10 questions crypto investor should ask a management company

Mine Corporation
4 min readFeb 10, 2020

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Investing is always a not easy mission, and it’s doubly difficult if it’s about digital asset investment.

You can’t just sign papers, transfer money to the management company or fund and get numb waiting for payments. You’ll have to keep abreast of the news, follow your company’s progress and keeping in touch with it always. Here are a few tips every investor should ask, striving not only to return his investments but also to get stable passive income.

1. For how long the company is operational?

Cryptocurrencies and blockchain is a young industry, there are no companies with a 20-year history. Any company founded yesterday should be avoided of course. The detailed history and 2–3 year history documents are best suited.

It’s also worth to pay attention to companies with giant & impressive ‘History’ web-site section, and the partners list including the globally known names or even possibly Elon Musk. Surely, it deserves to be mistrusted and double-checked.

2. Does it’s activity is regulated by the financial authorities or state? Does it pass the audit?

The investor always associates reliability with strict law compliance. Therefore, following the regulatory standards of a particular jurisdiction will be a significant advantage for the company that you choose to invest in.

At the same time, the company needs to be also passed financial audits by independent appraisers regularly, and its results were publicly available.

3. Does the company implement KYC / AML procedures? What is the way of due diligence?

Another important question to ask is whether the company is passing due diligence procedure, which involves the assessment of investment risks and investment objects, as well as its comprehensive financial condition and market position check. The same applies to KYC / AML procedures, which are becoming more widespread year after year.

At the same time, those management companies and funds that were caught in hiding the results of such inspections, or simply didn’t pass it, should be alarmed.

4. Does the company show steady alpha (does it outperform the profitability of benchmark BTC investing)?

Perhaps the most important question for the investor is the fund or the management company’s profitability. Yearly, half-yearly, quarterly, monthly and weekly profitability reports should be available for the client on demand. The fact of refusing to provide such reports says a lot. It’s worth to pay attention to whether the company’s profitability exceeds the return on BTC investment for the specified period.

5. What is the way of the customer’s digital assets stored?

It’s also worth checking how the company is going to store your assets while they are in management. In this case, companies using cold storage, for example, Ledger, or those who use services of custodial services market’s leaders are more preferable.

6. What risk management policies are applied?

In the modern world, with it’s growing chaos, risk management comes to the fore, and the risk management department directly involved in calculating the consequences of possible trader’s mistakes becomes almost the main company unit. It’s worthwhile to find out what risk management policies are applied by the fund (or management company) and what specific tools are used to protect your investments.

7. What strategy is used to hedge open positions?

Traditional strategies, advanced strategies, trading bots — the risk management tools the company uses are extremely important. At the same time, in the case, there is no information about it neither in the company’s ad nor in client’s agreement, and the investment manager doesn’t mention it also, this will be a direct indication the company will deal with client assets in bad faith and there is a risk of pouring money down the drain ‘drain’.

8. What is the current company’s AUM size (amount of money under the management)?

The amount of capital under the management directly indicates the company’s quality. The higher it is, the more retail and institutional clients trust it their assets. In the long run, such a company is less likely to drown, which means your chances of making a profit is increasing.

9. Does the company have a lock-up period (the period after which the investor got the opportunity to withdraw profits/investment body)?

Some funds have the so-called ‘long lock-up’, which implies that profits can be withdrawn no earlier than after a year. If it’s important for you to be able to receive investments monthly, or, if necessary, to withdraw assets out of the company and terminate the contract any time, you should pay attention to the lock-up terms.

10. Does the company accept under the management only the fiat assets or cryptocurrency also?

The asset transfer method is also matters. Can you make the cheep bank transfer, or will you need to bring the box of cash to Switzerland or Malta? How much will be the cryptocurrency transfer fee? All these questions should be asked before you decide to cooperate with the company and sign a loan agreement.

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