The investment company Morgan Creek, which manages $1.5 billion in assets, launched its own crypto fund, the Morgan Creek Digital Asset Index Fund, but refused to include some large cryptocurrencies in it. This is written by Forbes.
For example, in the new fund, which was managed by the American company Bitwise Asset Management, such cryptocurrencies as XRP, developed by the startup Ripple, and Lumen (XLM) of the Stellar project, are not represented, as their release was carried out through the so-called pre-goal.
“If there is a central authority that controls 30% of the issue or more, we exclude such a cryptocurrency from the index,” said Morgan Creek Digital partner Anthony Pompliano. “We believe that it carries with it additional risks that could not be had if its network were more decentralized.”
The index fund includes a basket of 10 major cryptocurrencies weighted by market capitalization, which is rebalanced monthly. Other cryptocurrency requirements fall into the fund, such as the presence of custodial solutions and a restriction on the concentration of trade.
When forming the fund, the risks of centralization of crypto assets were taken into account because of the increased probability of manipulating their prices and possible issues of regulators if such assets were recognized as securities.
“We are fully prepared and believe that we have created something that will attract institutional investors, regardless of the categorization of assets, whether they are securities or not,” Pompliano said.
According to the co-founder of Bitwise co-founder Hunter Horsley, the main difference between the Morgan Creek Digital Asset Index Fund and the HOLD 10 fund launched by his company is the availability of the first inspection committee, which included Morgan Creek CEO Mark Yusko, Pompliano and Bitwise Research Department head Matt Hogan.
Horsley said that the decision of the committee to limit cryptocurrencies with pre-currency is caused by two main factors: fears about the opportunities for fraud, which are possessed by large holders of assets, and the doubts of regulators for which a high degree of centralization is an additional basis that allows to recognize cryptocurrency as a security.
“Decentralization is the cornerstone of most blockchains. When most of the assets are centralized, there are contradictions and difficulties that distract us from what we expect to see in public blockchains,” Horsley said.
The Morgan Creek Digital Asset Index Fund is already available for institutional and accredited investors. Horsley promised that the fund will be audited by Cohen&Company from this fall, the results of which will be published on an annual basis. The first report will be submitted in early 2019.
“Together with Bitwise, we have created a product that we expect will become the standard for the industry, as S&P has become the standard for indexing securities,” Yusko said. “This is our long-term goal.”