Top 5 Fund Administrators Employed By Crypto Funds in August 2023
A fund administrator is an external, usually independent company that calculates the NAV (net asset value) for a fund portfolio on a regular basis. The NAV is required to price subscriptions and redemptions of investors. Together with a separate payment agent, they help facilitate any money flows to and from the fund. Fund administrators are also an additional safety mechanism in regulated investment vehicles to help avoid investment managers defrauding their investors. As fund managers typically cannot directly access all the portfolio’s holdings, the fund administrator is an independent party with checks and balances in place that safeguards investors’ money.
The choice of a fund administrator is not trivial for fund managers. Differences in expertise, jurisdictional coverage, KYC processes, ease of onboarding and offboarding of investors, experience handling crypto assets, and cost are all factors to keep in mind.
When it comes to the relevant expertise, crypto hedge funds find themselves severely constrained when choosing a fund administrator. Fund administrators often require crypto-specific pricing services for NAV calculations. Others are held back by the regulatory uncertainty around Bitcoin, Ether, and the cryptocurrency and token domain in general. Some otherwise established fund admins stay out of the crypto game entirely.
To get more specific, a fund administrator for a crypto fund needs to be capable of handling a number of topics. These include sufficient coverage of exchanges and OTC-desks, accounting for side letters and private investments, coverage of custodial solutions, coverage of blockchains, accounting for margin, futures, and options trading, use of DeFi/decentralized exchanges and staking.
The list below shows that some new or smaller fund admins were able to capitalize on the reluctance of TradFi fund solutions providers and fill this niche.
1. NAV Consulting
NAV Consulting is the market leader in terms of the number of crypto funds under administration. Its market share of 19.2% is relatively modest, considering that market for crypto custodians is much more concentrated on a few service providers.
One reason for this is that fund service companies such as NAV Consulting often do not have a truly global presence, or that there are national champions in a particular country.
NAV Consulting is active internationally, but their most relevant presence is in the Cayman Islands. The British Virgin Islands and, to a much lesser degree, Bermuda also play a role in their crypto fund client portfolio.
Outside of crypto, NAV Consulting has a large footprint as well, claiming USD 210bn assets under administration as per their website. [1.1]
2. Formidium, formerly Sudrania Fund Services
Formidium covers 11.7% of the crypto hedge funds that we have analyzed. Their main footprint for crypto asset managers is in the Cayman Islands, the British Virgin Islands, and Bermuda. Formidium, formerly known as Sundrania, rebranded in June 2022. [2.1]
The number two player only has USD 25bn assets under administration as per their website, putting them at a fraction of the NAV Consulting’s USD 210bn self-reported assets under administration. [2.2]
3. Trident Trust
Trident Trust, with a market share of 6.7%, mainly administers Cayman & BVI Funds. A unique twist to Trident’s offering is that they administer these funds out of a U.S-based office in Atlanta.
Trident Trust was originally established in 1978 and employs over 1,000 staff worldwide. They were one of the first administrators to provide services to crypto hedge funds. They have won a number of awards in the past for their digital asset services.
4. Apex Corporate Services
Apex Corporate Services is also mainly active in the Cayman Islands and has some presence in Switzerland. It achieves a market share of 5.8% in the crypto fund business.
In addition to fund administration, Apex also provides legal and entity formation services and even ESG rating services. Due to their broad offering, they claim to be a one-stop shop and a convenient solution for clients that require advisory from different angles.
Like the other administrators, Apex offers a wide range of locations.
Theorem Fund Services is used by crypto funds from the US and the British Virgin Islands, achieving an overall 5.0% market share.
The company prides itself on having ready-made setups with crypto exchanges and brokers. [5.1]
Theorem crossed the mark for USD 10bn assets under administration in 2021. [5.2] It is not only a smaller player in the comparison between crypto asset managers, but also smaller in the traditional funds business.
Conclusion & Outlook
As the list of crypto fund administrators shows, the market for fund administrators has not consolidated. Administrators that are successful in traditional fund management tend to be well-positioned for crypto fund management as well.
We expect NAV Consulting and Formidium to remain the administrators of choice for many crypto funds. An upcoming relevance gain of decentralized finance and decentralized exchanges will show whether the top players from today will be able to meet the demands of funds dealing with decentralized protocols. Fund administrators that can support stablecoin and other “in-kind” crypto payments may have an advantage, and our data shows that both NAV and Formidium administer some funds that accept crypto subscriptions and redemptions.
However, we see a common issue with a lot of fund administrators in the crypto fund space: NAVs are often reported up to 25 days after the end of the month. Even for hedge fund standards, this is quite slow. Many crypto funds are yearning for faster processing.
Funds seeking to change their administrator or to set up a new fund should keep the crypto-specific criteria in mind: jurisdictional coverage, coverage of exchanges and OTC desks, accounting for side letters and private investments, coverage of custodial solutions, coverage of blockchains, accounting of margin, futures, and options trading, use of DeFi/decentralized exchanges and staking.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as investment advice, endorsement, or recommendation. Consult with a qualified financial professional before making any investment decisions. Neither the authors nor 21e6 Capital shall be liable for any loss or damage arising from reliance on the information contained herein.
21e6 Capital is a Swiss investment advisor, connecting professional investors with optimal crypto investment products.
Please find more information about our authors on our homepage: 21e6.io
Jan Spörer is Due Diligence Manager at 21e6 and responsible for overseeing the content quality management of the 21e6 Crypto Fund Database.
Maximilian Bruckner is Head of Marketing & Sales at 21e6 Capital AG.
21e6 Crypto Fund Database, cryptofunds.21e6.io
[1.1] NAV Consulting’s assets under administration: https://www.navconsulting.net/about
[2.1] Formidium’s press release regarding their renaming (formerly Sudrania): https://formidium.com/Sudrania-fund-services-is-now-Formidium.html
[2.2] Formidium’s assets under administration: https://formidium.com/about-us.html
[3.1] Trident Trust’s data leak: https://www.icij.org/investigations/pandora-papers/icij-publishes-final-batch-of-pandora-papers-data-on-more-than-9000-offshore-companies-trusts-and-foundations/
[5.1] Theorem’s crypto-specific services: https://www.theoremfundservices.com/services/?service_id=229
 Theorem Fund Services’ assets under administration: https://www.prnewswire.com/news-releases/theorem-fund-services-passes-10-billion-usd-in-digital-assets-aua-301429180.html