Meanwhile Advisors, a crypto startup backed by the American entrepreneur Sam Altman, has 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 targeting an additional 5% yield denominated in the cryptocurrency.
Bitcoin Rally Sparks Launch Of Meanwhile Advisors Fund
According to a report by The Block, Meanwhile Advisors has launched the fund as Bitcoin continues its recent rally, with prices currently falling from the $44,000 level down to the $43,200 mark.
Zac Townsend, the co-founder and CEO of Meanwhile Group, stated that the belief is that Bitcoin will appreciate significantly in the future, and the fund offers investors a unique opportunity to increase their exposure to digital assets.
The Meanwhile BTC Private Credit Fund adopts a single-close, closed-end structure. Participating limited partners (LPs) will contribute US dollars to the fund, which will be immediately converted to Bitcoin following the single close.
Meanwhile will lend this BTC to borrowers to generate the targeted 5% return in Bitcoin. This structure allows LPs to accumulate more Bitcoin if its price appreciates during the fund’s lifecycle without requiring additional principal investment.
Townsend mentioned that the minimum investment amount per LP is $250,000, with no maximum limit. The fund’s investment period spans three years, followed by a four-year harvest period, resulting in a total term of seven years.
However, capital is returned to investors during harvest, meaning a significant portion of the invested capital may be returned well before the seven-year mark.
Innovative Fee Approach?
Per the report, the Meanwhile BTC Private Credit Fund charges a 2% management fee and a 20% carried 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 substantial price appreciation, Meanwhile does not benefit from the price appreciation itself but rather from generating more Bitcoin for the LPs.
Addressing concerns about risk management, Townsend highlighted that the closed structure of the fund eliminates the risk of a “bank run” scenario that can lead to insolvency. Moreover, the fund focuses on making conservative loans to “creditworthy institutional borrowers”, mitigating risks associated with lending to retail investors at higher rates.
The Block also reported that Anchorage Digital serves as the fund’s custodian. Meanwhile Group’s insurance unit has previously launched a Bitcoin-denominated life insurance policy, and Townsend mentioned plans to introduce an accidental death coverage policy in Bitcoin as well.
When writing, the leading cryptocurrency in the market is trading at $43,200, marking a decrease of nearly 2% within the last 24 hours. This decline follows an unsuccessful attempt to solidify its position above the significant $44,000 milestone.
Nevertheless, Bitcoin has managed to maintain a 14% increase over the past seven days and is currently holding strong at the support level of $43,000, as it sets its sights on achieving a new annual peak.
Featured image from iStock, chart from TradingView.com