- A former Merrill Lynch manager with ties to Russian oligarchs has started one of the first crypto-based hedge funds
- According to him, more funds will be invested in crypto once regulations are put in place
- He also says that many managers are scared away due to potential fraud
Crypto has exploded in the last decade. It has gone from an internet phenomenon taking over the world sector by sector. One of the sectors that have most embraced crypto lately is the financial sector, mostly because the lucrative nature of crypto has become impossible to ignore. A lot of the investment in crypto are no longer limited to individuals as large firms are getting in on the action. Examples of this are JP Morgan’s decision to launch their own stablecoin, as well as bitcoin and ethereum indices being listed on Nasdaq.
With regulation come investments
One of the factors that have led to greater investment in crypto is the fact that crypto-related regulations are becoming clearer and more defined. As such, a new market has emerged in the last few years and many businesspeople are springing up to take advantage of this. One of such people is Gerald Banks, a businessman who previously structured derivatives for Merrill Lynch and also was part of the management of a Russian oligarch’s empire. After seeing much success in both ventures, Banks, formerly called Guerman Aliev, has taken on the role of chief investment officer of a new hedge fund in Connecticut that is focused on digital assets.
His new firm is called Cipher Technologies Management LP and it is registered with the Securities and Exchange Commission as well as the Commodity Futures Trading Commission. Most of the offerings for the clients involve cryptocurrency and futures contracts. In a recent interview, Banks stated that this choice of offering was not coincidental and instead, was in anticipation of a large wave of institutional money that is going to come into crypto.
This wave will come, he says, when regulations are fully cleared up with regards to the different types of trading and investments that are allowed. Banks also stated that many money managers have explored digital assets but few invested in them due to concerns about money laundering and market manipulation.
Diverse sources of funding
Now that their shop is fully set up, the firm is speaking with a number of potential investors. Some of these investors include endowments, foundations and pension funds.They also have an ambitious funding target of 250 million of assets managed by the firm by the end of 2019.
While this is certainly a high amount, it is not far-fetched considering Banks’ previous successes. He has previously held a senior role in Inetrros Holding co. which is owned by Russian billionaire Vladimir Potanin. He also successfully started Altpoint Capital Partners in 2009 and Cipher Technologies is a separate entity to it.