Wilshire Phoenix will set up the first risk-free institutional cryptocurrency fund before the end of 2018. An organised statutory trust will provide exposure to Bitcoin (BTC) while mitigating the risks associated with the exposure. According to a press release, the fund will not operate like an index. However, it will only hold Bitcoin while making it easier for investors to access the digital asset.
Institutional Crypto Fund without Derivatives
As per the release, Wilshire Phoenix will cap the fund at $500M USD. In partnering with Coinbase Custody, the fund will provide the best-in-class platform to store cryptocurrencies. Further, the fund will provide investors with an easy way to purchase Bitcoin. Normally, investors and financial institutions find it difficult to buy because of hindrances like the Generally Accepted Accounting Principles (GAAP).
However, Wilshire Phoenix claims to have an ingenious system that will work its way around these hindrances. “We trust that our system, which is patent-pending, may also solve this important issue,” the company assures.
In addition, the institutional crypto fund will only limit its activities to a trust fund. This is to say that the new outfit will not utilize any form of leverage towards achieving its objectives. As a result, investors and financial institutions should not expect to get derivatives on the platform.
Wilshire Phoenix Counterparty Exposure
As per the release, “This will limit counterparty exposure and the often unnecessary additional fees that are normally associated with these types of financial products or methods.”
In November 2017, Coinbase launched Coinbase Custody to help institutional investors store their cryptocurrencies. This was quite a natural step since the Coinbase cryptocurrency exchange stores a huge amount of cryptocurrency for its clients.
In the partnership with Wilshire Phoenix, Coinbase Custody will store all the Bitcoin belonging to the fund’s clients. Bill Herrmann, Founder & CEO of Wilshire Phoenix, expressed his confidence in the ability of Coinbase Custody to deliver security.
“They are steadfast in their commitment to implementing and executing solutions for institutional clients as opposed to merely talking about their future plans to do so,” Herrmann says.
No Coinbase IPO in the Cards
Sam McIngvale, General Manager of Coinbase Custody Trust agrees with Herrmann’s assessment. He said, “As a regulated Qualified Custodian and fiduciary, Coinbase Custody will not only offer Wilshire Phoenix clients’ secure storage for digital assets, but also the ability to perform GAAP-compliant audits whenever the need arises.”
Meanwhile, BCFocus reports that a Coinbase IPO is not in the cards now. In an interview with Bloomberg, Asif Hirji, CCO for Coinbase said, “There’s not going to be an IPO any time soon; we have so much to do.”
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