Specialty Funds invest in altcoins, DeFi tokens and protocol tokens.
Some are single-asset investment products; others are index funds. By investing through a private fund rather than purchasing the digital assets directly, investors gain exposure to the economics of the underlying digital assets while avoiding the hassles (and reducing the cost) of buying, storing and safekeeping the underlying digital assets.Digital Assets Specialty Funds are typically available only to accredited investors.
The funds are typically structured as limited partnerships or LLCs although some might be structured as trust vehicles. In some cases, shares are eligible for sale in the public market (with an accompanying premium or discount) after a six- or 12-month holding period. The minimum investment is typically $25,000 or more. Potential investors should ask about the fund’s subscription frequency, redemption availability/frequency, notice period for redemptions, management fees, placement fees, incentive fees (e.g., profit participation or carried interest), and tax reporting (Schedule K-1).