On May 9, the management company Arquant Capital received permission from AMF to place a portfolio of funds for professionals, 100% invested in cryptocurrencies. This is the first asset manager in France approved by the Autorité des Marchés Financiers for actively managed funds invested directly in cryptocurrencies, and the first to be opened for Ethereum.
Already several regulated funds
In 2019, Napoleon AM became the first regulated crypto fund in France. Unlike the funds offered by Arquant, it does not hold bitcoin directly, but copies its performance with structured products. As with Arquant, on the other hand, this fund is reserved for professional and institutional investors.
In 2017, Tobam was the first to launch an unregulated fund investing 100% in bitcoin. Only in 2019, the adoption of the Pacte law allowed cryptocurrencies to invest in specialized professional funds, which allowed the creation of regulated funds. In 2021, Tobam paved the way for retail investment in cryptocurrencies by launching the first AMF-approved life insurance fund linked to bitcoins and stocks of international companies, including blockchain and bitcoin activities.
Combination of algorithmic and human control
Arquant’s offer is primarily aimed at family offices, private banks and capital management advisors, for wealthy investors and for long-term investment. As a general rule, she advises not to exceed 5% of the distribution of assets in cryptocurrencies, which would be interesting for a diversification strategy, as they have very little to do with other asset classes. The company’s goal is to reach about one hundred million euros of assets under management by the end of 2022.
The Arkvanta model combines algorithmic control and discretionary control, “To maintain the volatility of this very risky asset class”, explains its president, Aaron Angele, who worked for the Caisse des Dépôts and Banque Postale Asset Management. The goal is to achieve a higher return than a 5-year underlying asset, with less volatility. To do this, its management teams consist of professionals in asset management, blockchain and quantitative financing.
Before embarking on collective management, the company offered management mandates, according to which it claims to have reached double-digit levels since the beginning of the year.
Accident, a “good thing” to clean up the market
Arquant Capital will be the first management company to launch Ethereum. Even on this cryptocurrency, the company, founded in 2019, has tested its model. The protocol she believes in because “Ethereum will be a pledge of Web3, and its scope is very, very wide”says Eron Angele. “In addition, moving the protocol from confirmation of operation to confirmation of the share will improve the speed and energy balance of this blockchain.”
Bitcoin and Ethereum have crashed in recent months. On June 13, bitcoin reached the lowest level since 2020 – 22,400 euros. And Ethereum is trading below 1,200 euros, which is 70% less than the peak in November 2021.
According to the founder of Arquant Capital, this catastrophe is “It’s a good thing to check the reliability of mounts that arrived too quickly. You should consider cryptocurrencies as small capitals or emerging markets. Their trajectory is not linear, there are peaks and corrections. We are going through a phase of market cleansing. According to our indicators, we are not far from the bottom “.
Bad time to run your funds? “It is better to enter the market at this price level”remarks Aaron Angele.
Segment of the market under construction
In fact, the fall of cryptocurrencies does not seem to cool management companies. According to Muriel Faure, senior adviser to the capital management company, and Mr.resident of the Commission on Technological Innovation of the French Association of Financial Management (AFG), which spoke last week at a conference on cryptocurrencies, «Bmany management companies are interested in cryptocurrencies ». AFG has established a working group with the French Association of Securities Professionals (AFTI) on this issue.
“In 2023, I think some of our members will face requests from institutional investors. On the other hand, 34% of young people aged 18-24 are considering investing in cryptocurrency. Management has the ability to dispose of this money for I’m sure that cryptocurrency management will evolve and competition will intensify. ” she adds.
Arquant Capital, which employs eight people, has raised 1.6 million euros in two phases in 2020 and 2021 and is now closing a new round of funding of 1 million euros.