Former Russian Oligarch Dives Into Cryptocurrencies, Bets on Institutional Investors

Gerald Banks, previously known as Guerman Aliev — formerly a deputy chief executive officer at Russian lender Rosbank PJSC and a Managing Director of Structured Products at Merrill Lynch — is seeking to apply his expertise and get exposure to the nascent cryptocurrency trading industry with his newly-created hedge fund for cryptocurrency trading, Bloomberg reports. Now, Banks heads Cipher Technologies Management LLP, a Connecticut-base hedge fund registered with the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The company is reportedly focused primarily on cryptocurrency options and futures contracts.

Betting on Institutional Money

Many corporate investors and money managers have been exploring new types of assets and the opportunities presented by blockchain technology and cryptocurrencies, but have refrained from direct exposure to the market. However, Banks believes that the cryptocurrency market has become mature enough to attract institutional investors — and he wants to be there when they start to pour their money into the industry. The unclear legal landscape and the lack of regulatory guidance on crypto-related instruments and trading strategies are the main roadblocks on the way to institutional adoption. Once these barriers are out of the way, a wave of institutional money will come into the markets — according to Banks. Global regulators need to address money laundering and market manipulation concerns — and many of them have been moving in that direction. France has recently adopted a regulatory framework for cryptocurrencies and other European countries may follow its lead. Meanwhile, US regulators understand the main issues of the industry and will soon be ready to address them, allowing institutions to legally invest in the cryptocurrency related instruments, Banks explains.

Cryptocurrency Derivatives

Banks declined to comment on the amount of financing the fund aim to raise. However, he mentioned that Cipher is negotiating with endowments, foundations, pension funds, and several other potential investors. Allegedly, the fund is targeting $250 million in assets under management by the end of the year. The cryptocurrency fund will provide professional investors with access to crypto-related derivatives and structured products that will include futures and options contracts. Do you think crypto derivatives will help close the gap between traditional finance and the cryptocurrency industry? Let us know what you think in the comments below.