BlockTower Capital relies on closed banks for crypto asset management funds

03/14/2023 22:28 • AI Insights • 80 views

It is reported that according to the latest regulatory documents required by the investment consultant, four private funds of BlockTower Capital, a crypto asset management company, use the closed Signature Bank and Silvergate Bank as the asset custodian. The total asset value of these funds is about $940 million.

BlockTower Capital used Silvergate and Signature Bank as asset custodians

Analysis based on this information:

BlockTower Capital, a well-known crypto asset management company, is reportedly relying on two closed banks, Signature Bank and Silvergate Bank, to serve as the asset custodian for its four private funds, as per the latest regulatory documents, required by the investment consultant. These private funds have a total asset value of about $940 million, and the company’s decision to rely on these banks for custodianship has raised some questions.

BlockTower Capital, like other crypto asset management companies, faces a complicated task of finding secure and trustworthy banks to act as custodians of their assets. Custodians are institutions responsible for holding and safeguarding clients’ assets, ensuring proper settlement of transactions, and managing any other financial processes related to those assets. In the crypto world, where security is paramount, selecting the right custodians is critical.

Traditionally, most crypto asset management companies relied on banks that specialized in holding cryptocurrencies (crypto banks). However, the recent closure of several crypto banks, including one of the most popular ones, Binance, has forced several crypto management companies to look into alternative options.

The reliance on Signature Bank and Silvergate Bank, which are not crypto banks, is a curious move by BlockTower Capital. It is possible that the company selected these banks as custodians due to a lack of private crypto banks or crypto banks with secure environments. It may be that the company expects these banks to adapt to changing regulatory requirements regarding crypto assets since they are FDIC-insured, unlike crypto banks.

Furthermore, the off-stage status of these banks gives BlockTower Capital a level of secrecy regarding their total assets. The company’s recent report concerning its private funds has indicated that their total assets value is about $940 million, but without knowing how the figures are divided among these banks, one cannot determine how secure the BlockTower Capital’s assets are.

In conclusion, BlockTower Capital’s recent reliance on two closed banks shows the complicated nature of finding the right asset custodians for crypto assets. However, it does raise some concerns as the choice leaves the company’s assets without proper disclosure or scrutiny. Therefore, the company may want to seek other transparent and insured custodians to assure their investors that their assets are secure.

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BlockTower Capital relies on closed banks for crypto asset management funds

BlockTower Capital used Silvergate and Signature Bank as asset custodians

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