Wave Financial LLC (Wave), a leading asset management firm focused on digital assets, today announced that it has launched the Wave BTC Income & Growth Digital Fund, Ltd, the first crypto derivatives-based yield fund on the market.
Wave BTC Income & Growth Digital Fund is a British Virgin Islands incorporated fund that holds Bitcoin (BTC). The investment objective is to generate yield by selling call options on BTC held in the Fund. The Fund expects such option sales to generate attractive premiums due to BTC’s high volatility, which should provide a stream of income that can be paid out monthly.
The Fund aims to distribute a dividend of 1.5% of NAV per month, which, if achieved, would result in an 18% target annual yield. Excess premium above the target yield, minus a performance fee, would be credited back to the Fund to purchase more BTC, contributing to the growth of NAV. The Fund would generate this premium by selling call options with strikes higher than the current price, which also leaves room for investors to capture potential BTC upside. Fidelity Digital Assets will provide custody for the Fund’s BTC.
“For high net worth investors, appetite for innovative yield product with upside potential is strong. This product monetizes higher volatility of BTC to deliver yield, independent of the interest rate environment, while keeping some upside exposure,” said Benjamin Tsai, President of Wave.
For investors that are interested, Wave BTC Income & Growth Digital Fund will issue Fund Tokens based on cryptographic technologies similar to those used for creation and transfer of select virtual currencies. Wave anticipates that Tokens will be able to be traded on alternative trading systems at a later date.
“The mission of Wave is to provide investors with diversified exposure to crypto assets,” said David Siemer, CEO of Wave. “This is an alternative way to hold BTC exposure.”
Potential investors should be aware that an investment in Fund/Tokens involves a high degree of risk. Please read the private placement memorandum carefully for a discussion of the most significant risks to such an investment.
An investment in Fund/Tokens is suitable only for sophisticated investors who have experience investing in private funds employing the Fund’s strategies, are familiar with investing in and trading Crypto Assets and can afford the loss of their entire investment in Fund/Tokens.
The Fund will sell Fund/Tokens only outside the United States to non-US persons in compliance with Regulation S under the Securities Act of 1933 or, within the United States, only to “accredited investors” within the meaning of Rule 501(a) of Regulation D under the Securities Act, pursuant to an exemption from registration provided by Rule 506(c) of Regulation D. The Fund/Tokens are only available for purchase through the Fund or broker/dealers engaged by Wave on behalf of the Fund.