Blockchain & Cryptocurrency Regulation 2019 | The rise of the crypto asset investment fund: An overview of the crypto fund ecosystem

Cryptocurrency has emerged as a lucrative financial asset class that has captured the attention of investors around the world.¹  Together with its rise as an asset class, investor interest in cryptocurrency has led to the creation of a variety of investment vehicles dedicated exclusively to crypto asset investment.²  These crypto assets include cryptocurrencies and non-cryptocurrency, blockchain technology-based assets, such as digital tokens generated through initial coin offerings (“ICOs”) and pre-ICO token sales, as well as traditional equity investments in blockchain technology startup companies.³

Crypto asset investment funds (“crypto funds”) have intrigued both private and public sector investors around the world due, in part, to the colossal returns that some crypto fund managers captured in 2017 when Bitcoin reached its all-time high market price of $19,783.06 per coin.⁴  Some crypto funds continue to raise significant levels of capital in 2018 despite Bitcoin’s price slump.⁵  Crypto funds have also attracted international criticism due to extreme volatility, cybersecurity risk, illicit activity, and concern over potential systemic risk that crypto funds could “spawn” in mainstream financial markets.⁶

With the launch of over 100 crypto funds in 2017, and the projected launch of over 150 new crypto funds in 2018,⁷ challenging questions arise from regulatory and operational perspectives, as well as from the perspective of legal service providers who will service the emerging international crypto fund market.⁸  This chapter will provide an overview of the crypto fund ecosystem, as well as a close look at select crypto investment funds, some of which are projected to become dominant players in the crypto fund market.

Terminology

Crypto funds and the crypto assets in which they invest come in a variety of forms.  As a preliminary matter, crypto funds (also referred to as cryptocurrency funds, digital asset funds or blockchain funds) can be defined as investment vehicles that raise capital from investors in order to invest in crypto assets for profit.  Crypto assets, in turn, can be defined as “digital assets recorded on a distributed ledger”.⁹  These digital assets include cryptocurrencies and non-cryptocurrency, blockchain technology-based assets, such as digital tokens generated through ICOs and pre-ICO token sales, as well as traditional equity stakes in blockchain technology startup companies.  Although there is no universally accepted definition of cryptocurrency (also referred to as virtual currency or digital currency),¹⁰ a cryptocurrency can be conceptualised as an electronic medium of exchange that operates independent of any central or commercial bank.¹¹

In contrast to cryptocurrencies, which are intended to serve as a medium of exchange across blockchain applications, digital tokens are intended to provide financing for an early-stage blockchain company’s projects by providing investors with future access to that blockchain company’s projected goods or services.¹²  These tokens can be issued by way of a crowdfunding-style fundraising campaign known as an ICO (also known as an initial token offering), or by way of a pre-ICO token sale, which is generally targeted to specific “angel” investors.

It is worth noting that, to date, there is no harmonised international standard for the treatment and characterisation of crypto assets or related crypto asset transactions, such as ICOs and pre-ICO token sales.¹³  Instead, there are conflicting classifications both domestically and internationally.  In the U.S., for example, digital tokens have been categorised by federal and state agencies as either securities, commodities, currency or property.  Outside of the U.S., financial regulators have taken a variety of approaches to crypto regulation, ranging from complete bans on ICOs in China and South Korea to more permissive forms of regulation, such as that in existence in Switzerland and Singapore.  Notwithstanding the current state of international legal fragmentation with respect to crypto assets, private and public sector institutions from the around the world are collaborating vigorously to develop international norms that will enhance, rather than hinder, the growth of the crypto ecosystem.¹⁴

