- Blockstream launches three new Bitcoin investment funds targeting institutional investors and accredited individuals.
- The funds offer varying risk levels, from conservative yield strategies to complex trading approaches.
- Asset management division will be led by Sean Bill, former CIO of Prime Meridian Capital Management.
- Multi-signature custody solutions and partnerships with established platforms aim to address security concerns.
- Expected returns range from 1.5% to mid-teens, depending on the fund strategy.
Blockstream Expands into Bitcoin Asset Management
Blockstream, the Montreal-based bitcoin infrastructure company, announced its entry into asset management with three new investment funds. The initiative marks a strategic expansion for the company led by cryptography expert Adam Back, as it seeks to attract institutional investors looking for regulated bitcoin investment options.
Three-Tiered Investment Strategy
The new Blockstream Asset Management (BAM) division will operate three distinct funds:
The Income Fund focuses on bitcoin-backed lending, offering loans between $100,000 and $5 million to companies holding bitcoin treasury reserves. With loan-to-value ratios of 25% to 65%, the fund projects annual yields between 8% and 15%.
The Alpha Fund combines multiple strategies, including basis trading—which profits from price differences between spot and futures markets—and derivatives trading. This fund targets investors seeking higher returns through sophisticated market approaches.
The Yield Fund positions itself as a bitcoin equivalent to traditional money market funds, targeting 1.5% to 3% annual returns through institutional bitcoin lending services.
Security and Compliance Framework
After the cryptocurrency industry’s recent setbacks, including the FTX collapse, Blockstream emphasizes security measures in its fund structure. The company partnered with Komainu, a Nomura-backed digital asset custodian, following a $75 million investment. Additional partnerships include Unchained Capital, Hodl Hodl, and Debifi for loan origination and liquidity provision.
"We’re using secure dependable bitcoin technology, partners with multi-sig custody, we are staying away from that kind of technology risk," explains Back, addressing previous industry failures.
The funds will operate through Delaware-registered vehicles for U.S. investors and Cayman Islands structures for international participants. Monthly NAV reporting and independent audits will provide transparency for investors, with the Income and Alpha funds scheduled to launch in Q1 2024, followed by the Yield Fund in Q2.
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