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U.K.-based hedge fund manager Nickel Asset Management has secured $50 million for a newly launched crypto investment fund, Nickel Arbitrage Fund, according to a report by CoinDesk.
Regulated by the Financial Conduct Authority (FCA), the firm said the fund will be regulated as a full-scope alternative investment fund manager following the EU rules. As such, the firm is allowed to manage over $100 million in assets and target institutional investors.
The fund will be used for arbitrage trading in digital assets. In arbitrage opportunities, traders buy an asset on one exchange and sell it on another at a higher price, thereby gaining a profit from the price difference.
“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,” Alek Kloda, Nickel’s Portfolio Manager, said.
Nickel has also established its own automated trading systems. By investing only in digital assets with active futures and swap markets, it maintains “an overall market-neutral exposure to volatile crypto-assets.” The firm also provides a solution to manage digital assets on several trading platforms.
“Until now, hedge funds have been using a self-custody model for digital assets. Since blockchain transactions are irreversible, the risk of a single point of failure has been the key reason for institutional investors avoiding exposure to the asset class at any significant scale,” Nickel stated.
The company will use multi-signature security to make sure no single party can move fund individually and fund movements are restricted to a pre-approved white list of addresses.
“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,” Anatoly Crachilov, Nickel CEO, said.
The firm has now “soft closed” the fund to new investors, just two months after launching. The raise was joined by funds of funds and family offices in the U.K., Europe, North America, and Singapore. However, Nickel noted that the funds may be reopened to investors for a limited period later this year as its services are already full.
Meanwhile, just last month, Elwood Asset Management, another U.K.-based asset management firm owned by billionaire Alan Howard is reportedly planning a $1 billion venture in the cryptocurrency hedge fund space.