Market size

At the time of writing, it is estimated that over 460 crypto funds exist worldwide,¹⁵ collectively managing between $7.5–10bn in assets.¹⁶  This figure does not include cryptocurrency investment trusts, such as Grayscale’s Bitcoin Investment Trust, or Bitcoin futures traded on Bitcoin futures exchanges, such as the Chicago Mercantile Exchange and Chicago Board Options Exchange, which would otherwise add approximately $2–4bn of crypto fund exposure to crypto assets.¹⁷  The largest crypto funds have over $100m in assets under management (“AUM”), including Arrington XRP Capital, BlockTower Capital and the Logos Fund.¹⁸  Polychain Capital, founded and led by early Bitcoin investor Olaf Carlson-Wee, is estimated to control $1bn in AUM according to recent filings with the U.S. Securities & Exchange Commission (“SEC”).¹⁹  Other large crypto funds include Brian Kelly Capital Management, the Galaxy Digital Assets Fund, MetaStable Capital and Pantera Capital.²⁰  The majority of crypto funds, however, have less than $10m in AUM²¹ and fewer than 10 employees.²²

The crypto fund sector has grown rapidly due, in part, to inflows of investment from institutional investors.²³  Reputable venture capital firms, such as Andreesen Horowitz, Sequoia Capital and Union Square Ventures, have invested heavily in crypto startups, including early-stage crypto funds.  Polychain Capital, for example, raised $10m in a round led by Andreesen Horowitz and Union Square Ventures in December 2016.²⁴   Grayscale Investments has reported that 56% of its incoming capital in the first half of 2018 derived from institutional investors.²⁵  In addition, research from the Tabb Group indicates that sovereign wealth funds and pension funds have expressed significant interest in cryptocurrency investment.²⁶  Universities are reportedly also investing in crypto assets with the goal of increasing revenue for their endowments.²⁷

Source: Crypto Fund Research

Geographic location

More than half of all crypto funds are domiciled in the U.S., with the largest concentration located in California and New York.  The most favoured cities for crypto funds are San Francisco, New York, London, Singapore, Hong Kong, Zurich and Chicago,²⁸ all of which have established investment fund communities.  Although most crypto funds are U.S.-based, the crypto fund phenomenon is global in nature.  As of August 2018, the following number of crypto funds exist in the following jurisdictions: Argentina (1), Australia (12), Bahamas (1), Bermuda (1), Brazil (1), British Virgin Islands (1), Bulgaria (1), Canada (17), Cayman Islands (6), China (16), Cyprus (2), Denmark (1), Estonia (2), Finland (1), France (5), Germany (14), Hong Kong (15), India (4), Isle of Man (1), Israel (3), Japan (4), Jersey (1), Kenya (1), Liechtenstein (1), Lithuania (1), Luxembourg (2), Malta (1), Mexico (2), Monaco (1), Netherlands (2), Nigeria (1), Portugal (2), Puerto Rico (2), Russia (3), Singapore (22), South Africa (1), South Korea (2), Switzerland (19), Taiwan (1), The Netherlands (4), Tortola (2), Turkey (3), United Arab Emirates (1), Ukraine (1), United Kingdom (30), and United States (250).²⁹ 

While many crypto funds are privately held, others have significant levels of public sector involvement.  The $1.6bn Xiong’An Global Blockchain Innovation Fund, for example, was launched in April 2018 by Chinese venture capital firm Tunlan Investment, with $400m provided by the Hangzhou city government.³⁰  In addition, the 10bn yuan Nanjing Public Blockchain Fund, which was launched by the Chinese city of Nanjing in July 2018 to spur public blockchain projects and the development of a “token economy” in China,³¹ is believed to have received 30% of funding from the Nanjing government.³²  In addition, the Chinese city of Shenzhen has setup its own 500m yuan blockchain investment fund to invest in local blockchain startups, with 40% of funding provided by the Shenzhen municipal government and the remainder provided by the private sector.³³ 

