DrawBridge Lending, d/b/a DBL Digital, a digital asset lending, borrowing and investment management company, has secured its first major investment in its new bitcoin investment product ‘DBL Digital Series Fund’.
While investments in cryptocurrencies and derivatives can present high risks that are not suitable for many investors, the DBL Digital Series Fund uses derivative options strategies to offer qualified investors the opportunity to leverage their bitcoin holdings to produce potential returns while their assets remain in cold storage at a qualified and insured custodian. The fund also permits the investor to select downside protection as high as 50% of the value of the investor’s bitcoin holdings.
“By capturing market volatility, the DBL Digital Series Fund allows investors to receive a potential return on their bitcoin, regardless of the price movement of the underlying asset.” Jason Urban, CEO at DBL Digital. “This investment validates that investors have a strong appetite for a yield earning product like ours that also provides downside protection.”
The fund is organized as a Delaware Series LLC in which each investor can have a “pool of one” with its own EIN number, administered and audited by experienced industry firms. Investors can deposit their Bitcoin holdings in a free cold wallet with an insured custodian. Unlike other bitcoin investment products, the investors’ digital assets never leave the wallet during the investment tenor.
“What investors fail to realize is the current bitcoin lending landscape poses unforeseen risks,” says Mr. Urban. “We see a giant credit risk in the space with coins being re-hypothecated to unknown, or in some cases, weak counterparties. Additionally, we firmly believe the solution we’ve brought to the market is more robust, more elegant, and plainly speaking, more secure. Putting investor protections into the fund is the foremost principle at DBL Digital.”
The DBL Digital Series Fund provides an opportunity for qualified persons to invest in the digital asset space under the steady guidance of veteran derivatives specialists without having to directly navigate the numerous hassles associated with direct investments in the cryptocurrency markets. Of course, no investment in derivatives is without a high degree of risk and is unsuitable for many investors. The volatile nature of the underlying bitcoin markets has the potential to cause unforeseen and detrimental consequences, including the insolvency of derivative transaction counterparties. In addition, there is a lack of centralized pricing sources and markets have a tendency to be opaque.
To be eligible to invest in the fund, investors will have to be both accredited investors and eligible contract participants (ECPs), meaning they have a net worth of at least $1,000,000. The minimum investment in the DBL Digital Series Fund will be $1,000,000, which can be met with the aggregation of multiple investors.
“This investment is a great opportunity for us,” said Tom Anderson, President and Chairman of the Board of DBL Digital. “We aim to provide innovative solutions that meet the demand of investors who want a product that delivers yield and secures their coin.”
DISCLAIMER: HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. DRAWBRIDGE LENDING, LLC HAS HAD LITTLE OR NO EXPERIENCE IN TRADING ACTUAL ACCOUNTS FOR ITSELF OF FOR CUSTOMERS. BECAUSE THERE ARE (LITTLE OR) NO ACTUAL TRADING RESULTS TO COMPARE TO THE HYPOTHETICAL RESULTS, CUSTOMERS SHOULD BE PARTICULARLY WARY OF PLACING UNDUE RELIANCE ON THESE HYPOTHETICAL PERFORMANCE RESULTS.
