U.K. Regulators Approve First Cryptocurrency Hedge Fund

Prime Factor Capital, a London-based hedge fund manager founded by former BlackRock and RWE AG employees, became the first crypto investment firm to be approved by the Financial Conduct Authority, according to Bloomberg.

The firm will be regulated under Britain’s financial watchdog as a full-scope alternative investment fund manager and submit to European Union rules.

Under these guidelines the firm will be allowed to hold more than 100 million euros in assets under management. There is currently a $300 billion market for cryptocurrencies.

“Our focus on just one asset class has allowed us to become a leader in this space and a trusted authority on crypto investing,” wrote the founders.

Prime Factor is required to appoint a custodian under EU regulations to ensure and validate investors’ returns and the fund’s holdings. The custodian will act independently and also provide cash flow reconciliation.

“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,” said Adam Grimsley, Prime Factor’s chief operating officer.

Grimsley worked as a fixed-income investor at BlackRock, until 2017 when he partnered with his former colleague Michael Wong. CEO Nic Niedermowwe was formerly an energy derivatives trader at RWE AG.

Euro photo via Shutterstock