Thank you for standing by, and welcome to the CoinShares Q3 earnings broadcast. All participants dialing in are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. You can submit your questions via the post box below the video on the platform. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host, Jeri-Lea Brown. Thank you.
Thank you, operator. I would like to welcome you all to the CoinShares 2023 Q3 earnings call and webcast. Speaking from management today will be Jean-Marie Mognetti, Chief Executive Officer, and Richard Nash, Chief Financial Officer. All those joining today are encouraged to log in to the live event, where you'll be able to view the accompanying presentation during today's call. Alternatively, the results and a copy of the presentation are available to download from the Investor Relations section of the CoinShares website. A replay of the webcast will be available for 30 days following the live call, and a transcript will be posted on the company's website as soon as it is available. Following the presentation, we will host a short Q&A via the webcast platform. Should you wish to submit a question to the management team, please provide your name and company affiliation.
We will do our best to get to as many of these as we can in the allotted time. Lastly, our safe harbor statement. CoinShares would like to remind everyone that, except for historical information contained herein, statements made on today's call and webcast that constitute forward-looking statements are based on currently available information. The company assumes no responsibility to update any such forward-looking statements, and I would like to point you to the risk factors associated with our business, which are detailed in our prospectus. At this time, I will turn the call over to Jean-Marie.
Good afternoon, everyone, and thank you for taking the time this Tuesday to join us and hear about CoinShares' activity during Q3 2023. Every quarter since Q2 2021, we discuss with our shareholders and analysts the significant transformation in our industry and how CoinShares is positioning itself in this evolving environment. Q3 2023 was no exception and a busy quarter, especially with U.S. lens, with two major trends being of interest. First, the SEC intensified scrutiny on certain players, which underscores the importance of strict adherence to regulations. This is at the core center of CoinShares' strategy since its origin. Albeit, in the short term, it sometimes make us appear too slow or not agile enough. However, in the medium term, our strategy has been right and continues to be the right one. Sometimes perception is not reality.
On the other hand, events such as the Grayscale win over the SEC and the absence of appeal from the SEC tend to indicate digital assets' growing acceptance in the global financial landscape. What the SEC is needing now is leadership to take the matter even further. So the confluence of digital assets, innovation, and regulatory structure is evident, and this is CoinShares' know-how in Europe since 2014. We have long held the belief that the future resides in their seamless convergence, a new form of financial Web 2.0. Looking at markets now, a meaningful correlation has surfaced between bonds and equities as up to 34%, almost a record-breaking. With this in mind, it is worth noting that Bitcoin is emerging as a powerful diversification option in your portfolio allocation.
If you are interested to learn more about our thesis, I cannot recommend enough our Q3 paper, re-edited, augmented, and improved by James Butterfill and his fantastic research team. It is entitled, 'A Little Bitcoin Goes a Long Way,' available on our website after a few disclaimers, and delves deeper into this narrative, underscoring Bitcoin's evolving role. On the macro side, the Federal Reserve's higher-for-longer rhetoric, coupled with geopolitical uncertainties, to say the least, creates a turbulent, tense macro backdrop. This environment, paired with the convergence of decentralized and traditional finance, fortifies Bitcoin's position as a genuine investment asset and seems to remind the market of its store of value challenger positioning. So reflecting on all these developments, I'm truly optimistic about our industry's trajectory and CoinShares' position within it. But before we keep digging into CoinShares' business, let's take a look at our financials for the quarter.
I will provide more detailed insight afterwards, but for now, I'll hand over the mic to Richard to discuss our Q3 2023 financials. Richard, over to you.
Thanks, Jean-Marie. So as we approach the end of the year, we're happy to report another quarter of profitability and continued evidence of stability in the group's overall performance. As we can see from the overview slide here, our top line for the quarter stands at over GBP 16.7 million, with a roughly even split between asset management and capital markets, giving us a total figure of GBP 19.8 million there, which is then reduced by the net losses that we saw in our principal investment portfolio of approximately GBP 3 million. So this brings our year-to-date top-line performance to GBP 52.4 million and a level of consistency quarter on quarter that is becoming a more established pattern as the business continues to grow. The stability of our top line is also being echoed in the cost base of the group.