Fund investment strategies

The crypto fund market can be divided into segments based upon the multiple investment strategies that are executed by crypto fund managers.  London-based fintech research firm Autonomous NEXT has divided the crypto fund market into seven such segments:³⁴ (1) liquid venture funds, which invest in early stage blockchain companies, cryptocurrencies and digital tokens; (2) trading funds, which actively trade cryptocurrencies using buy-and-hold, long-short and long-only approaches;³⁵ (3) artificial intelligence-driven quant funds, such as San Francisco-based Numerai, which use machine learning algorithms to execute statistical arbitrage strategies; (4) token basket funds, in which fund managers invest in baskets of crypto assets (i.e. cryptocurrencies and/or digital tokens),³⁶ which can be purchased by way of a single basket token, such as the Daily Crypto Basket offered by Flipside Crypto; (5) passively managed index funds, such as Bitwise Asset Management’s HOLD 10 Private Index Fund and the Coinbase Index Fund, which invest in indices of top performing cryptocurrencies in exchange for 2–3% annual management fees; (6) crypto funds of funds, such as the Apex Token Fund and Protocol Ventures, which invest in other crypto hedge funds; and (7) crypto credit funds, such as SALT Blockchain Asset Management and Genesis Global Capital, which offer investors crypto asset-backed loan products.  As illustrated below, crypto venture funds and crypto trading funds (i.e. crypto hedge funds) are the most popular category of crypto fund and hold the most in AUM, with crypto venture funds holding 56% and crypto hedge funds holding 20% of all crypto fund AUM, respectively.³⁷  As between crypto venture capital funds and crypto hedge funds, more crypto hedge funds have been launched in 2018 than crypto venture capital funds.³⁸

Source: Autonomous NEXT

Overview

Crypto asset hedge funds (“crypto hedge funds”) can be defined as open-ended private investment vehicles that actively invest in crypto assets, including both cryptocurrencies, as well as non-cryptocurrency, blockchain technology-based crypto assets, such as digital tokens generated through ICOs or pre-ICO token sales, as well as equity investments in blockchain technology startup companies.³⁹

Blockchain technology-based trading of crypto assets is considered revolutionary to the traditional hedge fund industry from an investment standpoint because of the opportunities that crypto investments afford to traditional fund managers from a returns and portfolio diversification perspective.⁴⁰  Cryptocurrency-focused hedge funds generated nearly 900% year-to-date returns in 2017, for example.⁴¹  Although crypto hedge fund returns declined by approximately 50% in the first half of 2018,⁴² many crypto fund managers remain bullish on crypto asset markets, particularly as certain crypto hedge funds, such as Altana Digital Currency Fund and Amber AI Pivot Digital Trading-2, performed well notwithstanding Bitcoin’s price slump.⁴³  Crypto hedge funds, moreover, are considered to be the fastest-growing segment of the hedge fund industry as a whole.⁴⁴ As of August 2018, there are over 250 crypto hedge funds in existence worldwide, with approximately 60 crypto hedge funds launched in 2018.⁴⁵

Multi-asset traditional hedge funds, which are reported to have captured higher net inflows in 2017 than those engaging in single-asset strategies,⁴⁶ are the most likely to see crypto assets become an increasingly important component of their multi-asset investment strategies.  In this regard, there is growing evidence of increased appetite on the part of traditional hedge fund managers for crypto asset investment.  Northern Trust Hedge Fund Services has publicly announced, for example, that it is providing three unnamed “mainstream” hedge funds that have been investing in cryptocurrencies with crypto fund administration services, including crypto asset valuation, anti-money laundering compliance and digital asset validation.⁴⁷

In addition, BlackRock, which is widely regarded as the largest asset manager globally with $6.3tln in AUM as of March 2018,⁴⁸ has set up an internal working group to analyse potential future investment into crypto assets.⁴⁹  Although BlackRock CEO Larry Fink has publicly stated that he does not foresee massive investor interest in cryptocurrency strategies,⁵⁰ major traditional hedge funds like BlackRock can more likely than not be expected to engage in some form of experimentation with crypto asset investment in the near future.  In addition, continued interest in crypto asset investment from senior hedge fund managers, such as Steven A. Cohen, who recently invested in crypto hedge fund Autonomous Partners by way of his family office’s venture capital division, Cohen Venture Partners,⁵¹ provides further evidence of a growing crypto investment trend in the traditional hedge fund community.   

