Meanwhile, Advisors, a crypto startup backed by the American entrepreneur Sam Altmanhas announced plans to raise $100 million for a Bitcoin (BTC) private credit fund.
The fund, known as Meanwhile Private Credit Fund, aims to provide institutional investors with access to BTC while aiming for an additional 5% return in the cryptocurrency.
Bitcoin Rally Leads to Launch of the Meanwhile Advisors Fund
According to a report by The Block, Advisors has launched the fund as Bitcoin continues its recent rally, with prices currently falling from the $44,000 level to $43,200.
Zac Townsend, the co-founder and CEO of Meanwhile Group, stated that the belief is that Bitcoin will increase significantly in value in the future, and that the fund offers investors a unique opportunity to increase their exposure to digital assets.
The Meanwhile BTC Private Credit Fund uses a single-close, closed-end structure. Participating limited partners (LPs) will contribute US dollars to the fund, which will immediately be converted into Bitcoin after the one-time closing.
Meanwhile, this BTC will be lent to borrowers to generate the targeted return of 5% in Bitcoin. This structure allows LPs to accumulate more Bitcoin as its price rises over the life of the fund, without requiring additional principal investments.
Townsend said the minimum investment amount per LP is $250,000, with no maximum limit. The fund’s investment period is three years, followed by a four-year harvest period, resulting in a total term of seven years.
However, capital is returned to investors at harvest, meaning that a significant portion of the invested capital can be repaid well before the end of the seven years.
Innovative reimbursement approach?
According to the report, the Meanwhile BTC Private Credit Fund charges a 2% management fee and a 20% interest fee, both in Bitcoin. The carried interest fee only applies when the LP’s Bitcoin holdings are increased.
This fee structure ensures that if Bitcoin experiences a substantial price increase, it will not benefit from the price increase itself, but rather from generating more Bitcoin for the LPs.
Highlighting concerns about risk management, Townsend emphasized that the closed structure of the fund eliminates the risk of a “bank run” scenario, which could lead to insolvency. Additionally, the fund focuses on providing conservative lending to “creditworthy institutional borrowers,” mitigating the risks associated with lending to retail investors at higher interest rates.
The Block also reported that Anchorage Digital serves as the fund’s custodian. Meanwhile, the Group’s insurance division has done so before launched a life insurance policy in Bitcoin, and Townsend mentioned plans to introduce an accidental death coverage policy in Bitcoin as well.
Currently, the market’s leading cryptocurrency is trading at $43,200, down nearly 2% in the past 24 hours. This decline follows a failed attempt to strengthen its position above the important milestone of $44,000.
Nevertheless, Bitcoin has managed to maintain a 14% gain over the past seven days and is currently holding at the $43,000 support level as it sets its sights on reaching a new yearly peak.
Featured image from iStock, chart from TradingView.com