United States-based bitcoin investment firm, Pantera Capital, has filed with the U.S Securities and Exchanges Commission (SEC) for an Initial Coin Offering (ICO) hedgefund.
If Successful, Pantera ICO Fund LP Will Be the World’s First ICO Hedgefund
Pantera Capital is hoping to become the first bitcoin investment firm to offer an ICO hedgefund. The Pantera ICO Fund LP plans to offer investors a diversified and third-party managed means to speculate on upcoming initial coin offerings, claiming to mitigate much of the risk associated with investing in pre-market cryptocurrency projects.
Pantera Capital was formed in 2013, comprising the first US-based bitcoin investment firm. The company has invested in numerous cryptocurrency heavyweights, including blockchain-based remittance service Abra, leading South Korean bitcoin exchange Korbit, and altcoins Ripple and Zcash. Pantera CEO Dan Morehead and Auger co-founder Joey Krug will be chief investment officers for the fund, with Krug now joining Pantera Capital as a full-time employee.
In a recent interview with Techcrunch, Joey Klug, Dan Morehead, and Pantera Capital partner Paul Veradittakit articulated their intentions for the ICO hedge fund. The ICO hedgefund will have a preference for investing in “protocols where the token is integral to the functioning of the service itself… where tokens are the only exposure to the network.” Ideally Pantera will invest in projects where the development team has experience with “buil[ding] an open source community on a large scale”, with the fund planning to hold tokens for between ten and twenty projects at any one time. Pantera are also planning on having direct engagement with the projects that they invest in, with Paul Veradittaki stating that “[Pantera will] help provide the right connections, whether in terms of marketing or recruiting or business development.” Where possible, the fund hopes to be the largest participant in the projects it invests in.
Dan Morehead suspects that ICOs may come to supersede traditional VC firms, describing such as the principal motivation behind Pantera’s ICO fund. “In [2017’s] second quarter, ICO issuance was greater than venture capital, with $210 million [invested in ICOs] versus $180 million [invested into startups by VC firms. We do expect that transition to continue.”
Pantera’s Filing With the SEC Comes Before a Clear Regulatory Apparatus Has Been Developed for Initial Coin Offerings
The fund will be open to private and institutional US-based investors, offering a means for many venture capital firms to participate in the ICO markets that are otherwise unable to directly invest in cryptocurrency projects due to company policies. The company plans to open up to non-US investors in the future.
Pantera’s filing with the SEC comes before a clear regulatory apparatus has been developed for initial coin offerings. Recent controversies surrounding particular cryptocurrency pre-sales have been prompting experts to forecast the inevitability of a regulatory crackdown on ICOs. Recent reports have evidenced that the SEC is actively looking at ICOs, citing a lack of transparency and oversight as areas of concern. Despite such, Dan Morehead and Pantera Capital are confident that Pantera ICO Fund LP will be able to comfortably adapt to future regulations. “All these new currencies are along a spectrum and have various attributes, and various regulatory bodies around the world, including the CFTC and the IRS, have taken clear stances on them already. Other agencies haven’t ruled on them, but I think it’ll be the same with token sales, where there will be a period of time where they figure out how they fit into existing regimes or whether new regimes are needed to regulate token sales.”
The firm is currently in the process of a $100 million fundraising campaign for the venture, having already successfully secured over $25 million.