Galaxy Digital takes another swing at crypto asset management, but the landscape is more competitive than ever

Galaxy Digital Holding Ltd. announced today that it is launching two Bitcoin funds— the Galaxy Bitcoin Fund and the Galaxy Institutional Bitcoin Fund— to provide accredited and institutional investors access to low-fee and institutionally secure bitcoin exposure.

The two new funds build on Galaxy’s existing offerings, including the Galaxy Crypto Index Fund and Galaxy’s ecosystem funds. They will offer third-party custody from the Bakkt consortium and Fidelity Investment, and Bloomberg L.P. will act as the pricing agent.

The Galaxy Bitcoin Fund requires a $25,000 minimum investment and investors can withdraw their funds on a quarterly basis, while the Galaxy Institutional Bitcoin Fund has a higher minimum investment requirement and weekly liquidity.

“Galaxy continues to have high conviction in bitcoin and has made significant strides in helping to bring a more institutionalized footprint to the digital asset ecosystem,” Mike Novogratz, CEO and Founder of Galaxy Digital, said in a press release. “We believe this effort is an important step forward in fulfilling this mission.” 

If at first you don’t succeed…

The firm’s asset management operation has undergone considerate challenges in recent years. In 2017, Galaxy Digital teamed up with Bloomberg to release a cryptocurrency price index but it did not take off.

“We went out the tested the waters and the market is just not ready yet,” Novogratz said in an episode of The Scoop. “It was a bear market and people didn’t want to participate in the index.”

This time, Novogratz takes another swing and aims to attract accredited investors between the age of 50 and 80—“the wealth of America”—who have not actively engaged in cryptocurrency investing, Bloomberg reported.

“The Galaxy Bitcoin Funds help accredited investors mitigate the complexities and risks of managing direct bitcoin investments. The funds provide investors bitcoin exposure with institutionally secure third-party custody, best-in-class service providers, and Galaxy’s platform support,” said Steve Kurz, Head of Asset Management at Galaxy Digital.

Crowded market

However, Galaxy is reentering the field of crypto asset management at a time when the competition is particularly stiff.

Investment giant VanEck Associate partnered with asset manager SolidX Management this September to launch a new fund that offers big-money buyers a way to invest in bitcoin. Crypto asset manager Grayscale announced this week that it has voluntarily filed with the Securities and Exchange Commission to register its bitcoin trust fund, GBTC, hoping to attract more institutional clients. Bitwise Asset Management’s Bitcoin ETF Trust also works with the similar demographic profile as Galaxy’s new funds. 

Operating in a competitive landscape, Galaxy’s funds aim to charge lower fees than rivals to attract its target audience.

“The existing landscape for accessing Bitcoin is incomplete,” Steve Kurz, head of asset management at Galaxy Digital, told Bloomberg. “We are trying to offer secure service providers, low fees, simple access to Bitcoin. We wanted to create something that could plug into the existing infrastructure.”


Galaxy Digital takes another swing at crypto asset management, but the landscape is more competitive than ever written by Yilun Cheng @ November 19, 2019 Yilun Cheng

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