Alternative investment firm North Capital announced that it has launched a new Ethereum investment fund called Proof Ethereum LCC that aims to capitalize on the growth of the Ethereum blockchain and the increase in the value of ether.
Proof Ethereum will “engage in mining of ether, in buying and selling mining contracts and royalty agreements, and will provide ‘proof of stake’ and other technology services related to Ethereum,” as well as hold ether as an investment, according to the company’s offering document.
To invest in Proof Ethereum, investors can purchase membership interests under Regulation D / 506(c). Membership Interests are restricted securities for which the company expects that there will be no active secondary market in the near future. Instead, the managing company, Proof Ethereum Management Inc, “will make commercially reasonable efforts to provide quarterly liquidity to holders who wish to withdraw from the Company. The Manager may impose a withdrawal liquidity charge of up to three percent, to be retained by the Company, in connection with any such withdrawal.”
Furthermore, the company will charge a two percent management fee as well as a 0.25 percent per quarter to cover marketing expenses and the costs of company formation. Proof Ethereum is looking to raise $250,000.
Salt Lake City-based North Capital is a financial services company that offers broker-dealer services and escrow services for private securities transactions as well as alternative investment funds. It wholly-owns Proof Ethereum Management and offers securities in Proof Ethereum through its FINRA regulated broker-dealer arm North Capital Private Securities Corporation.
North Capital CEO James P. Dowd believes that “the Ethereum blockchain will continue to gain traction as an effective protocol for tracking digital assets of all types, particularly financial assets.” He added, “Proof Ethereum is the first offering of its kind to give investors the opportunity to invest in the future of Ethereum and Ether.”
Given the high risk of investing in private securities due to their illiquidity and the high expense ratio of this new investment vehicle, seasoned cryptocurrency investors will likely stay away from this new fund and, instead, buy and mine ether themselves. However, for investors who are new to the digital currency space and want to benefit from the growth of this sector, the Proof Ethereum fund might become a welcomed and sought-after investment opportunity as it provides exposure to the asset class through a more traditional investment vehicle.