Discovery Invest launches Bitcoin fund 

Discovery Invest has launched its own Bitcoin Fund as part of its tax-efficient endowment policy, with its shared-value structure that gives a 20% boost to any money in the fund.

The Discovery Bitcoin Fund will give South African investors rand-denominated exposure to BlackRock’s fastest-growing Bitcoin exchange-traded fund (ETF).

CEO Rabson said Discovery Invest added the Bitcoin Fund because it is always looking for opportunities to bring the best that the investment world has to offer to South Africa.

Following the approval of Bitcoin ETFs by the US Securities Exchange Commission, they have become a viable alternative asset for investing a small amount of an investor’s portfolio without the need for direct ownership of actual Bitcoins.

The Discovery Bitcoin Fund is immediately available to Discovery Invest clients.

This appears to be an opportune time to launch such a fund in South Africa, with demand for crypto growing strongly over the past few years.

Demand has been driven, in part, by greater regulatory certainty from the Financial Sector Conduct Authority (FSCA), which has resulted in traditional financial service providers offering crypto-related products.

In October 2022, the FSCA declared cryptocurrencies a financial product, allowing crypto trading platforms to become licenced and placing them under its regulatory purview.

It has since moved to licence various crypto exchanges and incorporate them into its existing regulatory framework.

While crypto was still unregulated, it was specifically excluded from investments by pension funds and other institutions.

However, regulation of the sector opens the door to institutional investment – a much greater pool of capital than retail investors.

Research from the FSCA showed that over 5.8 million South Africans own a crypto asset, meaning that nearly 10% of the country’s population owns some form of cryptocurrency. 

The study also showed that unbacked crypto assets, such as Bitcoin, are the most popular type in South Africa, mimicking global trends. 

This shows that most people engage with crypto for speculative purposes and invest with the intention of making a quick return and exiting the space.

It also revealed that the vast majority of crypto trading platforms used by South Africans are based within the country. 

This makes it easy for the FSCA to regulate, with about 45% of all crypto platforms being based in Cape Town alone.

Interestingly, most businesses that applied for licences in South Africa to offer crypto services are registered financial services providers.