U.K. FCA Approves New Cryptocurrency Hedge Fund

United Kingdom Prime Factor Capital cryptocurrency hedge fund bitcoin

Financial regulators in the U.K. have given the green light to plans for a new cryptocurrency hedge fund, set to become the first fund of its kind to offer U.K. investors the chance to speculate on cryptocurrencies.

Prime Factor Capital won the approval of the U.K.’s Financial Conduct Authority and has been designated a “full-scope alternative investment manager” by the regulator.

This means the firm has the authorization to hold over 100 million euros in assets under management, as well as permission to invest exclusively in cryptocurrencies like bitcoin and ether.

The founders of the fund said that through working with cryptocurrency as a single asset class, they can become a trusted global investment leader.

By securing authorization, chief operating officer Adam Grimsley said Prime Factor Capital would use their status to attract capital in a market where trust remains a problem for some investors.

“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.”

As part of the authorization, which will see Prime Factor Capital operating under broader EU regulations, the firm is required to appoint an independent custodian to safeguard client funds.

As well as securing and storing crypto assets on behalf of the fund, the custodian will also provide regular cash flow statements, designed to ensure the fund remains solvent.

The team heading up Prime Factor Capital draws on investment expertise from some of the world’s largest asset management and financial services firms, including Deutsche Bank, Blackrock, Legal & General and Goldman Sachs.

The approval is the first of its kind to be granted by the Financial Conduct Authority, and could pave the way for more investment vehicles to become regulated in the near future.

It comes at a time of increasing demand from the mainstream financial world for access to cryptocurrency markets, despite lingering concerns over the lack of regulation and security issues around holding and storing crypto assets.

With both private and institutional investors increasingly keen on cryptocurrency, funds such as Prime Factor Capital are expected to become ever more popular with those in search of an alternative route to investing in cryptocurrency.