Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and Europe

35 Pages Posted: 19 Jul 2017

See all articles by Wulf A. Kaal

Wulf A. Kaal

University of St. Thomas, Minnesota - School of Law

Marco Dell'Erba

New York University School of Law; Labex ReFi

Date Written: July 14, 2017

Abstract

The use of blockchain technology in private investment funds is proliferating. Using a dataset of private investment fund advisers that utilize blockchain technology (N=120), we explore the core commonalities and differences in the use of blockchain technology between European and American fund advisers.

The data analysis in this article suggests that the market for private investment funds who invest in- and utilize blockchain technology appears to be near equally divided between the US and the EU, with Russia and China playing significant roles. We interpret parts of the data as suggesting that larger private investment fund advisers in Europe may be more willing to make the required investments into blockchain infrastructure whereas in the US the legacy systems utilized by larger private investment fund advisers create barriers to entry for larger advisers to invest in- and utilize blockchain technology. Larger European fund advisers use the technology predominantly to invest in- and secure crypto assets whereas American fund advisers appear to use the smart contracting features of the technology more frequently to build more advanced crypto businesses and business structures via blockchain technology.

While the overall proportion of strategies of private investment funds that utilize modern technologies, including blockchain technology, is still small, as the private investment fund industry’s use of blockchain technology grows and accelerates, the innovation benefits for private investment funds and their clients promise lasting change for the industry.

Keywords: Blockchain, Distributed Ledger Technology, Artificial Intelligence, Machine Learning, Data Science, Data Scientists, Meta Models, Innovation, Entrepreneur, Startup, Big Data, Private Investment Funds, Hedge Funds, Private Equity, Diversification, Compliance, Optimization, Efficiency

JEL Classification: K20, K23, K32, L43, L5, O31, O32

Suggested Citation

Kaal, Wulf A. and Dell'Erba, Marco, Blockchain Innovation in Private Investment Funds - A Comparative Analysis of the United States and Europe (July 14, 2017). U of St. Thomas (Minnesota) Legal Studies Research Paper No. 17-20. Available at SSRN: https://ssrn.com/abstract=3002908 or http://dx.doi.org/10.2139/ssrn.3002908

Wulf A. Kaal (Contact Author)

University of St. Thomas, Minnesota - School of Law ( email )

MSL 400, 1000 La Salle Avenue
Minneapolis, MN Minnesota 55403-2005
United States

Marco Dell'Erba

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012
United States

Labex ReFi ( email )

79 avenue de la République
Paris, 75011
France

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