Categories of crypto hedge funds

Broadly speaking, crypto hedge funds can be divided into at least three categories: (1) active trading crypto hedge funds; (2) buy-and-hold crypto hedge funds; and (3) blockchain ecosystem crypto hedge funds.⁵² 

Active trading crypto hedge funds, such as Arrington XRP Capital, MetaStable Capital and Polychain Capital, trade cryptocurrencies and employ long-only and/or long-short approaches.⁵³

Buy-and-hold funds can be divided into public buy-and-hold funds and private buy-and-hold funds.⁵⁴  Public buy-and-hold funds include both exchange traded notes (“ETNs”) and exchange traded funds (“ETFs”).  Examples of ETNs include Grayscale’s Bitcoin Investment Trust (symbol: GBTC) and Ethereum Classic Investment Trust (symbol: ETCG), both of whose shares are publicly quoted on the OTC Markets Group’s OTCQX market, as well as Jersey-based Global Advisors’ Bitcoin Tracker One (symbol: BITCOIN XBT), Bitcoin Tracker Euro (symbol: Bitcoin XBTE), Ether Tracker One (symbol: ETHEREUM XBT) and Ether Tracker Euro (symbol: ETHEREUM XBTE), all of which are listed on the NASDAQ/OMX in Stockholm.⁵⁵  Several cryptocurrency ETFs have been proposed to the U.S. SEC for regulatory approval, such as the Winklevoss Bitcoin Trust ETF (symbol: COIN) and VanEck SolidX Bitcoin Trust (symbol: XBTC), but none have received approval to date.⁵⁶  Unlike public buy-and-hold funds, private buy-and-hold funds are not listed on publicly traded exchanges.  One example of a private buy-and-hold fund is Pantera Capital’s Pantera Bitcoin Fund.

Blockchain ecosystem crypto hedge funds invest in non-cryptocurrency assets related to blockchain ecosystem infrastructure, such as emerging blockchain protocols.  These funds, which appear to resemble venture capital funds in terms of their early-stage investment targets, invest in ICOs, pre-ICO token sales and/or directly into blockchain startups through equity investments.⁵⁷  Pantera Capital’s Pantera ICO Fund, for example, was created to invest solely in tokens that power public blockchain protocols.⁵⁸  Pantera Capital has also invested in blockchain startup companies including 0x, Abra, Augur, OmiseGO and Ripple.⁵⁹ 

Overview

Venture capital interest in crypto assets has surged in 2018 as a result of the exponential returns that continue to be generated from ICOs.⁶⁰  PwC Switzerland, in collaboration with the Swiss Crypto Valley Association, has recently reported that 537 ICOs closed successfully in the first five months of 2018, generating a total of $13.7bn in funds raised, thereby exceeding all pre-2018 ICO fundraising levels combined.⁶¹  The largest ICOs in 2018 have so far included Telegram’s $1.7bn ICO and Block.one’s $4.1bn EOS protocol ICO.⁶²  In addition, as illustrated below, annual venture capital activity in the crypto asset market has shown a consistent upward trend in deal flow, amounting to 187 deals closed with a total value of $1.7bn through late-June 2018:

Source: PitchBook

While there has been much debate as to whether or not the ICO model would replace the traditional venture capital fundraising process, it is clear that many traditional venture capital firms have paid close attention to the rapidly evolving crypto asset market and have adapted their strategies accordingly.⁶³ Union Square Ventures and Andreesen Horowitz, for example, have both made long-term decisions to enter the “potential trillion-dollar” crypto asset market.⁶⁴  The Rockefeller family’s venture capital firm Venrock Partners has also recently announced that it is entering the crypto startup investment market through a partnership with CoinFund, a New York-based crypto fund.⁶⁵  Some traditional venture capital firms, moreover, have been described as “crypto unicorn hunters”⁶⁶ due to their investments in several fintech and blockchain startups whose valuations now exceed $1bn, such as Coinbase, Robinhood and Revolut.⁶⁷  Ribbit Capital, for example, which is ranked by CB Insights as the most active venture capital fintech unicorn investor, manages a portfolio of 10 fintech unicorns, three of which are crypto unicorns.⁶⁸ 

Crypto venture capital investment

Venture capital firms that invest in crypto assets do so in at least one of three ways: (1) investment through pre-existing internal funds that are not focused exclusively on crypto assets; (2) investment through separate funds dedicated exclusively to crypto asset investment; and (3) investment into external crypto funds managed by other crypto investment firms.⁶⁹

