Cryptocurrency accounting and data processing company Lukka has joined fund admin Theorem Fund Services to offer daily net asset value reporting capabilities to digital assets index fund Hashdex.
Based out in New York, Lukka invented the first crypto tax calculator and is the first date services company to help monitor fund performances and prepare auditable financial statements for cryptocurrency assets on a day-to-day basis, said Jake Benson, Lukka CEO.
“In a super volatile market, having daily liquidity is really advantageous,” Benson said, adding same-day reporting provides enhanced protection for investors, unlike monthly NAV reporting, which is the standard practice in the industry.
Lukka is currently testing out the new offering on the Hashdex Digital Assets Index Fund (HDAI) –a passive fund that follows its own index of 13 digital assets, including 75.5% bitcoin and 10.15% ethereum.
The new service aims to reduce the timeframe of reporting process. It would also be able to price and audit fundamental assets in an investment vehicle more accurately due to their innovative technology, added Benson.
According to Benson, there are currently two key processes that challenge fund managers in evaluating digital assets, including data collection from a range of venues and data normalization.
“In the crypto industry, getting transactional data is a pretty intensive exercise,” Benson said.
Digital assets venues, starting from cryptocurrency exchanges to crypto wallets, OTC desks and blockchains, require different data capture processes.
“We have an entire team of technologists and quality control just focused on maintaining connectors to all the different transactional venues to assemble the data,” he added.
“When we’re aggregating data, it’s not just pulling down a fix fee from prime brokers we are managing 30 to 40 different connectors.”
Another challenge for the industry is normalizing cryptocurrency data. That’s because there is no standard identifier in the industry yet, according to Benson, noting his company has developed reference data to solve the puzzle for corporate investors.
“I think everybody in the industry should be excited about this because it’s just a representative milestone of the industry growing up,” Benson said.
Of course, the crypto industry can’t wait to implement same-day NAV reporting.
“Same-day NAV reporting is definitely a step in the right direction for not only launching funds, but also having investors be comfortable with buying them,” said Kostya Etus, portfolio manager at CLS Investments.