With our unique position in the Hedge Fund industry working with both digital (Crypto) and traditional finance ‘TradFi’ funds, we get to see trends related to purely digital funds as well as hybrid funds. 2022 was certainly a game of two halves for Crypto and for many in the capital markets (but not in digital), they think time is up for the Crypto funds.
Yes, of course early 2022 was busy, late 2022 was a problem and a few funds either left the market or cancelled plans to enter the digital market after the collapse of FTX.
However, we have seen funds launch and funds expand in both activity and subscriptions. It’s a healthy pipe line for the months ahead. In all, net positive.
With our Crypto Portfolio Management System working in both markets, we see regular interest in existing funds planning to move into Crypto investments or existing digital funds looking to add more institutional grade functions.
Governance has certainly increased, with more interest in counterparty risk, token/coin exposure management and detailed reporting. If anything, the recent problems in the market have rewarded the funds that manage risk well.
More conversations with clients and prospects on how to do this has increased. We are delighted to help where we can. Much of this draws on our experience from the TradFi space and provides our Hybrid and Crypto PMS clients with all that it has to offer out of the box.
Crypto HedgeFund Software as an industry is in its infancy. Most dedicated Crypto systems for Administrators, trading, reporting, compliance etc still have a long way to go, this includes the exchanges. Here we give our clients a leg up, courtesy of the huge investment to make the Arbor PMS Crypto friendly. There are still lots of new issues that arise and the ability to respond rapidly to many non standard Crypto practices requires daily focus from us. Much of this still causes issues with the established institutional expectations and admittedly does deter some from entering the Crypto world altogether and some just delaying their entry.
But in short, for 2023, we see more activity and growth, but more expectation from managers (and systems) to perform at institutional level and not like the Wild West. Standards are higher. It was always assumed Crypto would need to grow up – many of the exchanges would fail and some of the nonsense securities would disappear. This is happening. More exchanges will enter the market, more will fail and existing ones will change their behaviour very quickly. Responding to these rapid workflow changes of the Crypto exchanges is engrained in our daily workflow.
It is not all about Bitcoin either. Whether Bitcoin is $1 or $100,000 by the year end, the digital environment will become more established this year. For asset-backed securities looking to trade more fluidly and new listings to market, the digital securities market will be well placed to service this need and do it far better: 24×7, globally, cheaper, direct to the investor, quicker to market and with more flexibility on T’s & C’s of funding. This will be the real winner for 2023 and we are looking forward to keeping our Crypto PMS at the forefront.
To see more about our Crypto Portfolio Management System go to: