How it works
The detail behind the Quay Cove model: where the yield comes from, who holds the assets, how you get liquidity, and how it is reported and taxed.
Digital asset growth
Both Quay Cove funds are built on the same idea: hold the underlying digital asset for the long term, and put it to work in the meantime.
Combining the two is what gives each fund a target return above its respective S&P index. Rewards are earned in the same asset, so they compound the underlying holding rather than sitting in cash.
Where the yield comes from
Staking is how proof-of-stake networks pay the participants who help secure them. Capital is committed to the network, and the network pays rewards for that commitment. It is not lending, and it does not involve handing the asset to a counterparty to trade with.
Ethereum (QCEG). ETH is staked into the Ethereum network's own consensus mechanism through the fund's staking arrangements. Rewards accrue in ETH.
Bitcoin (QCBG). Bitcoin does not have native staking in the Ethereum sense. The Bitcoin Growth Fund uses the Babylon protocol, which locks Bitcoin into a Taproot-script arrangement on the native Bitcoin network — the Bitcoin never leaves the Bitcoin chain, and is never wrapped or bridged to another network.
In both cases, locking and unlocking the assets is not a sale or a purchase. The fund's holding is unchanged throughout.
Custody and control
The fund's digital assets are held by an independent custody trustee on trust for the fund, in a segregated wallet that the fund controls. Assets are not commingled with the manager's own holdings, and the manager cannot move them unilaterally.
The fund retains ownership and control of its assets throughout the staking period. That separation — manager, custodian, auditor — is the same structure investors expect from any regulated managed fund, applied to digital assets.
The simplicity of a fund
Investors subscribe for units in the fund the same way they would for any wholesale managed fund. There is no wallet to set up, no seed phrase to protect, no exchange account to open, and no on-chain transaction to get wrong.
Everything that makes direct digital asset ownership difficult sits inside the fund: key management, staking operations, counterparty selection, valuation, tax reporting and audit. If you know how to invest in a fund, you know how to invest with Quay Cove.
Liquidity
Units are priced on the underlying digital asset holdings, and the funds are designed to give investors regular access to liquidity rather than locking capital up for a fixed multi-year term.
A buy/sell spread applies on entry and exit. The spread exists so that transaction costs fall on the investor transacting, rather than on the investors who stay in the fund. Current spreads and the applicable redemption terms are set out in each fund's Investment Memorandum.
Reporting and audit
Quay Cove funds adhere to robust reporting standards and are audited by Big 4 accounting firms. Investors receive periodic reporting on holdings, valuations and staking rewards.
Quay Cove Investment Management Limited is registered as a Financial Services Provider under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 of New Zealand, registration number FSP1007544.
Tax and the PIE regime
The Quay Cove ETH Growth Fund is a New Zealand Portfolio Investment Entity (PIE). Under the PIE regime, income is attributed to investors and taxed at their Prescribed Investor Rate, which is capped below the top personal income tax rate.
The Bitcoin Growth Fund intends to elect into the PIE regime; its structure is still to be confirmed.
This is a general description of the regime, not tax advice. Tax treatment depends on your own circumstances — please take advice from your own adviser.
Risk
Both funds sit at 7 out of 7 on the standard risk indicator — the highest band. Digital asset prices are volatile and can fall sharply and quickly. Staking carries its own risks, including protocol and smart contract risk, validator penalties, and periods during which assets cannot immediately be unstaked.
The funds are offered to wholesale investors only. Nothing on this page is a recommendation or an offer. Please read the relevant Investment Memorandum in full before investing.
Request an Investment Memorandum, or talk to the team directly.