Regulated Bitcoin investment product launched in South Africa

Multi-manager Sygnia has launched a Bitcoin investment product that tracks BlackRock’s iShares Bitcoin Trust ETF, sidestepping regulatory hurdles preventing the launch of a similar ETF in South Africa.

The Sygnia Life Bitcoin Plus Fund launched without much fanfare on 1 June 2025. It offers investors a way to allocate a portion of their portfolio to crypto without self-managing the risks of direct investments.

“No digital wallets, no exchange accounts — professional management handles everything while you access the digital asset revolution,” Sygnia stated.

It also uses derivatives to increase returns by adding income from South African money market investments, compared to holding overnight cash. This helps increase the overall return beyond what the underlying market provides.

The product is available through the Sygnia online platform to living annuity and retail investors via five-year sinking funds.

Sygnia said the fund employs portable alpha technology to deliver returns that could exceed the underlying iShares Bitcoin Trust (IBIT) performance.

Portable alpha refers to a strategy that involves investing in areas that have little to no correlation with the market, without taking on more risk.

“As a result of regulatory restrictions, no bitcoin funds are currently available to South African investors on the Johannesburg Stock Exchange (JSE),” Sygnia stated.

“The JSE has indicated that a listed cryptocurrency fund could become available by early 2026, potentially as an exchange-traded fund (ETF) or exchange-traded note (ETN).”

Sygnia explained that an ETF directly holds underlying assets, whereas an ETN is a debt instrument that replicates index performance.

“Sygnia has pioneered cryptocurrency investment options in South Africa, having previously attempted to launch crypto funds in 2018 and 2021,” the launch document for the fund stated.

“Both proposals were rejected by the JSE due to uncertainty around cryptocurrency regulations and unclear CISCA and Regulation 28 compliance issues,” Sygnia stated.

Sygnia’s co-head of investment, Kyle Hulett, previously told MyBroadband they were days away from launching a Bitcoin ETN in 2018, but were denied the listing.

However, the landscape began shifting in 2022 when cryptocurrency gained recognition as a financial product in South Africa. Despite this progress, several obstacles continue to complicate crypto fund development.

“South Africans can purchase overseas crypto using their R1 million annual single discretionary allowance or buy locally on exchanges like Luno,” Sygnia explained.

“However, financial service providers risk rapidly exhausting these allowances, creating operational challenges.”

Additionally, the South African Reserve Bank has not classified cryptocurrency as either an offshore or onshore asset, creating uncertainty for institutional investors.

Sygnia has sidestepped these hurdles by launching its new product that tracks BlackRock’s IBIT ETF.

“BlackRock’s IBIT, launched in January 2024, has become a phenomenal success story,” Sygnia stated.

“It accumulated over $17 billion in assets in its first year, representing approximately 1% of all bitcoin in circulation.”

IBIT is now the largest spot bitcoin ETF in the world and has already surpassed BlackRock’s Gold Trust, managing over $70 billion compared to gold’s $45 billion.

“While others continue to debate bitcoin, the smart money is already in position,” Sygnia said.

Crypto remains risky

While the Sygnia Life Bitcoin Plus Fund is regulated, the money manager has classified it as high risk and warned that cryptocurrency’s significant hazards remain.

“The fund’s returns are subject to extreme price volatility and the potential for loss, theft or compromise of private keys,” Sygnia warned.

“Investing in crypto comes with risks that include large-scale sales by major investors, security threats like breaches and hacking, negative sentiment among speculators and competition from central bank digital currencies and financial initiatives using blockchain technology.”

Sygnia also warned there could be no assurance that security procedures designed to protect the underlying digital assets would work as designed or safeguard them against all possible sources of theft, loss or damage.

“The strategy faces additional risks beyond these crypto-specific risks, including the risk that money market investments may underperform and the risk that the companies issuing derivatives may default,” said Sygnia.

“The former is mitigated by diversification and highly rated money market investments, while the latter is mitigated by regular mark to market of the positions.”

Sygnia warned these risks could result in partial or total capital loss. It charges an annual management fee on the Life Bitcoin Plus Fund of 1.20% per annum, calculated and accrued daily and payable monthly in arrears.