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Asset management company Wave Financial has launched the Wave BTC Income & Growth Digital Fund, Ltd, which it claims to be the first crypto derivatives-based yield fund on the market.
Incorporated in the British Virgin Islands, the fund holds bitcoin (BTC) and aims to generate yield by selling call options on the BTC held. It expects option sales to generate attractive premiums due to BTC's high volatility.
Importantly, Fidelity Digital Assets will provide custody for the fund's BTC.
According to a press release, the fund aims to distribute a dividend of 1.5% of NAV per month, which could result in an 18% target annual yield. Ben Tsai, managing partner of Wave Financial, told CoinDesk that the fund would charge 100 basis points fixed management annually, and take 30 percent of any returns above the 18 percent yield, and the rest would be credited back to the fund.
"For high net worth investors, appetite for innovative yield product with upside potential is strong. This product monetizes higher volatility of BTC to deliver yield, independent of the interest rate environment, while keeping some upside exposure," said Tsai.
Tsai told CoinDesk that a number of investors have already expressed interest, adding that they are working to “get them the actual private placement memorandum and subscription agreement.” He added that Wave Financial has been reaching out to accredited investors and high-net-worth individuals and has been developing a distribution network across major international markets.
Waves Financial said that the fund will issue fund tokens using “cryptographic technologies similar to those used for creation and transfer of select virtual currencies.” It expects that these tokens would be tradable on alternative trading systems at a later date.
Earlier this month, Binance acquired crypto trading platform JEX to focus on building the crypto-asset derivatives market. More recently, CME Group revealed its plans to launch options on its Bitcoin futures contracts in the first quarter of 2020.
