Crypto Asset Manager opens in Zurich
Portal is looking for Swiss family offices, banks and private investors to partner with.
BY SARAH PRAETORIUS
Digital asset manager Portal has opened a new office in Zuirch, Citywire has learned
Portal launched its first Swiss branch at the start of June, from which it will serve clients from Switzerland and across Europe. It is now looking for Swiss family offices, banks and private investors to partner with.
Portal manages three funds in the digital asset and cryptocurrency space:
Portal Digital, a fund of digital hedge funds.
Horizon Index, which contains 25 different tokens.
Radiance Global, a multi-strategy hedge fund focused on fundamental digital asset investing.
The firm, which was initially drawn to Zug’s crypto valley, believes Switzerland is rapidly becoming a major centre for decentralised finance.
‘Switzerland provides a real layer of legitimacy to the crypto industry,’ said Portal’s chief investment officer Mark Witten.
‘The Swiss are doing very smart things in terms of working with developers, regulators and banks to come up with a decent product.’
One attractive element of Switzerland for international cryptocurrency ventures is its regulator.
‘Finma is an excellent regulator,’ said Witten. ‘It is probably one of the most efficient regulators in the world. It’s very thorough and hands-on. It is quite strict, which is a good thing. This industry in particular needs regulation.’
Portal has dealt with authorities in countries including Australia, the UK and the US, and finds Finma constructive rather than antagonistic.
‘The US owns half of the investment world; it’s not an easy space for crypto,’ said Witten. ‘We’ve seen it with underlying fund managers. Many of them are opening offices in other locations to pre-empt potential harassment from the SEC [Securities and Exchange Commission].’
In fact, Portal sees the crypto centre of gravity shifting towards Europe. It also believes the appetite for crypto is growing exponentially.
It pointed to a study by Crypto.com that found there was a 39% increase in global cryptocurrency owners in 2022, to 425 million, despite a slump in the price of the likes of bitcoin.
‘It’s a rapidly growing industry,’ said Portal CEO Deryck Graham. ‘The adoption rate of this industry is tracking in line with the adoption rate of the internet in the late 90s, early 2000s.’
The influx of users seems to be driven by developing countries, which lack sophisticated banking systems and are opting for digital currencies as an alternative.
Portal said the company is in close communication with many well-known Swiss private banks. They have told him that onboarding onto crypto platforms is easier in a bear market as they have more time, whereas when the bull market comes, the bank needs to be ready.
Some players are more sceptical of the digital investment universe, especially following the collapse of crypto exchange FTX and lending protocols Terra and Celsius last year.
While there was an initial knock-on effect after the crypto fallout, similar to that of Lehman Brothers in 2008, Portal believes the crypto ecosystem has survived and may be flourishing.
Across Portal’s total fund assets, it has lost just over 1% on exposure to Terra and 2.5% from FTX exposure. Portal’s drawdowns peaked at 10% last November, which it said compared favourably with other crypto fund providers.
‘FTX was a deliberate balance sheet fraud as the FTX exchange was using another entity, Alameda, to hide and launder money. It’s a classic sort of Ponzi scheme,’ said Witten.
‘The best way to avoid this is to manage your counterparty risk. You can’t have any more than 15-20% exposure to any one exchange.’
He added that losses were limited by adjusting to inflation and macroeconomic concerns.
He said Portal takes time to review managers and improve the operations side of its business. It only invests in funds it deems to be institutional grade. Such strategies must have a portfolio manager domiciled in a recognised regulated jurisdiction, independent third-party administrators and auditors, as well as relevant insurance, among other criteria.
Portal said taking such precautions makes it easier for Swiss banks and wealth managers to invest in cryptocurrencies.
Over one year, the Portal Digital fund has returned -13.8%, compared with 14.4% for bitcoin and -19.7% for the Crypto Currency Index 30, which tracks the 30 largest cryptocurrencies by market capitalisation. Since inception in 2020, the fund has returned 89.4%, compared with 154.7% for bitcoin and 53.4% for the Crypto Currency Index 30.