Lisbon-based investment firm FundBox together with trading platform Kvarn X is launching the KvarnPortugal Fund, a first-of-its-kind crypto product based on the CoinDesk 20 index that helps people who invest at least 500,000 euros in the fund easily establish residency there.
Here, Jason Dominic, the co-founder of KvarnPortugal, and Anders Bjorkman, an asset manager at the fund, discuss why many high-net worth individuals are flocking to Portugal now, and how their new fund makes it simple for them to create a back-up plan for today’s unpredictable world.
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Question: Can you tell us what the genesis of this product was?
Jason: We realized that there’s this big evolution going on in Portugal around fintech and crypto and our fund also is eligible for the “Portuguese Golden Visa,” which grants residency rights to people who invest at least 500,000 euros in the country. So we thought, wouldn’t it be great if somebody could actually marry the two together and be able to appeal to this new market that’s emerging? So if you want to invest in bitcoin and the CoinDesk 20 index, we combined it into a unique fund where you put in the minimum amount for a Golden Visa, and then because it’s 100 percent invested through a Portuguese company, it is Golden Visa eligible.
We partnered with the CoinDesk 20 index because that gives you a nice diverse spread. There’s a huge demand now for Portuguese residency via such an investment product, and the U.S. is the number one market in the world for Portuguese Golden Visas. And there’s also synergies with that in terms of the growth in crypto, especially with what’s been going on politically in America. Also in Asia, you’ve got China, which is the second-biggest market for Portuguese Golden Visas. Hong Kong also just officially embraced crypto with the massively attended CoinDesk Consensus event there. The financial secretary did an opening speech welcoming crypto businesses into the city, and in his new budget just announced, brought in new policies to achieve this. Hong Kong is expected to be a major hub for crypto assets over the next few years.
Question: What’s so attractive about Portugal right now?
Jason: In the last five to six years, Portugal has essentially become a Latin Switzerland. There’s been a real evolution of wealth moving into the country, along with growing entrepreneurship. And that’s to do with there being a restructuring of the economy post economic crisis, in which the government brought in all these new tax reforms and made it tax-free for people for ten years on certain overseas income, and made investments like crypto completely tax-free in many instances. So there’s a huge migration of wealth going on globally and Portugal is one of those main hubs, in addition to Dubai.
Anders: There’s also a thriving crypto community here — a lot of Meetups, projects, etc and a lot of people involved in crypto around the Lisbon area. It’s the best place for crypto in all of Europe, if you ask me.
Jason: The thing about ultra high net worth folks is they tend to need mobility. And if you look at how this product works, they only have to actually be in Portugal for 35 days over the course of five years, and then they’ll be eligible for permanent residency or a passport. It’s all blended into one product and it’s tax free, which is what they always look for. It’s for people who want to have a Plan B, or they want to have another residency without too many strings.
Question: Why are many affluent people looking to establish residency elsewhere these days?
Jason: This year is shaping up to be a record year for wealth migration. The latest studies expect about 142,000 ultra high net worth individuals to relocate out of mainly the U.S., China, the U.K., Brazil, India, South Africa and Vietnam.
The reasons why are a mixture of things. One, there’s all this global instability, and it’s similar to how wealthy people used to have holiday homes; now they want to have a second passport option for the family. Also, maybe their governments are becoming very tax heavy, like what’s just happened in the U.K. In the last few months, for example, over 10,000 multi-millionaires have left the U.K. mainly because of the tax regime changes with the Labour government. In China, it has to do with geopolitical shifts and the desire to diversify into other assets. With Covid and the lockdown that went on there for almost two years, a lot of ultra high net worth individuals in China want to have the option, if it happens again, to be able to get on a plane and go to Europe and not have to worry about getting a visa.
In the U.S., it’s to do with what’s been going on politically because things have become so polarized. People just want to have a safe exit strategy if they need one. So it’s basically to do with what’s going on globally — the world’s just become way more unpredictable and unstable. Portugal is now a well established safe haven.
Question: How does FundBox, the manager of the KvarnPortugal Fund, differentiate itself from its rival asset managers?We’re very careful with onboarding clients. We make sure that everything’s done properly with due diligence, following all the regulations of the Portuguese regulator. It doesn’t matter where you’re from and how much money you’ve got — if you don’t fit the legal criteria, then you’re simply not allowed to invest. There is a big team. There’s about 33 people in the office and it’s a multidisciplinary company. So we have lawyers, compliance officers, the onboarding team, etc. in addition to the investment managers.
Question: Do you have to be a Golden Visa candidate to invest in your fund?No, the fund is not just open to ultra high net worth individuals. The minimum investment is 100,000 euros. So it’s run similar to an ETF like BlackRock’s, for example, where you can put in lower amounts. And if you want to just sit there and have your crypto investment fully managed, then it’s an easy way to do that.
For more information visit: https://www.kvarnportugal.com/.
Authors’ views and opinions are their own and not associated with CoinDesk Indices. The interview was conducted by CoinDesk Indices and is not associated with CoinDesk editorial.
