1. A lack of regulation is risky.
Cryptocurrency is new, and its regulatory environment is immature. In order to mitigate your company’s risk in this uncertain environment, it is important to have proper insurance coverage in place. Be sure it includes coverage for regulatory inquiries and formal investigations, which are offered by Argo Pro’s Private Equity PROtectSM, a fully integrated policy with enhancements including third-party cyber coverage, executive protection coverage and non-indemnified limits for executives.
2. Be transparent in limited partner communications.
As the crypto space grows, funds may receive more scrutiny from limited partners monitoring the industry. As a result, the funds’ investment process may also receive more attention. Make sure your offering documents are clear on the funds’ investment strategy and fee structure.
3. Have proper valuation practices in place.
Part of being transparent is providing clear financial updates on investments to limited partners. Use a third-party valuation firm to validate the pricing of your portfolio – it’s the best way to foster confidence from all parties, which alleviates the challenges of pricing newer emerging industries.
4. Stay current.
Know what is going on in the regulatory environment and in the news. Pay attention to what is happening in what is, frankly, an unproven environment. In particular, follow the SEC’s guidance and comments in this area.