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Crypto fund growth surging in the face of obstacles

Tony Zerucha

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  • A record 107 crypto funds debuted in 2017
  • New York, California host majority of American funds
  • 179 of 302 funds are based in the United States

Even though cryptocurrency prices are well off established highs and the SEC announced plans to investigate more than 100 cryptocurrency hedge funds, new crypto investment funds are appearing at strong rates, data from Crypto Fund Research suggests.

2017 saw a record 107 crypto funds launch and the rate has shown no signs of slowing down, Crypto Fund Research founder Josh Gnaizda said.

“While crypto hedge funds constitute a small portion of hedge fund assets, they are one of the fastest growing sectors in the hedge fund industry. In addition, many venture capital funds are including cryptocurrency and blockchain assets in their existing portfolios, or creating new funds specifically to invest in digital assets.”

Not surprisingly, California (81) and New York (31) are home to the most crypto funds. Illinois (15) and Massachusetts (10) are the only other states hosting more than five.

The United States is the preferred location for crypto funds, with 179 calling it home. The United Kingdom hosts 28, and China and Hong Kong 16. No other country has more than 13. Of the American-based funds, roughly one in four (47) are registered with the SEC.

Even though crypto funds account for less than .1 per cent of total hedge fund assets, the 107 such funds created in 2017 represent 14 per cent of all hedge funds created over that time. There are now 302 crypto funds, with 183 set up as hedge funds and 106 as venture capital funds. The remainder are a combination of private equity and ETFs.

The overall assets under management remain quite small in comparison to other sectors. More than one-third of all crypto funds (105) have less than $10 million in funds under management, 79 have $10M-$50M, 51 have $50M-$100M and 43 have more than $100 million under management.

But those numbers are trending upward.On Jan. 1, 2017 the funds collectively had $675 million under management. One year later that number was $5.86 billion, a near nine-fold increase. New fund growth and asset appreciation were cited as the two biggest factors.

Tony Zerucha

Tony Zerucha is an alternative finance journalist with more than seven years experience in the space. The author of more than 1,000 articles, Tony was named LendIt's 2018 Journalist of the Year.

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