Tom has over 30 years of experience in the payments industry, including serving as CFO for various Visa International entities from 1980 until 1999, retiring with the title of Group EVP and Treasurer.
Another day, another “watershed” moment in the Crypto-verse… London-based Nickel Asset Management has gained approval from the FCA to offer a specialty investment fund that will focus on arbitrage opportunities in the crypto environment. The firm has already raised $50 million for its “Nickel Arbitrage Fund”, having applied a “soft close” after only two months of fundraising activities. For those institutional investors that were turned away, the company has committed to another limited opening later this year.
The Financial Conduct Authority (FCA), the UK’s regulatory watchdog, has already given the “green light”, as long as the fund complies with the EU regulations governing an “Alternative Investment Fund”. Sales will be limited to institutional investors, and the fund will be allowed to grow in excess of $100 million. According to its press release, the arbitrage fund “will apply market-neutral, low-latency algorithmic trading to crypto securities”… that may include ”triangular arbitrage, futures basis trades, swap trading, and volatility arbitrage”.
Alek Kloda, a portfolio manager at Nickel, spoke with reporters from CoinTelegraph and explained the opportunity as it exists today: “As long as digital assets and their derivatives trade on multiple exchanges across the globe, with sufficient speed and execution quality, we can profitably make markets, while improving liquidity for other market participants.”
It is no secret that Bitcoin and other altcoins make volatile swings in the market like no other asset class in history. Corralling this volatility for profit may not be that difficult at the outset. At last count, there were over 200+ crypto exchanges across the globe, and each one is unregulated, except for perhaps few that must comply with money transfer statutes, and each one must be a “market maker” with only its own customers. Due to this uncoordinated business model, the degree that liquidity and spreads vary across the planet at times are just begging to be an arbitrage target.
Anatoly Crachilov, the CEO of Nickel Asset Management, told the folks at CryptoNews that: “Our vision is that it’s simply a matter of time until digital assets become part of institutional portfolio allocation for forward-looking investors around the world, and we aim to build an institutional-quality gateway to this high-octane world of digital assets.” Industry observers have referred to the fund as a “watershed moment for institutional crypto trading”. His assembled team brings the experience and professionalism to make this venture a success, as evidenced by the quick closure of its first funding round.
Yes, Nickel Asset Management will be creating another “tool” for the institutional investors’ toolbox, the ability to hedge the volatility of the crypto marketplace. Over time, arbitrage will tighten spreads and expand liquidity, as well. David Fauchier, CIO at Cambrial, noted that the closing of the fundraising was a “watershed moment for institutional crypto trading”. Fauchier went on to add to CrowdFundInsider: “The uniquely experienced team, coupled with the firm’s advanced custody solution, have won endorsement from institutional investors.”