The combined cost that bring us down to our adjusted EBITDA figure totaled GBP 6.9 million for the quarter, which gives us an adjusted EBITDA of GBP 9.9 million at a margin of 59%. As we've always stated, we aim to keep a tight control over our costs in order to allow the growth of the wider market to have as close to a direct impact as possible on our bottom line performance.... The margin for the quarter is therefore the same as the margin seen year to date, and a significant improvement on 2022, which was heavily impacted by the turbulence of the wider market. While we're not yet back to the levels of performance we saw over the course of 2021, we are busy diversifying both our product suites and activities to fully benefit from the market.
We are expecting our top-line performance to further diversify as we move into 2024, as our newly launched hedge fund solutions business begins to gather interest from both our existing and prospective customers. Before we take a slightly closer look at our core business units, it's worth acknowledging that in the last few weeks, post quarter end, we have seen some significant price movement and reached highs for the year in both BTC and ETH. We are hoping that as we close out the year, we are able to show continued stability and enjoy the benefits of these increases manifesting in our bottom line. So onto our asset management platform now, and as always, just a reminder, the components of this business unit are the XBT Provider ETPs, our CoinShares Physical ETPs, and the CoinShares Blockchain Global Equity Index, or Block Index.
The story here is very consistent with that of the overall group, quarter-over-quarter stability that is a reflection of the movements in the wider market, coupled with cost control and solid margins. As can be seen from the table here, the overall gross profit margin of the group's asset management platform remains very healthy. Total management fees for the year are now in excess of GBP 30.3 million, and should the recent price increases hold to the end of the year, this will be reflected in the management fees for Q4 accordingly. Looking at the level of flow activity in our main products for the quarter, the CoinShares Physical product suite generated inflows over Q3 of $6.7 million, bringing year-to-date inflows to just over $53.8 million.
We've previously acknowledged the trend within XBT Provider of the outflows being largely stemmed, and over Q3, XBT Provider products saw minimal net outflows of $30.8 million, bringing year-to-date outflows to $87.5 million. The flows for both ETP product suites and those of our key competitors is published in our weekly Digital Funds Flows report, which is available on our website. And additionally, the level of AUM held within each of our products is disclosed and subject to daily attestation by LedgerLens, an independent firm solution embedded into our own website, which is designed to provide additional transparency and comfort to all of our stakeholders. And as always, we encourage everyone to go and take a look at both of those things. So just as a quick summary, to close out asset management platform.
At the end of the quarter, the level of AUM across our two ETP platforms, XBT and Physical, stood at approximately GBP 1.53 billion, with an additional GBP 420 million of AUM within the Block Index. So moving on to capital markets now. The performance of the group's capital markets business over Q3 2023 demonstrates the benefit that diversification of activities can bring, resulting in total other income and gains of just over GBP 9 million. With the turbulence and the exceptional losses of 2022 behind us, and ongoing enhancements of the group's internal controls framework, we also achieved relatively consistent performance month-on-month, and a stable gross profit margin for the quarter, averaging out at 77%.
Our staking income has yielded strong results for the quarter at just short of GBP 5 million, bringing the year-to-date total to approximately GBP 13.8 million. On the delta neutral trading strategy side, we've had zero point eight million pounds of gains, and this predominantly represents opportunities arising from trading CME futures. The fixed income activities are also showing a good increase on 2022, and these levels have been achieved even against the backdrop of a far more selective approach to our lending counterparties following the events we saw over 2022. And then finally, we have a small amount of liquidity provisioning arising from supporting the group's ETPs, and the reason why this is down on last year is due to the level of flow that we're seeing on XBT Provider decreasing, as outflows have been largely stemmed.
Now, just while I provide some brief closing comments, we can take a look at the quarterly performance of the group since the start of 2020 on this graph here, which helps visualize the quarter in context and the year in context. Yeah, so 2023 performance has been solid, and the digital asset market is obviously a huge factor in this, but, you know, that can't be achieved without the combination of diverse activities, cost control, and infrastructure improvements that we continue to work hard on every quarter. We've always been focused on ensuring that our range of products and activities continues to evolve.
And with a product suite of now 19 ETPs and a capital markets team that's continually diversifying its reach and partnerships, we believe we're well-placed to reap the benefits of the remainder of the year, and we can really see some interesting market developments on the horizon that will hopefully work out in our favor as we move into the new year. And then finally, just worth reminding everyone that everything that we've touched upon here and much more financial information is included within the full earnings report that we released earlier today.
