As the crypto industry matures more and more traditional funds are considering investments in digital assets and potentially diversifying their portfolio. For established digital asset funds they may be considering appointing independent directors as part of the natural maturation of the fund to implement proper corporate governance or to meet institutional investor requirements.
So why is it important to appoint directors with specific experience in the industry?
When looking at the independent directors space it’s difficult to find factors that truly distinguish independent directors from each other. All directors are reputable individuals with many years of experience in the financial industry who are registered with the regulator and part of industry bodies. They will also take care in performing their fiduciary duties and duties of skill and care. They will ensure quarterly meetings are held, regulatory issues are raised, all the registers are maintained, audits are performed and filings completed.
Digital Asset Experience Questions
Funds should look for directors that can add additional value to the fund. Some of the questions to ask potential independent directors are:
- Does the director have unique experience related to the digital asset industry?
- Will the director provide unique insights into risks others may not consider?
- Has the director worked with service providers in the industry before?
- Is the director active in the industry and will they be aware of the latest trends and issues?
- Can the director add value in the oversight of areas such as cyber security, accounting, tax and other areas that may be more nuanced in a digital asset fund?
It’s a difficult process when considering which directors to appoint to the board of your fund. The best approach is normally to ensure a mix of experience and skills when appointing independent directors. Some with many years of experience and knowledge of the financial industry combined with directors who are more technical and will be able to resolve key technical issues.
The well established directors will be able to add value when dealing with more traditional issues relating to investors and regulations whereas a technical director can advise on issues such as digital asset security, DeFi and smart contracts.
This mix of skills will ensure the fund is well equipped to handle any issues that may arise and put investors’ minds at ease when investing in the fund.
If you want to find out more about our directors services, please feel free to contact us and set up a call.
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