Dedicated crypto venture capital funds

A crypto venture capital fund can be defined as an investment vehicle dedicated exclusively to investment in crypto assets (“crypto venture fund”).  Some traditional venture capital firms in the U.S. have decided to launch separate, dedicated crypto venture funds in order to overcome regulatory obstacles that would otherwise limit the amount of crypto assets that they can invest in and hold.  More specifically, U.S.-based venture capital funds that are structured as “Exempt Reporting Advisers” (“ERAs”) under the rubric of the Venture Capital Fund Advisers Exemption to registration requirements under the Investment Advisers Act of 1940 can hold no more than 20% of aggregate capital contributions and uncalled capital commitments in “non-qualifying investments”,⁷⁰ which include liquid assets, such as cryptocurrencies and digital tokens.⁷¹  In order to avoid this 20% limit on crypto asset holdings, crypto venture funds have been structured as “Registered Investment Advisers” (“RIAs”), similar to hedge funds.  One preeminent Silicon Valley venture capital firm that has launched a crypto venture fund in this way is Andreesen Horowitz.

In June 2018, Andreesen Horowitz launched a $300m crypto venture fund known as a16z crypto, which is designed to be a long-term, “all weather” fund that will invest aggressively in crypto assets irrespective of their stage of development or geographic location, even if there is another so-called “crypto winter” characterised by extreme price fluctuations.⁷² Recognising that crypto is a rapidly evolving open source software movement, a16z crypto was structured as an RIA so as to hold crypto asset investments of greater than 20% for over 10 years.⁷³  A16z crypto is unique in that it will invest at all stages of the crypto business lifecycle, from pre-launch and seed rounds to investments in later-stage mature blockchain companies.⁷⁴  It also will provide operational support to its crypto portfolio companies, including participation in corporate and blockchain network governance, similar to the levels of operational support that it has historically provided to its traditional early stage portfolio companies.  With its base of pre-existing equity investments in leading crypto businesses, such as Coinbase, Ripple and Polychain Capital, as well as its current ability to acquire larger crypto asset holdings through its RIA structure, a16z crypto is projected to become one of the largest and most influential investors in the emerging crypto fund market. 

The explosive growth of crypto funds in 2017 and 2018 is expected to deepen the existence of the crypto ecosystem by augmenting the ability of investors to trade crypto assets and provide financing to crypto startups. As crypto fund-backed startups, in particular, develop into mature enterprises, these enterprises and their investors will seek to expand through traditional exit strategies, such as merger and acquisition transactions and initial public offerings.  The future of the crypto asset market is likely to be one of expansion and increased deal activity, calling for specialised legal services from attorneys who understand the intricacies of the industry and its underlying technologies.  Similar to blockchain-based securitisation, which is already recognised as a growth area by major law firms,⁷⁵ there is likely to be an increased demand for attorneys who are able to service crypto funds and subsequent transactions involving their portfolio companies.  As a result, transactional and regulatory law practitioners should pay close attention to developments in this space.

The views and opinions expressed in this article are those of the author alone, and do not necessarily reflect the views of Yale University, Stanford University, the University of Vienna, nor of the American Bar Association.  The material in this article has been prepared for informational purposes only and is not intended to serve as legal advice, nor as investment advice, nor as an endorsement of any entity or crypto asset mentioned in the body of the article.

The author would like to thank the Information Society Project at Yale Law School, the Stanford/Vienna Transatlantic Technology Law Forum, and the Stanford CodeX Blockchain Working Group for their encouragement in the undertaking of comparative and international academic research on blockchain technology and cryptocurrency regulation.  The author would also like to thank Preqin, PitchBook, Crypto Fund Research and the Tabb Group for providing access to their high-quality data on cryptocurrency market trends and cryptocurrency investment funds.

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Yale Law School Information Society Project

The Information Society Project (“ISP”) is an intellectual centre at Yale Law School, founded in 1997 by Professor Jack Balkin.  Over the past 20 years, the ISP has grown from a handful of people gathering to discuss internet governance into an international community working to illuminate the complex relationships between law, technology, and society.

