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Report highlights Rock’s prominent role in global crypto funds market

A recent report into the global crypto hedge fund landscape from PwC and Elwood Asset Management has shown Gibraltar as the 3rd highest jurisdiction of choice for crypto hedge fund managers, only behind the US and UK.

Gibraltar, which is also listed as having the 4th highest number of domiciled crypto hedge funds, puts the jurisdiction ahead of financial centres such as Singapore, Malta, The Netherlands, Hong Kong, and Switzerland and many others, despite its relative size.

The data in the report points to significant growth in the Crypto Hedge Fund industry in Gibraltar, as in the previous guide (2019) the jurisdiction was unranked on both indicators.

The report, compiled from data gathered in the first quarter of the year, provides an overview of the global crypto hedge fund landscape and examines both quantitative indicators, such as liquidity, and qualitative aspects, such as custody and governance best practice.

“Gibraltar has a great legal and regulatory landscape for crypto funds, evidenced by this report,” said Jonathan Garcia, a partner at ISOLAS, the Gibraltar law firm that works with leading crypto funds, managers and exchanges who choose Gibraltar for its regulatory approach, specifically its Core Principles based DLT regulations.

“The indicators put further weight behind Gibraltar’s growing status as a ‘go-to’ financial market.”

“The jurisdiction's strength is derived from its robust and dynamic regulatory framework thanks to our size, coupled with the willingness of regulators to consider input from external industry experts.”

In the rest of the world, the report showed that the overall Assets Under Management (AuM) by Crypto Hedge Funds doubled to $2 billion in the last year.

Over the same period, the industry saw the percentage of crypto hedge funds with an AuM of over US$20 million increased in 2019 from 19% to 35%, broadly in keeping with the overall trends of Crypto Hedge Funds getting larger, with average AuM increased from US$21.9 million to US$44 million, while median AuM increased from US$4.3 million to US$8.2 million.

“The report doesn’t just signal growing of interest in the sector in Gibraltar but points towards impressive overall growth,” Mr Garcia said.

“This is a sign of confidence in the Crypto Hedge Fund industry as a whole and points to greater institutional confidence in the market, something that is very important as crypto joins the ranks of established asset classes.”

“For Gibraltar to have a growing share of a quickly growing market is extremely encouraging news and a testament to the creativity of all involved in the sector, not least to our dedicated and innovative team here at ISOLAS.”

Luke Walsh, a director and crypto-lead at PwC Gibraltar said: “The PwC Crypto Hedge Fund Report provides an overview of the global crypto hedge fund landscape and offers insights into the industry.”

“Gibraltar's prominent position with regards to the percentage of funds and fund managers located in the jurisdiction adds to our positive reputation and further cements our place as a global player in the crypto industry.”

“The jurisdiction's fund offering is attractive to crypto funds looking for a crypto friendly jurisdiction that welcomes regulation and continues to attract global crypto entities.”

Joey Garcia, ISOLAS’ fintech partner, added: “It’s well known that Gibraltar led the way in respect of DLT and VASP regulation years ago, and the regulated DLT firms we have been able to attract show this quite clearly.”

“However, it is also great to see that the work we have conducted in defining specific focus points and codes of practice for virtual asset denominated funds has led to an increase in the jurisdiction placing itself as a leader in the funds space.”

“As a domicile for funds in this space, it makes a huge difference having lawyers, accountants, banks and fund administrators that firmly understand the technology and asset class, and are able to deal with the intricacies that come with it.”