Hedge Fund GABI Makes First Bitcoin Purchase via DigitalBTC

By September 24, 2014Bitcoin Business
Click here to view original web page at www.coindesk.com
GABI logo
GABI logo

Global Advisors Bitcoin Investment Fund (GABI) has announced the completion of its first initial offer period and its first purchase of bitcoin. The fund said the offer period was completed in early September and the first step towards deploying its assets into bitcoin has been taken.

GABI is incorporated in the island of Jersey and is possibly the world’s first regulated bitcoin investment fund. Due to regulatory requirements, it deals with established players like Netagio, KPMG, and Elliptic, and exchanges such as Bitfinex and Coinsetter.

Transparency and compliance

This is also one of the reasons behind GABI’s decision to execute its first bitcoin purchase using digitalBTC, Australia’s first publicly listed bitcoin company.

Daniel Masters, director of GABI and co-founder of Global Advisors Jersey Limited (GAJL) explains:

“We are delighted to have executed our initial over-the-counter bitcoin purchase with digitalBTC and we look forward to expanding our relationship as GABI’s assets grow. DigitalBTC offers GABI valuable liquidity and price discovery while being a strong counterparty.”

Bill Brindise, digitalBTC chief investment officer, said the company’s digitalX Direct platform is specifically designed to provide real-time liquidity for institutional investors and large commercial operators who choose to purchase bitcoins.

“As a publicly listed company, subject to strict reporting and disclosure requirements, we are also very pleased to be dealing with GABI, given their licensing regime and look forward to being able to provide similar liquidity in future,” said Brindise.

GAJL’s director and partner Jean-Marie Mognetti said the fund deals with companies that were previously approved by GABI’s compliance department following an extensive due diligence process mandated by the local regulator. Bitfinex, Coinsetter and digitalBTC met all the conditions outlined by the compliance department and, in turn, the Jersey regulator.

“In order to get the regulatory approval we got, we have to satisfy our regulators on a number of different levels,” said Masters.

Bank crackdown

Jersey – along with another British island, the Isle of Man – is a self-regulating British crown dependency and a tax haven for many financial operators.

Both islands have been touting themselves as attractive, regulated locations for the location of bitcoin businesses in recent months, with some success.

However, the Isle of Man lost some of its appeal last week, as banks decided to cut their ties with the island’s cryptocurrency sector. This caused the local middleman, banking solution provider Capital Treasury Services (CTS), to close all crypto-related accounts, causing shockwaves in the industry. Another solution does seem to be in the pipeline now, however.

The news did not have much of an effect on GABI, however. Masters told CoinDesk that GABI is connected with a number of businesses that were using the CTS system in the Isle of Man.

“And we had our reservations about how all that structure was set up. It seems that the ultimate banks making the payments were not open to cryptocurrency businesses. CTS was forming a kind of a barrier, but ultimately they saw through that,” said Masters.“We anticipated that and that is why we delayed for a while.”

The need for regulation

When it comes to regulation, Masters views it pragmatically, as a necessary step in the evolution of bitcoin:

“The best scenario for bitcoin is that there is a bridge between the bitcoin world and the world of traditional finance. Unless there is a working relationship, it will just slow down the development of bitcoin dramatically.”

The Isle of Man issues may in fact work to GABI’s advantage in more ways than one. The fund pointed out that the recent bitcoin price weakness can be attributed to a series of factors, including the CTS issue on the Isle of Man, troubles with the New York ‘BitLicense’ programme and recent Russian Treasury comments.

“We timed our entry to the bitcoin market accordingly. We believe the resulting entry point represents an opportune moment to initiate our first round of capital deployment,” the fund said in a statement.

GABI is incorporated in the island of Jersey and is possibly the world’s first regulated bitcoin investment fund . Due to regulatory requirements, it deals with established […]

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