Crypto funds are a relatively new form of investment funds, which emerged from the growing awareness of and interest in cryptocurrencies. Investors interested in enjoying some of the volatile, yet often large returns of cryptocurrencies but not interested in the high risk and the process of trading on
can invest in these funds. Crypto funds are funds that either exclusively contain cryptocurrencies, or funds that manages a mix between cryptocurrencies and other assets. This rather new segment of the investment industry is growing, with new funds launched and new inflows to already existing funds, and the
reached more than 59 billion U.S. dollars as of third quarter 2021. In April 2022, Fidelity Investments announced plans to include bitcoin as an option in 401(k) retirement accounts later that year. Other major investment management firms followed suit with Blackrock launching its blockchain ETFs several days later.
What kind of crypto funds are there?
Most of the crypto funds worldwide, over 95 percent, are either
venture funds or hedge funds, with a slightly higher number of venture funds than hedge funds. Except for these two, crypto funds can also be private equity or ETF, but these comprise a rather small share of the total crypto funds. As stated above, crypto funds are quite new in the investment fund industry and around two thirds of the crypto hedge funds were launched between 2018 and 2019, and the
average assets under management of crypto hedge funds more than doubled during these years.
Where are crypto funds located?
More than half of the worldwide number of
crypto funds were based in North America as of the third quarter 2021, and around one fifth in both Asia and Europe, respectively. The leading countries for crypto hedge funds were the United States and the United Kingdom, where more than 60 percent of
crypto hedge fund managers were located. This, however, only refers to the physical location of the managers and not the jurisdiction of the fund. In fact, the largest share of the crypto hedge funds was
domiciled on the Cayman Islands in 2021.
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