As the Winklevoss twins attempt to get regulatory approval for their bitcoin exchange-traded fund, we now have another fund that revolves around the crypto-currency. According to FINalternatives, Coin Capital Management is launching the new fund this week. Managing Partner Samuel Cahn said they see the digital currency as “an exciting payment technology.”

Bitcoin index funds

Bitcoin hedge fund “fully dedicated”

This will be the first fund to hold the digital currency in “an institutional grade hedge fund using the same types of checks and balances that investors have come to expect,” according to Cahn. A family office is seeding the new hedge fund, which Cahn founded with his brothers Drew and Sigmund Sommer.

Cahn is an attorney who also has worked at the White Bay Group, serving in both an investment management advisory role and as counsel for the firm. He managed Combinations Capital Partners as well. Sigmund Sommer has been investing in, trading and mining bitcoin for years. In the past, he was an assistant to Aladdin Gaming’s chief technology officer. He was also a senior server engineer at Hello Networks. Drew Sommer has also been trading, mining and investing in bitcoin for some time.

How the bitcoin hedge fund will work

Cahn described their strategy for buying and holding the crypto-currency. He said it’s based on supply and demand. Since there will only ever be a certain amount of bitcoins in existence, the price of the digital currency will rise along with demand.

According to Cahn, the market is “really on the cusp of consumer adoption.” He noted that online retailer Overstock.com decided to start accepting bitcoin as payment starting this year. Also the Federal Election Commission ruled that the digital currency is an acceptable type of currency in which to make contributions to political campaigns.

Bitcoin fund explains security measures

Security has become a major issue for bitcoin over the last several months. Mt. Gox, once the world’s largest exchange for the crypto-currency, folded after hackers broke in and stole many of its bitcoins. Also Flexcoin and other companies have reported hacking attacks and thefts.

Cahn believes their system for storing the coins is very safe. He said they’re using “a multi-signature technology,” which means that it requires multiple parties to sign off on all transactions. He said this also means that investment managers can’t steal the funds, since a third party vendor must confirm all transactions.