VIRTUAL CURRENCY DISCLOSURE: DRAWBRIDGE LENDING IS A MEMBER OF THE NATIONAL FUTURES ASSOCIATION (NFA) AND IS SUBJECT TO NFA’S REGULATORY OVERSIGHT AND EXAMINATIONS. DRAWBRIDGE LENDING HAS ENGAGED OR MAY ENGAGE IN UNDERLYING OR SPOT VIRTUAL CURRENCY TRANSACTIONS IN ITS COMMODITY POOL. ALTHOUGH NFA HAS JURISDICTION OVER DRAWBRIDGE LENDING AND ITS COMMODITY POOL, YOU SHOULD BE AWARE THAT NFA DOES NOT HAVE REGULATORY OVERSIGHT AUTHORITY FOR UNDERLYING OR SPOT MARKET VIRTUAL CURRENCY PRODUCTS OR TRANSACTIONS OR VIRTUAL CURRENCY EXCHANGES, CUSTODIANS OR MARKETS. YOU SHOULD ALSO BE AWARE THAT GIVEN CERTAIN MATERIAL CHARACTERISTICS OF THESE PRODUCTS, INCLUDING LACK OF A CENTRALIZED PRICING SOURCE AND THE OPAQUE NATURE OF THE VIRTUAL CURRENCY MARKET, THERE CURRENTLY IS NO SOUND OR ACCEPTABLE PRACTICE FOR NFA TO ADEQUATELY VERIFY THE OWNERSHIP AND CONTROL OF A VIRTUAL CURRENCY OR THE VALUATION ATTRIBUTED TO A VIRTUAL CURRENCY BY DRAWBRIDGE LENDING. ONE OR MORE JURISDICTIONS MAY, IN THE FUTURE, ADOPT LAWS, REGULATIONS OR DIRECTIVES THAT AFFECT VIRTUAL CURRENCY NETWORKS AND THEIR USERS. SUCH LAWS, REGULATIONS OR DIRECTIVES MAY IMPACT THE PRICE OF VIRTUAL CURRENCIES AND THEIR ACCEPTANCE BY USERS, MERCHANTS AND SERVICE PROVIDERS. THE RELATIVELY NEW AND RAPIDLY EVOLVING TECHNOLOGY UNDERLYING VIRTUAL CURRENCIES INTRODUCES UNIQUE RISKS. FOR EXAMPLE, A UNIQUE PRIVATE KEY IS REQUIRED TO ACCESS, USE OR TRANSFER A VIRTUAL CURRENCY ON A BLOCKCHAIN OR DISTRIBUTED LEDGER. THE LOSS, THEFT OR DESTRUCTION OF A PRIVATE KEY MAY RESULT IN AN IRREVERSIBLE LOSS. THE ABILITY TO PARTICIPATE IN FORKS COULD ALSO HAVE IMPLICATIONS FOR INVESTORS. FOR EXAMPLE, A MARKET PARTICIPANT HOLDING A VIRTUAL CURRENCY POSITION THROUGH A VIRTUAL CURRENCY EXCHANGE MAY BE ADVERSELY IMPACTED IF THE EXCHANGE DOES NOT ALLOW ITS CUSTOMERS TO PARTICIPATE IN A FORK THAT CREATES A NEW PRODUCT. MANY VIRTUAL CURRENCIES ALLOW MARKET PARTICIPANTS TO OFFER MINERS (I.E., PARTIES THAT PROCESS TRANSACTIONS AND RECORD THEM ON A BLOCKCHAIN OR DISTRIBUTED LEDGER) A FEE. WHILE NOT MANDATORY, A FEE IS GENERALLY NECESSARY TO ENSURE THAT A TRANSACTION IS PROMPTLY RECORDED ON A BLOCKCHAIN OR DISTRIBUTED LEDGER. THE AMOUNTS OF THESE FEES ARE SUBJECT TO MARKET FORCES AND IT IS POSSIBLE THAT THE FEES COULD INCREASE SUBSTANTIALLY DURING A PERIOD OF STRESS. IN ADDITION, VIRTUAL CURRENCY EXCHANGES, WALLET PROVIDERS AND OTHER CUSTODIANS MAY CHARGE HIGH FEES RELATIVE TO CUSTODIANS IN MANY OTHER FINANCIAL MARKETS.
About DrawBridge Lending:
DrawBridge Lending (DBL) initiates USD loans secured by crypto assets. DBL is a licensed lender and is able to provide commercial loans in 49 states and Washington D.C. In addition, DBL is a registered Commodity Trading Advisor (CTA) and Commodity Pool Operator (CPO) with the NFA. DrawBridge Lending uses both a qualified and insured custodian and advanced risk management strategies to protect borrower assets and lender capital. Learn more about its products, company and team at drawbridgelending.com.