Blockchain technology company DigitalX announced on Wednesday the establishment of its DigitalX Bitcoin Fund, an investment vehicle that will allow qualifying investors to gain exposure and interest in bitcoin—the pioneering cryptocurrency native to the Bitcoin network.
In an announcement by the Australian Securities Exchange-listed company, DigitalX said “the Bitcoin Fund is available through a standard unlisted fund structure to allow sophisticated investors including family offices and high-net-worth individuals a low-cost and familiar vehicle to gain exposure to this growing asset class.”
In order to establish and launch the Bitcoin Fund, DigitalX—which has held bitcoin since 2013 and been involved in the Bitcoin ecosystem since 2014 through its now-defunct bitcoin mining operation—will seed it with 215 of its own bitcoin; nearly half of the 431 it owns as of press time. At the end of the financial year ending June 30, 2014, Digital CC (i.e., the former name of DigitalX) held 3,632 bitcoin.
By transferring 215 of its bitcoin into the DigitalX Bitcoin Fund, the company—which is headquartered in Perth with satellite offices in New York and Sydney—will be “effectively swapping its interest in those bitcoin for an equivalent interest in the fund,” it explained in Wednesday’s announcement. With the price of bitcoin trading at AU$12,765 (US$8,733) at the time of writing, 215 bitcoin equals AU$2,744,475 (US$1,877,595).
The DigitalX Bitcoin Fund will offer an annual management fee of 1.65 per cent and no performance fees. For the sake of comparison, other popular bitcoin investment vehicles Grayscale Bitcoin Trust and Galaxy Bitcoin Fund charge annual management fees of 2.0 per cent and 1.0 per cent, respectively, with neither charging performance fees.
DigitalX added that its bitcoin fund—the structure of which is an Australian wholesale unit trust—will utilise the institutional-grade custodial services offered by BitGo, one of the largest companies in the cryptocurrency ecosystem. DigitalX Bitcoin Fund’s bitcoin holdings will be “secured in the highest-grade wallet security system available” through BitGo, DigitalX said. As a bitcoin custodian, BitGo is insured up to US$100 million through the world-leading Lloyd’s of London insurance market.
Commenting on the DigitalX Bitcoin Fund’s launch was executive director Leigh Travers. “DigitalX has held its bitcoin position through the 2017 bull market and 2018 drawdown because of our fundamental long-term belief in the value of the asset. What has become more and more apparent to us as we speak to investors and market participants generally, is that there is a growing interest in accessing bitcoin from people who have traditionally not considered investment in digital assets.”
The announcement of DigitalX’s bitcoin fund comes as management prepares for a roadshow through Sydney, Melbourne, and Perth. A major focus of the roadshow will be “to meet potential investors and promote the fund to qualifying investors,” according to DigitalX.
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