Simmons & Simmons advises Prime Factor Capital, the first FCA authorised dedicated crypto asset manager

04 Jul 2019

Our Hedge Funds team has recently advised London headquartered crypto asset management firm, Prime Factor Capital Limited, on the launch of its asset management business and the establishment of a Cayman domiciled fund. The fund provides a solution for professional clients seeking exposure to cryptocurrencies. The Simmons & Simmons Hedge Funds team provided support on fund structuring, tax and regulatory issues.

Prime Factor Capital was authorised to operate as a full-scope Alternative Investment Fund Manager (AIFM) by the UK Financial Conduct Authority (FCA) on 01 July 2019. This is the first time that the FCA has authorised a dedicated crypto asset manager as a full-scope AIFM.

In what is believed to be another industry first, Prime Factor Capital has appointed a depositary as required by the AIFM Directive (AIFMD). Depositaries provide an additional layer of protection to investors by providing independent fund oversight, asset ownership verification and cashflow monitoring.

Sarah Crabb, Managing Associate said: “We are delighted to have advised Prime Factor Capital on the successful launch of its asset management business and first fund. To date, uncertainty around the FCA’s approval process and the lack of available depositary solutions have presented significant challenges to UK fund managers looking to launch in the digital assets space. The fact that Prime Factor Capital has obtained FCA approval in its own right will be revolutionary for the UK crypto funds industry. We very much look forward to working with the Prime Factor Capital team as the UK crypto funds industry continues to evolve.”

Nic Niedermowwe, CEO of Prime Factor Capital, comments: “This is a significant milestone not just for Prime Factor, but for the industry as a whole. Being FCA-regulated brings us under the purview of one of the most recognised financial markets regulators globally. This is particularly relevant in the cryptocurrency space, which has repeatedly captured headlines for poor operating standards and even fraudulent activity. Investors need to be able to trust their managers not only to generate returns, but also to act responsibly and in their best interest. We are very happy with the outstanding support we received from the Simmons & Simmons’ team in helping us to reach this important milestone.”

The Simmons & Simmons team was led by London-based Managing Associate, Sarah Crabb. Other core team members include Martin Shah (Partner, Tax) and Alex Sherston (Associate, Funds). Simmons & Simmons is uniquely placed to advise on digital asset funds as it has both the market leading Hedge Funds practice and the market leading FinTech practice.

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