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US investment firm launches crypto-currency funds

Thursday, November 02, 2017

NEW YORK - Multicoin Capital, a US investment firm with a multi-year horizon, said on Thursday it had launched two funds that would invest in digital currencies or tokens, as it sought to tap robust demand for virtual assets that allowed for instant, borderless transactions.

Both funds have a combined $US10 million ($F20m) in assets, with a target of $US100m ($F208m), Kyle Samani, Multicoin's managing partner, said in an interview with Reuters.

Mr Samani expects the firm to hit that goal in the first quarter of 2018.

Multicoin has an long-term investment view, typically three to four years, said managing partner Tushar Jain.

That's far longer than the typical horizon of digital currency funds of just a few months.

"We'll adjust the percentage of the portfolio during that time. We only invest in assets that will hold for that time frame," Mr Jain added.

The firm actively manages two funds: Diversified and Concentrated. The Diversified fund holds between 20-30 tokens at any given time, while the Concentrated Fund has six to eight digital assets.

"We look for protocols that replace middlemen with network participants," Mr Samani said.

"We've spent a lot of time looking at the market opportunities and at which protocols are best suited to take advantage of those opportunities."

Mr Samani and Mr Jain came out of the NYU Stern School of Business and both have tech entrepreneur backgrounds.

Crypto-currency funds have mushroomed in 2017 as the market capitalisation of digital tokens exploded to roughly $US170 billion ($F353b).

The price of bitcoin alone topped nearly $US6000 ($F12,481) eight years after it burst into the scene.

Out of bitcoin came blockchain, a digital ledger of transactions that has underpinned its technology.

There are more than 100 crypto-hedge funds that manage between $US2-$US3b ($F4b-$F6b), according to data Autonomous NEXT, which tracks future technology in the financial services industry.

The research firm said 75 per cent of the crypto funds were launched this year.

Multicoin's Mr Jain also pointed out that one big difference between his firm and other funds is that the company has developed new tools and security measures to invest responsibly in the token ecosystem.

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