UK’s First Crypto Hedge Fund, Prime Factor, Closing From Lack Of Demand

The first-ever licensed digital currency hedge fund that was set up within the borders of the UK is set to close its doors. This comes after the firm had failed to attract the needed levels of investment from institutional investors.

First In; First Out

Prime Factor Capital first won the Financial Conduct Authority (FCA)’s approval back in the summer of 2019. It stood as the first-ever crypto hedge fund to be licensed by the UK-based regulator. Even so, things didn’t seem to work out, as Financial News reported that the firm is planning to close up shop. The reason for this is simply due to a lack of institutional investor demand.

Prime Factor Capital was founded by BlackRock’s former executives, but had failed to live up to the expectations the fund had made since its launch.

A Simple Lack Of Demand

Nic Niedermowwe stands as the CEO of Prime Factor Capital, and gave a public statement about the matter at large. He explained that the fund did actually deliver returns for its investors, having managed to deliver an average monthly performance of over 4%. Even so, Nidermowwe explained that there was a simple lack of institutional investment, and as such, the fund has no other choice but to be wound down.

Sources that were close to the company went into detail, as well. In press reports, these sources were quoted in saying that the fund couldn’t get enough traction when it comes to raising assets. In a bid to keep itself afloat, the hedge fund even tried to sell a stake in the management company during these past six to twelve months, seemingly to no avail.

Institutions Still See Crypto As Too Risky

The UK’s digital currency investment sector has taken yet another blow with this news. The UK’s crypto space has simply failed when it comes to securing a significant amount of institutional-level investment partners. As a result of the simple lack of investor confidence within this asset class, Prime Factor Capital and other funds like it are struggling to raise sufficient assets.

Prime Factor Capital, in particular, was banking heavily on a dramatic rise in interest from banks and investment funds. Prime Factor promised to deliver a solid monthly return through its digital asset investment. However, the simple fact of the matter was that the risk profiles were just too high. As a result, institutional investors are still staying away from speculating on digital currencies, by virtue of sheer volatility.