Osprey launches Polkadot Trust and sees hedge fund interest in its bitcoin trust

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Digital investment specialist firm Osprey Funds has launched the Osprey Polkadot Trust for private placement. DOT, the native token of the Polkadot network, has a market capitalisation of over USD31 billion and is the eighth largest cryptocurrency. 

Osprey’s CEO Greg King says: “We wanted to launch something first to market and as compelling as we could find and Polkadot fulfilled both of those criteria.”  

He explains that he feels it has significant potential as a cryptocurrency. “It’s very similar to Ethereum as it is an eco-system, but a broader one, in that it is trying to create a multi-chain universe where blockchains can talk to each other.” 

Within Polkadot, King explains, there are effectively 100 parking spaces on the platform and whatever 100 projects are parked in those spaces, they can communicate with each other, including other cryptocurrencies. One of the founders of Polkadot is Dr Gavin Wood, who was a co-founder and CTO of Ethereum.  

Osprey launched its bitcoin trust, OBTC, last year, and that trust now has assets of USD160 million. Osprey was spun out of its founding firm REX Shares to do all the cryptocurrency business earlier this year. 

King notes that demand for cryptocurrency funds in the US has caused a brief oversupply in the offerings in trust form, with Grayscale’s trust hitting assets of over USD35 billion but trading at a discount, like a closed-end fund.  

The firm intends to convert its bitcoin trust into an ETP just as soon as the regulatory position in the US changes but King does not believe that the SEC will allow crypto ETPs until 2022. 

“I think there is less than a 50 per cent chance the SEC will approve a cryptocurrency ETP this year, and maybe up to 80 per cent next year,” he says. 

The demand is there though, as he reports a phenomenal response from clients, eager to invest in digital assets. 

“There are massive potential returns which give them an allure,” he says. “The underlying technology is very complicated so there is plenty of interest but a lot of educating involved as well.” 

The client base consists of individuals and hedge fund managers, while wealth managers and financial advisers are limited by what they can do through their platforms. “The appetite for next generation crypto investment vehicles is only increasing,” King says. 

The Osprey Polkadot Trust is currently available to accredited investors for subscription with a USD25,000 minimum investment. The sponsor intends to pursue listing the fund on the OTCQX market as soon as possible and has also agreed to waive the management fee for all investors until January 2023. 

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