Bitcoin goes institutional: First European mutual fund launches to try to attract big investors to the cryptocurrency

Jasper Jolly
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Tobam claims it will manage operational risk around bitcoin (Source: Getty)

Bitcoin took another step towards mainstream financial acceptance today as a French firm launched the first European mutual fund offering exposure to the cryptocurrency.

Paris-headquartered asset manager Tobam hopes to attract big institutional investors to bitcoin, which has so far gained little in the way of a following among professional funds.

The firm, which manages $8.8bn (£6.7bn), said its fund will address the “numerous difficulties” posed to investors who wish to gain exposure to bitcoin. The fund will not be available to retail investors.

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While bitcoin’s massive volatility has caused many seasoned investors to describe it as a bubble, the cryptocurrency is gaining increasing traction among mainstream financial services providers. Giant futures exchange CME Group plans to launch bitcoin futures by the end of the year.

However, those brave enough to face big price swings still face significant operational hazards which put off risk management teams in institutional managers.

The cryptocurrency has been forced to “fork” repeatedly, in which the underlying blockchain ledger is split into two separate currencies to address volume issues. Meanwhile, exchanges have proven vulnerable to hacking and theft.

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Christophe Roehri, Tobam head of business development, said: “Direct investment in Bitcoin can be operationally challenging, from dealing with the choice of the platform, to maintaining the proper security measures in terms of custody and to managing the changes made to the protocol – hard forks.”

However, the bitcoin fund will offer significant diversification benefits to investor portfolios, Tobam claimed, with cryptocurrencies potentially becoming a “durable standard in financial and saving markets”.

Yves Choueifaty, Tobam president, said: “Bitcoin being a highly diversifying asset, this launch is also an expression of our commitment to diversification in all its forms.”

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