New Dawn crypto fund to invest in global exchange where you can buy anything
Australia’s newest crypto fund for the man and woman on the street has unveiled its first investments, and one is the founder’s baby.
New Dawn Fund will deploy its cash into an institutional-grade security token exchange, an ambitious Europe-based exchange which managing director Rob Dey has been working on for some time.
“We’re going to have something up within three to six months. Within 12 months this thing will have probably have circa $50 billion at least market cap on there,” he told Stockhead.
The other two investments are a crypto mining company and an algorithmic trading desk, where traders working for New Dawn will make active investments.
Unlike regular money, digital currencies such as bitcoin aren’t issued by a central bank. Instead they’re generated through very energy-intensive computing processes known as “mining”.
The fund opened in April and closes to new investment on May 30, after which it will be allocating a hoped-for $20 million into the above areas, as well as venture investment, mergers and acquisitions, Initial Coin Offerings (ICOs), and tokenised real estate.
An ICO is a form of crowdfunding. It is like an initial public offering — but instead of offering shares in a company, an issuer offers digital tokens that can be traded on cryptocurrency platforms or for digital services.
About 60 per cent of the fund’s money will be allocated to active trading and establishing a buy-and-hold portfolio.
It will charge a standard hedge fund “two and 20” fee: 20 per cent of net profits and a 2.25 per cent fee as the entry price, but which it will only charge once rather than annually.
Mr Dey says they have raised $2 million as of today, and are now “dealing with the heavies” from the institutional and corporate advisory world.
“Capital is absolutely knocking on the door here. Yesterday, a 68-year-old lady put in $50,000.”
He says a Silicon Valley hedge fund is looking at them now.
Mr Dey would like to launch a Cayman’s-based private hedge fund for sophisticated investors as well
A world exchange of everything
Mr Dey is particularly excited about his baby, the securities exchange.
He says they are finalising regulations with the financial regulator of a Europe country now, but cannot yet reveal which country that is.
The exchange is designed to a zero-day settlement, so unlike the ASX, for example, where all trades take two days to finalise, the blockchain technology will make deals instantaneous.
It will be able to handle all kinds of securities, from tokens to cryptocurrencies to traditional shares like, for example, Westpac or BHP.
As such, it will be “institutional grade”, meaning it has all of its regulatory ducks in a row for anti-money laundering and other traditional securities trading rules.
Mr Dey says the demand for listings is there, as he is speaking with accounting, advisory and law firms which have “a long list of companies that want to tokenise and list”.
The fund has a two-year term, so the investments within it must start making money quickly.
The trading desk and the miner will be able to make money immediately, the exchange will take a little longer but take the usual market operator’s cut on listing fees, annual fees, participant fees from brokers and so forth.
Mr Dey expects the fund’s seed investment in the exchange to deliver a return via dividends.