The Signal - Episode 7: institutional investing in digital assets

  • Multi Asset
  • Financials
  • North America

As one of the first institutional investors in digital assets, Kevin Kang, founding principal of BKCoin Capital LP, talks about the genesis of his firm, debunks the myths surrounding this asset class, and tells us why allocators and managers should believe the future is bright for digital assets.

Digital assets are ultimately “just another trading instrument” where the market is open 24/7, Kang tells us in episode 7 of The Signal. Driven to date by retail traders, the asset class is maturing, with traditional allocators increasingly exploring opportunities in the space. Kang tells us his firm’s clients are mostly funds of funds and family offices -“but we are now talking to some of the bigger pensions and endowments, now we have over four years of track record, which is exciting.” There is no denying that volatility “can definitely catch you off guard”, Kang adds. But on the flip side, volatility can be a “trader’s best friend”.

Kang also tells us how his daily work life shifted from being a portfolio manager to wearing many different hats when he and his partners launched BKCoin, including compliance, legal and investor relations. “Now we still have a small team of 15, but everyone’s done a tremendous job supporting each other and we all have very distinct functions.” The team comprises industry veterans with experience across asset classes “because we didn’t know how digital assets were going to behave”, he adds. “We wanted to cover all asset classes to put the best brains together to figure out what this asset class is going to look like.”

The genesis of the digital assets class was to empower individuals and promote decentralisation, which Kang explains is a double-edged sword due to the absence of regulation. “There’s got to be a good balance between good regulations for consumer protection, first of all, but also really try to embrace this new technology that can really change the world in a sense,” he says.

Structured products are beginning to enter the digital assets class, and Kang anticipates it ultimately looking “exactly like some of the traditional assets”. But the turning point will be when sovereign wealth funds allocate into them, Kang says. 

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