Thank you, Richard. As it is our custom, let's delve into our business line performance, and as usual, let's start with our asset management business. So asset management. In Q3, European crypto ETPs providers faced significant outflow due to a mix of stagnant market sentiment and tactical redemptions from institutions. Looking in more details, we can observe for CoinShares Physical the following four points. Firstly, and in a few words, CoinShares Physical felt the ripple effect. It recorded its leanest quarter for inflows since inception, with $6.7 million of net inflows for the period. Secondly, our Bitcoin offering bore the brunt of this downturn, with $3.8 million in net outflows during Q3. Thirdly, our diversified altcoin product displayed resilience, securing $10.5 million on inflow, reflecting our strategic market positioning....
Finally, in a similar positive vein, it's important to acknowledge that the investor composition of the CoinShares physical product suite shows greater market penetration, separating us from our competitors. Now, looking at our legacy product suite, XBT Provider, there are three key takeaways. Our summer marketing campaign, specifically focused on the Swedish region for the XBT Provider platform, achieved favorable results, reflecting strong engagement and a reinforced brand presence. This campaign aimed at fortifying the XBT Provider brand, standing as a leading crypto ETP issuer in the Nordic region. Concurrently, the net outflows for XBT Provider have been maintained at minimal levels. Indeed, XBT Provider exhibit commendable consistency, with monthly net outflows stabilizing at $10 million despite the advanced age of the platform. To sum up, last quarter, we held a dominant 50% market share in Europe, showcasing our leadership.
We are firmly committed to strengthening our leading position in the European crypto ETP market by refining our strategies. Turning quickly to the Block Index, there were clear outflows among leading global blockchain ETF funds, paralleling a 10.9% decrease in Bitcoin over the quarter. Block Index contained its decline to a mere 6.6%, thus outperforming Bitcoin in the period and other comparable blockchain products. This product continues to assert its dominance, consistently distinguishing itself as a benchmark index. So let's look now quickly at our capital market activity. We have focused our efforts this quarter on CME futures trading strategies. Notably, the recent environment of historically low volatility, coupled with diminishing spot volume, presented challenges. Nonetheless, our team showcased resilience and adaptability, ensuring sustained performance despite these obstacles.
We also prioritize the establishment of a robust infrastructure and a diligent framework for our staking and lending operation to increase our capital market revenues. Furthermore, crypto exchanges in a post-FTX environment are increasingly reluctant to be the custodian of client funds. This critical shift in the industry is a step towards a model realignment to traditional financial markets. We have championed this evolution for a long time, and in Q1, 2023, we started the implementation with our custodian and exchange partners by developing all weather processes and legal frameworks, allowing us to mitigate and overall reduce our counterparty risk. Lastly, a quick update on our strategic directions. Since Q2, as you know, we've been fast-tracking our move towards our hedge fund solution business. It is very inspiring to see the dedication of our traders, quant, developers, and operation teams.
They are all in on this project, ensuring the smooth transition from pure capital market to capital markets and hedge fund solution, and the launch of this new business. So let's talk a bit more of this new business now. What does it mean? So this September, we celebrated a pivotal moment, the official launch of our hedge fund solution business. We have expanded our reach, initiating talks with external LPs across Asia, Europe, and for the very first time, the U.S. Through CoinShares Capital, our U.S. FINRA-registered broker-dealer subsidiary, we are amplifying our marketing efforts for these investment strategies. We are now in a position to tap into the world's predominant asset management market, which is home to 50% of global AUM. With this launch, we are reinforcing our commitment to being a one-stop shop. What does that mean?
Whether you are looking for beta or alpha exposure, we get you covered. And the best part, clients can now craft their own portfolio tailored to their risk appetite by just moving the cursor between the two buckets. I'm also excited to share that our initial strategies have been up and running since the end of Q3, with a track record starting officially in August. Our team has been hard at work, not just generating alpha, but also gearing up for the first external contribution. As we move forward, our aspiration is to see our strategies flourish, garner interest, and set the stage for even more innovative strategies. Now, let's take a quick look at our principal investment book. During Q3, our principal investment portfolio registered a net decrease of GBP 3 million. The primary factor beyond this decline was the devaluation of our FlowBank holdings.
