Page 21 - bne_Tech_03_2019

Blockchain & Cryptocurrency
March 2019 www.intellinews.com I Page 21
BA: Do you focus on crypto and new economy or more traditional funds?
GY: We have five platforms that can set up funds. Three of them are in Luxembourg and two of them are on the Caymans Islands.
We are in the middle of creating a sixth platform on Guernsey in the Channel Islands. Most probably this will overtake the Cayman Islands as substance requirements in general dislike the offshore jurisdictions and is making people less interested in Cayman vehicles and more in European vehicles.
In Caymans one of the platforms is a crypto dedicated platform. We open accounts on
crypto exchanges. We set up accounts with
prime brokers who trade crypto. We set up with administrators who have experience with these funds. We work with legal people that understand how crypto works. We work with marketing guys who understand how crypto works.
Normal people who are trading traditional assets don't usually like to mix their infrastructure or system with crypto so that is why we decided to make two platforms.
On our platform you can start a funds starting from $2-3mn, which is impossible in most other cases. You can make an algo fund, a high frequency funds (HFT) – any type of fund. Mostly people who are interested in our services are algo or HFT guys.
BA: So you give access to small funds by lowering the cost of entry?
GY: Exactly that. And our revenue model is
quite simple. We do not earn on setting up a fund. For us it is not a business. We are not an administrator. We are not making these funds for a living. We make funds as a service. We earn revenue from two major sources.
First when we introduce capital into newly created vehicle we charge clients subscription fees and
we also take a small cut of management and performance fee from the fund because we helped them to set up.
In fact we share the success with the portfolio manager. If there is no success then they do not pay simply, as they have no revenue stream to pay us from. We think it is quite fair.
The second line of revenue we have is revenue sharing. Our sister company ITI Capital is a sell side broker that has offices in London in the Natwest building, in Guernsey and in Moscow. Any hedge fund manager that wants to exploit the opportunities of trading using our infrastructure, we would first offer them to go through one of our brokers in London or Guernsey or Moscow and we have a cut from the fees from the brokers.
BA: So its still early days?
GY: It is not early days, but we don't want to offer this to people we can’t earn enough revenues on to support our business. We share the success with the fund manager.
In Luxembourg we have three platforms. First is exchange-traded funds (ETFs) that are UCITS standard and the highest standard you can get that are regulated by the local regulator. On this platform we have two funds that operate in Ireland, London and Moscow. We have the third fund with an eastern European asset manger company and we are close to a deal with a Chinese asset manager.
The second platform is a RAIF under the Alternative Investment Fund Managers Directive (AIFMD) regulations, which covers
all non-bankable assets like real estate, loans (performing and non performing) intellectual property, derivatives, and on top of that you can also do usual stuff like buy equity and bonds.
The beauty of lighter regulated RAIF is unlike
the other fund types like SIF where you have to preapprove each subfund with the regulator, you can