New crypto ideas: SAFTs and private sales ()

Luxembourg, 21 June 2022 – The massive fall in the price of cryptocurrencies once again draws the attention of many investors to the opportunities and risks of cryptocurrencies. Just buying more may be a good tactic, but it does not change the basic risk-reward ratio. New products go much deeper, sometimes investing in cryptocurrencies at very early stages and diversifying investments. “Some things are more reminiscent of the approach to venture capital funds,” says Daniel Knoblach, a board member at Fair Alpha. “This enables new strategies with a high potential for return at the same time.”

The crypto winter still has Bitcoin & Co. in its grip. “Sharp price declines are not unusual for cryptocurrencies and are part of the risk profile,” says Knoblach. However, it is currently being shown that cryptocurrencies as an asset class are very similar to tech stocks, for example. “Both are reacting very strongly to the market’s perception of risk, so both asset classes are currently suffering,” says Knoblach. But there are many other parallels as well.

“Ultimately, many tokens or coins can be seen as start-ups,” says Knoblach. “Because just like with young companies, there is an idea behind every crypto project and ideally also an advantage.” New business models are constantly being created, some of which are based solely on blockchain. Similar to start-ups, the same goes for crypto projects: Early access can be very rewarding, but the risk of suffering a total loss is also greatest.

“Here again, it pays to spread the risk,” says Knoblach. “It’s also the path that project promoters are currently taking.” Money is collected from investors through securitization. This is then invested in young, new crypto projects. SAFTs, for example so-called “Simple Agreement for Future Tokens”. Ultimately, it is business plans that will only prove in the future whether they work. Tokens have not even been created yet, it is a venture investment in cryptocurrencies.

The same goes for private sales. Tokens are issued only to a small group of investors. The chances of above-average value increases are high if the underlying project works and achieves a breakthrough. “These investments are very similar to the classic venture capital market,” says Knoblach. “Only on a cryptocurrency basis and with the corresponding premiums for risk and return.”

It may be optimal to make such strategies in the form of a securitization. “Compared to, for example, an investment fund, time to market is much shorter,” says Knoblach. “They are detained, transparent and subject to an established regulatory securitization law – at least if they are set up in a place like Luxembourg.”

Such strategies are often supplemented by relatively safer crypto investments, for example by investing in parts of the cryptocurrencies or buying undervalued cryptocurrencies. “This requires a great deal of expertise,” Knoblach says. “By launching a product, significantly more investors can benefit from this expertise than if they tried it on their own.”

Through its subsidiaries, Fair Alpha offers financial market solutions to (semi-) institutional investors and asset managers. Investment ideas and trading strategies are converted into investable and safe custodian securities. In addition, innovative approaches are pursued that focus on the creation and issuance of digital assets (tokens) stored in specific wallets. With the help of tailor-made issuance vehicles, structures are created where issuer risk can be ruled out. Fair Alpha takes over the entire value-creating process from product setup to administration and ongoing life cycle management.


The author only provides information here, there is no investment advice, recommendation or invitation to buy or sell investments. Investment transactions involve risk, so it is advisable to consult professional investment advisers. In this context, we would like to point out that investing in stocks (including hot stocks or penny stocks), certificates, funds or warrants is sometimes associated with significant risk. A total loss of invested capital can not be ruled out.

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