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The Implications of Same-Day NAV Reporting for Digital Assets

The Implications of Same-Day NAV Reporting for Digital Assets

By Jake Benson, CEO, Lukka, Inc.

Since we announced the industry’s first same-day NAV calculation capability for crypto assets earlier this month, we’ve received unprecedented interest from the markets in learning more. The most popular questions to hit my inbox are:

  • Is same-day NAV available to other funds and fund admins beside Hashdex and Theorem?
  • What are the existing requirements and best practices for striking NAV in various markets?
  • What hurdles are there to enable this capability for other fund managers? 

I thought it would be worth discussing these questions which weren’t necessarily directly addressed in our press release and subsequent Coindesk article.

In the specific case of Hashdex, local market regulators recommended same-day NAV reporting as a way to protect investors interested in participating in this new and rapidly evolving asset class. Market participants in many countries, including the U.S., strike daily NAV for other mature asset classes as a matter of best practice to ensure daily liquidity and investor protection. Given that crypto assets are gaining traction in the institutional market, this fundamental capability is now available globally for those who want to ensure accurate daily valuation of fund assets.

As important as this new capability is, what really excites me is that this collaboration is another example of how the industry is coming together to facilitate broader adoption of digital assets in the institutional market.  In order to successfully enable this capability for Theorem and Hashdex, our customer success team coordinated and streamlined the operational processes required to deliver same-day reporting. Our team of data and operations experts helped establish consistent and transparent hand off procedures, enabling our customers to meet the high standards of their investors and regulators for daily valuation and financial reporting. 

Yet, no standard is more critical than security, and I don’t know of a single client that isn’t concerned about this. Underlying the same-day NAV process is a robust, reliable infrastructure that gives risk, compliance and business teams and their clients the peace of mind needed to move forward. We built the Lukka platform with these objectives in mind, and our SOC 1 Type II credentials attest to our commitment to security.  

We also get many questions about our process. API integration is used to aggregate and standardize data from 30+ sources, ranging from exchanges and trading desks to blockchains and custodians, directly into the Lukka Crypto Office platform. This offers users transparency into portfolio information and transactional activity in a clean, normalized fashion. Fund administrators and fund managers can then use our tools collaboratively, allowing for more efficient reconciliation and processing of crypto data. Ultimately, this means Lukka software and data tools can be reliably used to simultaneously compress reporting timelines and increase accuracy. 

I look forward to announcing ongoing enhancements to our platform that are in our pipeline for imminent deployment. Our reference data and pricing and valuation data products are helping institutional clients grow their businesses in this rapidly evolving market. Allowing funds and fund administrators to strike same-day NAV for digital assets is just the tip of the digital asset management iceberg!