Cryptocurrency Investment Funds

Cryptocurrency

The dawn of cryptocurrencies has been breached and the investment community is very excited about the possibility of exploiting this new asset class which is generating a profitable rate of return.

There are different types of cryptocurrencies, from Bitcoin to Bitcash, Litecoin, Zcash (ZEC), Dash (or Darkcoin) and many more. This gives investors a myriad of opportunities to participate in what is dubbed as the currency of the future. The world is entering an age which is moving away from the traditional centralised systems that have dominated mankind over the past centuries.

The Gateway to Cryptocurrencies

There are at least three different ways of how one can gain an exposure to cryptocurrencies. The first and most commonly known method is that of mining.  Mining is defined as

“….. the process by which transactions are verified and added to the public ledger, known as the blockchain, and also the means through which new bitcoin are released.  Anyone with access to the internet and suitable hardware can participate in mining.  The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle.  The participant who first solves the puzzle gets to place the next block on the blockchain and claim the rewards.  The rewards, which incentivize mining, are both the transaction fees associated with the transactions compiled in the block as well as newly released bitcoin.” [1]

Secondly, you could buy some from an exchange and the latest innovative way is that of establishing a cryptocurrency investment fund. This is a pioneering way of how one could invest alongside other investors in order to benefit from the intrinsic advantages of working as a collective.

Malta is in an ideal position to be a not only a European but why not, also a world-renowned innovative financial centre. Having cryptocurrency investment funds would allow investors to gain exposure whilst being in a regulated environment. To a certain degree, having a regulated structure would give investors peace of mind that the parties involved in the daily running of the operations are regulated and subject to prudential regulatory requirements.

The fund could be structured to have various objectives, such as combined capital for mining equipment, or to gain direct exposure to cryptocurrencies or both. Such types of funds would be a high yield investment program which would combine high risk and high reward.

Cryptocurrency investment funds are the next generation of collective investment schemes. Now is the right time to discuss how such structures can be implemented.

 

 

Let's meet to discuss

You may reach the author by calling on +356 2205 6415 or on fsu@cclex.com should you wish to discuss and explore possible avenues and opportunities in relation to cryptocurrency investment funds.


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Dr Priscilla Mifsud Parker

Senior Partner - Corporate, Trusts & Fintech

+356 22056422

Mr Steve Muscat Azzopardi

Senior Manager, Corporate & Fintech

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