Business 25 April 2018

Gerald Fenech

BaFin-approved German hybrid fund combines crypto, real estate

As the cryptocurrency space continues to grow and expand, the latest venture by a German firm has been to invest in what it called a hybrid cryptocurrency and real estate fund. Munich-based BITREAL Capital GmBH has been granted authorization by the German Financial Supervisory Authority (BaFin) to market this fund—an intriguing development in the current market scenario, Finance Magnates reported.

Although cryptocurrency values have taken a beating in the last three months, there appears to be a recovery on the horizon with most of the major currencies soaring by well over 100% in April from their lows for the year. However, the real estate market has not registered any form of correction and is in a booming phase with values in the top city centres continuing to soar. The idea of a combined fund is quite interesting as it attempts to ride the wave of cryptocurrencies which are expected to continue rising in the next years together with real estate, which is always seen as a safe investment.

Founded in 2017, BITREAL is looking to specialise in what are termed special alternative investment funds (AIFs). According to the company, the BITREAL Real Estate Blockchain Opportunities Fund 1 (BREBCO 1) will be the first fund of its kind to combine cryptocurrencies and real estate—a combination that should see explosive growth in the short to medium term.

BREBCO’s strategy is to invest in the cryptocurrency market through blockchain technology and strategic investments in high market cap coins that are relatively stable although volatility still remains an issue. It also plans to invest in commercial real estate to generate an impressive 15% equity return annually. These real estate purchases are to be partially funded by bank loans from across 10 top economic regions in Germany. The fund is aiming for a seven-year lifetime and an equity volume of around $49 million.

The fund also offers to opportunity to investors to use cryptocurrencies such as BTC and Ethereum to purchase shares in the fund. They will also be able to withdraw their holdings in fiat or in any listed digital currency. The minimum investment volume for BREBCO 1 is set at €500,000 (US$612,000).

Boris Hardi, managing partner of BITREAL Capital GmbH, said BREBCO 1 is the answer to questions “as to how or in which virtual currencies, coins, and tokens can be sensibly invested in or how to take part in the blockchain technology market potential without the high volatility and risk of total loss.”

The BaFin has also provided clarity for ICOs after receiving a substantial number of inquiries regarding the legality of such offers. It said that ICO operators in Germany will be required to check exactly whether a regulated instrument or security is being dealt with in order to fulfill potential legal requirements without any loopholes.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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