Just two months after its launch, a London-based crypto arbitrage fund is now “soft closed” to new investors, having raised $50 million.
A new milestone for the digital asset space
Launched by Nickel Asset Management, the Nickel Arbitrage Fund is the first fund based on a digital assets arbitrage strategy to be regulated by the Financial Conduct Authority (FCA), the UK’s financial regulatory body.
The fund was registered as a full-scope Alternative Investment Fund under European Union rules at the start of 2019.
This will allow the firm to manage more than $100 million in assets and target institutional investors.
Nickel explained that the new fund will look to take advantage of arbitrage opportunities in order to secure regular gains for investors in the highly volatile crypto markets.
The fund will invest in a portfolio of various digital assets using its own automated trading systems and will deploy strategies from traditional asset trading which include triangular arbitrage, futures basis trades, swap trading, and volatility arbitrage.
Nickel noted that while there are crypto arbitrage funds in Singapore and the US, regulatory hurdles have been a stumbling block in Europe until recently.
With the introduction of the new arbitrage fund, portfolio manager Alek Kloda highlighted the potential improvement in market liquidity of digital assets.
“As long as digital assets and their derivatives trade on multiple exchanges across the globe, with sufficient speed and execution quality, we can profitably make markets, while improving liquidity for other market participants,” he said.
Paving the way for institutional investors
Furthermore, Nickel claims to be the first fund manager in the world to provide a solution for managing digital assets on multiple trading platforms.
As blockchain transactions are irreversible, there are plenty of risks institutional investors are reluctant to assume.
Nickel employs multi-signature security to ensure that no single party can move funds individually and restricts the movement of funds to a pre-approved white list of addresses.
CEO of Nickel, Anatoly Crachilov, is confident that it is a question of when – and not if – digital assets will be allocated in institutional portfolios around the world:
“Our vision is that it’s simply a matter of time until digital assets become part of institutional portfolio allocation for forward-looking investors around the world, and we aim to build an institutional-quality gateway to this high-octane world of digital assets.”
Although currently “soft closed” to new investors, a spokesperson for Nickel stated that the fund may be reopened to new investors for a limited period later this year.