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9.   Ernst & Young (2018), IFRS (#) Accounting for Crypto-Assets.

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11.  Ernst & Young (2018), IFRS (#) Accounting for Crypto-Assets.

12.  Ernst & Young (2018), IFRS (#) Accounting for Crypto-Assets.

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14.  Werbach, K. et al (2018), Regulatory Considerations for Token Offerings, Spring 2018 Reg@Tech Token Offerings Workshop Report, Zicklin Center for Business Ethics Research, Wharton School, University of Pennsylvania.  Available at: https://zicklincenter.wharton.upenn.edu/wp-content/uploads/2018/06/June-2018-Regulatory-Considerations-for-Token-Offerings.pdf [Accessed 14 August 2018].  

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17.  Id.

18.  Crypto Fund Research (2018), “Cryptocurrency Investment Fund Industry Graphs and Charts.”

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20.  Id.

21.  Crypto Fund Research (2018), “Cryptocurrency Investment Fund Industry Graphs and Charts.”

22.  Id.

23.  Id.

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28.  Crypto Fund Research (2018), “Cryptocurrency Investment Fund Industry Graphs and Charts.”

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30.  CoinDesk, “$1 Billion Blockchain Fund Launches with Chinese Government Backing,” 9 April 2018.  Available at: https://www.coindesk.com/1-billion-blockchain-fund-launches-with-chinese-government-backing/ [Accessed 14 August 2018].

31.  ZDNet, “China’s Nanjing launches $1.5 billion blockchain fund,” 23 July 2018. Available at: https://www.zdnet.com/article/chinas-nanjing-launches-1-5-billion-blockchain-fund/ [Accessed 14 August 2018].

32.  CoinDesk, “Another $1 Billion Blockchain Fund to Launch With Government Backing,” 24 July 2018.  Available at: https://www.coindesk.com/another-1-billion-blockchain-fund-to-launch-with-government-backing/ [Accessed 14 August 2018].

33.  CoinDesk, “Another Chinese City Is Backing a Big Blockchain Investment Fund,” 23 April 2018.  Available at: https://www.coindesk.com/another-chinese-city-is-backing-a-big-blockchain-investment-fund/ [Accessed 14 August 2018].

34.  Autonomous NEXT (2018), #CRYPTO UTOPIA.

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37.  Autonomous NEXT (2018), #CRYPTO UTOPIA.

38.  Crypto Fund Research (2018), “Cryptocurrency Investment Fund Industry Graphs and Charts.”

39.  Preqin, “The Rise of Cryptocurrency Hedge Funds,” 4 May 2018.

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42.  CryptoVest Media, “Crypto, Blockchain Focused Hedge Funds Down 50% H1 2018  – HFR Report,” 11 July 2018.  Available at: https://cryptovest.com/news/crypto-blockchain-focused-hedge-funds-down-50-h1-2018---hfr-report/ [Accessed 14 August 2018].

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45.  Crypto Fund Research (2018), Crypto Fund List.  See also Crypto Fund Research (2018), “New Crypto Funds Launching at Record Pace.”

46.  Hedgeweek (2018), “Multi-Asset Strategies: A Hedgeweek Webinar Report.”  Available at: https://www.hedgeweek.com/sites/default/files/Hedgeweek_Special_Report_Multi_Asset_Strategies.pdf [Accessed 14 August 2018].

47.  Forbes, “Northern Trust Opens Doors To Cryptocurrency Hedge Funds As Part Of Pervasive Blockchain Expansion,” 31 July 2018.  Available at :  https://www.forbes.com/sites/michaeldelcastillo/2018/07/31/northern-trust-opens-doors-to-cryptocurrency-hedge-funds-as-part-of-pervasive-blockchain-expansion/#f29546248bce [Accessed 14 August 2018].  CCN, “$10.7 Trillion Custodian Northern Trust Helping Hedge Funds Invest in Bitcoin,” 31 July 2018.  Available at: https://www.ccn.com/10-7-trillion-custodian-northern-trust-helping-hedge-funds-invest-in-bitcoin/ [Accessed 14 August 2018].

