chief operating officer at Prime Factor, told Bloomberg.

Prime Factor Capital Ltd., a London-based hedge fund manager set up by former employees of #BlackRock Inc. and RWE AG, became the first investment firm focused on #cryptocurrencies to win the stamp of approval from U.K. regulators.
— ᴀʟɢᴇʙʀᴀ ᴄᴀᴘɪᴛᴀʟ (@algebra_capital) July 2, 2019

Bond traders jumping into crypto

The company was set up in 2017 by two former bond traders from Blackrock along with Nic Niedermowwe, an ex-energy derivatives trader at RWE AG. Currently, the traders’ team at Prime Factor has four members who were previously associated with Blackrock, Legal & General, Goldman Sachs, and Deutsche Bank. It is targeting professional and institutional investors such as sophisticated high net-worth individuals, family offices, and private wealth managers to invest in the volatile yet highly lucrative crypto market.

The company manages a fund called Prime Factor 10 and, according to its website, it gained 157.2 percent in the last two years while gaining 121 percent in the last three months. The company, however, did not disclose the digital assets in its portfolio.

As per the regulatory rules, the London-based hedge fund also needs to appoint a third-party custodian to hold and safeguard its crypto holdings.

Earlier this year, the company also announced that it received funding in an equity financing round from Speedinvest and Entrepreneur First.

Prime Factor Capital Ltd., a London-based hedge fund manager set up by former employees of #BlackRock Inc. and RWE AG, became the first investment firm focused on #cryptocurrencies to win the stamp of approval from U.K. regulators.
— ᴀʟɢᴇʙʀᴀ ᴄᴀᴘɪᴛᴀʟ (@algebra_capital) July 2, 2019