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The move comes after several firms blurred the lines between traditional- and crypto- financial markets, creating a token ecosystem that extends beyond decentralized applications and scalable blockchains.
Headquartered in the Cayman Islands, Epoch is registered with the Japanese Financial Services Agency (FSA) and complies with the authority’s guidelines for securities. The firm also filed a legal statement with EDINET – the agency’s disclosure system – on September 28, and stock subscriptions began on October 15.
As per the filing statement, subscriptions were capped at 100 billion yen or approximately 900 million USD. The venture will now employ hedge fund managers and risk management strategies to invest in and provide their clients with exposure to cryptocurrency businesses, tokens, ICOs, and other related products with a focus on aggressive returns but strict measures against volatility.
The cryptocurrency trading market has grown unlike the ethos of Bitcoin, the pioneer digital currency. The asset class was never envisioned as a contender to trading products available today, but with the rise of institutional investments and trading infrastructures, crypto-finance has emerged as a high-risk, high-reward investment market.
As stated in the report, Epoch will allow clients to put a “small investment” into any one of the fund’s offered asset management plans. However, the amount is not specified yet, and a “small” taking of wealthy customers could start in the six-figure range.
James Skinner, a partner at Epoch, stated Japan is at the forefront of adopting cryptocurrencies and making accepted frameworks for the asset class. He added that the sector is relatively younger than most trading products, but the entry of Goldman Sachs and Nomura into the space indicates “great things ahead.”
Skinner believes cryptocurrencies will be a regular feature of investment funds in the future, akin to forex, equities, and fixed income products, but be exposed on a much smaller scale.
The so-called Epoch Digital Assets venture will be marketed to investors by Tokyo-based Teneo Partners, which will sell the fund’s products to security funds in the country. Stanley Howard, the CEO of Teneo, stated the firm specializes in offering offshore funds to Japanese investors and is “delighted” to be working with Epoch.
“The ability to offer a truly unique diversified digital asset fund to our distribution and investor networks allows us to more fully address the increasingly diverse investment needs of our clientele and to differentiate ourselves from our competitors within the Japanese securities industry.”
While the year 2018 has seen a drastic fall in cryptocurrency prices – over $580 billion has left the market since an $800 billion market cap in January – the period has seen noteworthy developments in the broader sector. Events such as the trading of Bitcoin futures on the CBOE and CME, launch of regulated crypto-asset custodian service by Japanese giant Nomura, announcement of Intercontinental Exchange’s same-day settled Bitcoin exchange Bakkt, Japan’s MUFG bank revealing plans of a yen-pegged stablecoin, the list goes on.
It remains to be seen if cryptocurrencies ultimately achieve the creation of a decentralized, trustless financial system, or be relegated to the asset offerings of a bank’s financial investment division.