48.  BlackRock, “Q1 2018 Earnings: Earnings Release Supplement,” 12 April 2018. Available at: http://ir.blackrock.com/Cache/1500109536.PDF?O=PDF&T=&Y=&D=&FID=1500109536&iid=4048287 [Accessed 14 August 2018].

49.  Reuters, “BlackRock is evaluating cryptocurrencies, CEO Fink says,” 16 July 2018. Available at: https://www.reuters.com/article/us-blackrock-cryptocurrency/blackrock-is-evaluating-cryptocurrencies-ceo-fink-says-idUSKBN1K61MC [Accessed 14 August 2018].

50.  Id.

51.  Fortune, “Steven Cohen’s Venture Capital Firm Gets Into Crypto With New Partner,” 12 July 2018.  Available at: http://fortune.com/2018/07/12/steven-cohens-bitcoin-crypto-autonomous-partners/ [Accessed 14 August 2018].  Business Insider, “Steve Cohen has reportedly backed a crypto hedge fund,” 13 July 2018.  Available at: https://www.businessinsider.com/steve-cohen-crypto-hedge-fund-autonomous-partners-2018-7 [Accessed 14 August 2018].

52.  Hedge Fund Research (2018), “HFR Blockchain Indices Defined Formulaic Methodology.  Available at: https://www.hedgefundresearch.com/sites/default/files/pdf/HFR_Blockchain_Indices_methodology.pdf [Accessed 14 August 2018].

53.  Preqin, “The Rise of Cryptocurrency Hedge Funds,” 4 May 2018.

54.  Seeking Alpha, “The Cryptocurrency Funds Have Arrived, And They're Bringing Wall Street Money,” 6 March 2017.  Available at: https://seekingalpha.com/article/4052276-cryptocurrency-funds-arrived-bringing-wall-street-money [Accessed 14 August 2018].

55.  CNBC, “What the US can learn from Sweden about how to launch a bitcoin fund,” 17 January 2018.  Available at: https://www.cnbc.com/2018/01/17/sec-frets-over-bitcoin-etfs-but-swedes-figured-it-out-years-ago.html [Accessed 14 August 2018].

56.  CNBC, “Over $9 billion wiped off bitcoin’s value after SEC postpones key decision on a cryptocurrency ETF,” 8 August 2018.  Available at: https://www.cnbc.com/2018/08/08/bitcoin-price-falls-after-sec-postpones-key-etf-decision.html [Accessed 14 August 2018].

57.  Hedge Fund Research (2018), HFR Blockchain Indices Defined Formulaic Methodology. 

58.  CoinDesk, “Pantera Capital to Raise $100 Million in Investment for ICO Hedge Fund,” 28 June 2017.  Available at: https://www.coindesk.com/100-million-pantera-capital-ico-hedge-fund/ [Accessed 14 August 2018].

59.  CryptoSlate, “Crypto Investment Fund Pantera Capital Predicts $67,500 Bitcoin in 2019,” 30 July 2018.  Available at: https://cryptoslate.com/crypto-investment-fund-pantera-capital-predicts-67500-bitcoin-in-2019/ [Accessed 14 August 2018].

60.  Bloomberg, “Venture Capital Surges Into Crypto Startups,” 26 March 2018.  Available at: https://www.bloomberg.com/news/articles/2018-03-26/icos-can-wait-venture-capital-surges-into-crypto-startups [Accessed 14 August 2018].

61.  PwC/Strategy & (2018), Initial Coin Offerings: A Strategic Perspective.  Available at: https://cryptovalley.swiss/wp-content/uploads/20180628_PwC-S-CVA-ICO-Report_EN.pdf [Accessed 14 August 2018].

62.  Wall Street Journal, “What Crypto Downturn? ICO Fundraising Surges in 2018,” 1 July 2018.  Available at: https://www.wsj.com/articles/what-crypto-downturn-ico-fundraising-surges-in-2018-1530466008 [Accessed 14 August 2018].

63.  CryptoSlate, “Crypto Funds Explode in 2018 as Venture Capital Attacks the ICO Model,” 1 June 2018.  Available at: https://cryptoslate.com/crypto-funds-explode-in-2018-as-venture-capital-attacks-the-ico-model/ [Accessed 14 August 2018].

64.  CryptoSlate, “Union Square Ventures: Blockchain Might Be Worth Trillions,” 2 July 2018.  Available at: https://cryptoslate.com/union-square-ventures-blockchain-might-be-worth-trillions/ [Accessed 14 August 2018].  CNBC, “Union Square Ventures is investing in crypto for the long haul, but won’t start a dedicated fund,” 29 June 2018. Available at: https://www.cnbc.com/2018/06/29/union-square-ventures-is-doubling-down-on-crypto.html [Accessed 14 August 2018].

65.  Fortune, “It Started With the Rockefellers.  Now It’s Taking on Crypto,” 6 April 2018. Available at:  http://fortune.com/2018/04/06/crypto-vc-venrock-coinfund/ [Accessed 14 August 2018].

66.  CryptoSlate, “Crypto Unicorn Hunters: The VC Firms Behind Billion-Dollar Crypto Startups,” 15 July 2018.  Available at: https://cryptoslate.com/crypto-unicorn-hunters-the-vc-firms-behind-billion-dollar-crypto-startups/ [Accessed 14 August 2018].  CB Insights, “Ribbit, Index Lead Fintech Unicorn Hunters,” 10 July 2018.  Available at: https://www.cbinsights.com/research/fintech-unicorn-top-vc-investors/?utm_term
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67.  CryptoSlate, “Crypto Unicorn Hunters: The VC Firms Behind Billion-Dollar Crypto Startups,” 15 July 2018.

68.  CB Insights, “Ribbit, Index Lead Fintech Unicorn Hunters,” 10 July 2018. 

69.  Recode, “Why are big VCs opening up crypto funds?,” 21 June 2018.  Available at: https://www.recode.net/2018/6/21/17484524/venture-capital-cryptocurrency-investing -structures [Accessed 14 August 2018].

70.  U.S. SEC, Final Rule: Exemptions for Advisers to Venture Capital Funds, Private Fund Advisers With Less Than $150 Million in Assets Under Management, and Foreign Private Advisers, 17 C.F.R. Part 275 (21 July 2011).  See also U.S. SEC, IM Guidance Update: Guidance on the exemption for advisers to venture capital fund, No. 2013-13, December 2013.  Available at: https://www.sec.gov/divisions/investment/guidance/im-guidance-2013-13.pdf [Accessed 14 August 2018].

71.  Union Square Ventures, “Investing in Token Focused Funds,” 20 June 2018.  Available at: https://www.usv.com/blog/investing-in-token-focused-funds [Accessed 14 August 2018].

72.  Dixon, C. (2018), “Introducing a16z crypto.” Available at: https://a16zcrypto.com/ [Accessed 14 August 2018].  CoinDesk, “Andreesen Horowitz Starts a Crypto Fund,” 25 June 2018.  Available at: https://www.coindesk.com/andreessen-horowitz-launched-300-million-crypto-fund/ [Accessed 14 August 2018].

73.  Wall Street Journal, “Andreessen Pure-Play Crypto Fund Won’t Have Cap Limiting Most VCs,” 25 June 2018.  Available at: https://www.wsj.com/articles/andreessen-horowitz-names-katie-haun-as-first-female-gp-closes-300-million-crypto-fund-1529956810 [Accessed 14 August 2018].

74.  Fortune, “Why the Structure of Andreessen Horowitz’s New $300 Million Crypto Fund Matters,” 26 June 2018.  Available at: http://fortune.com/2018/06/26/andreessen-horowitz-crypto-fund/ [Accessed 14 August 2018].

75.  The American Lawyer, “Law Firms See Opportunity Pairing Blockchain and Securitization Expertise,” 25 June 2018. Available at: https://www.law.com/americanlawyer/2018/06/25/law-firms-see-opportunity-pairing-blockchain-and-securitization-expertise/?slreturn=20180713133521 [Accessed 14 August 2018].