However, the decline was partly balanced out by the appreciation in several other assets within our portfolio. It's important to clarify that the accounting representation of FlowBank, given our significant shareholding, hasn't factored in some positive events from 2023. A notable instance is the successful closure of its funding round in Q1, valued at 2.5 times our initial investment. Before closing, let's look at our share price performance. At the end of September 2023, our stock price has seen an impressive 85% uptick. Over the summer, we observed an average daily volume more than doubling. Furthermore, we achieved a record high in terms of retail investor engagement, especially from the Nordics. These achievements underscore a broader market acknowledgment of CoinShares as a credible and investable entity. All right, it's now time to conclude this review.
So it has been encouraging to see the continued growth and increasing maturity of CoinShares over the last nine months. In my many conversations with other players in the industry, it's clear that the perception of CoinShares among stakeholders, clients, shareholders is changing, and changing for the better. Step by step, CoinShares is moving into a new phase, and I thank you all for being with us on this journey. This is closing CoinShares management Q3 2023 remarks. Operator, you can now open the call for questions, please.
Thank you, Jean-Marie. Firstly, we have a few questions from H.C. Wainwright, which are directed to you, Jean-Marie. The first of which being: In light of all of the chatter about Bitcoin ETF approval in the U.S., what is your view on the approval's impact on the Bitcoin price? ... while acknowledging that the U.S. government has approximately 390,000 Bitcoin to auction, creating an overhang, according to recent NYDIG research.
Oh, the NYDIG research. So we're gonna talk about competitor quite sure. So the NYDIG research effectively is quoting 390,000 Bitcoin held by U.S. Marshals Service. They are the result of seizure. What is not said in the research, and that's probably the deficiency of the research, is that all these Bitcoin are still held until the court cases are closed and the investigations are closed. So as long as this investigation is ongoing, there is no selling pressure. Some of them might have been sold in the past. Anything in U.S. Marshals Service possession has been auctioned. And, you know, a company like Cumberland in the very first auction, where the recipient and the winner of this auction.
So, you know, net-net, in general, this auction and proceeds from, you know, proceeding from seizure and then being, I would say, captured by people who have a long-term view and are long-term holders and not, like, sold in the market. We forgot the Bitcoin price and the ETF, how is it impacting? You know, there is clearly an asymmetry between offer and demand. We have always been big advocate that a strong shock on the demand side, on the constrained supply, will have a exponential impact on price. You know, compliance will stop me from making a price prediction, so I will not go there. But, you know, we know it will be a significant improvement.
Thank you very much. Next question. What impact might the new regulations in the UK have on the CoinShares business? It seems that crypto oversight has moved away from the FSA now.
So CoinShares is ready. CoinShares has been planning MiCA and any kind of other implementation in continental Europe, and the extension in the UK is also something we have been looking at. So we are not too worried about UK regulation. As it stands, our activity in the UK is very, very limited because there is a crypto... Well, there's a ban on crypto derivative and crypto ETP for distribution in the UK. So, you know, our current engagement is very, very limited in the UK. So unless there is a tactical change from the FCA, the UKLA, and the other authorities, you know, we will not be impacted. If and when it becomes a reality, we are ready to deploy, we have the right licenses, and we have the right team.
Thank you. How might CoinShares quantify institutional adoption in Europe? Most ETP interest has been generated by retail investors, but they're wondering if there's any evidence that institutions might show more interest and if there's any way to quantify that.
Yeah, is this for me?
Yeah.
Okay. So I don't want to steal from Richard. All right. So, on this one specifically, what we have seen is true, is like from our start in the crypto ETP world, retail has been in the driving seat in terms of asset gathering. It is still the case in Europe. However, we can see a trend happening with regards to institutional adoption, because institutional adoption is to a large degree conditioned by the implementation of MiCA, not only by the parliament, but by the different authority in every single country, so in Europe. So MiCA is kind of the gatekeeper.
A lot of these institutions have looked at crypto before, were ready to make some commitments, and get cold feet on the back of the FTX events last year, which show them that not everything is rosy and need a bit of work. And I think the only way they will get comfortable is by seeing real regulation happening. That's for the European market of MiCA.
Thank you. Another one for you, Jean-Marie. In past full cycles, fear of missing out has driven crypto interest. We're wondering if CoinShares might be seeing some of that reflected in the recent trading trends?
Sorry. Oh, okay. So fear, fear of missing out. I was not sure I was reading that properly. Fear of missing out, I think is impacting every single trend. You know, I think fear of missing out has been driving the AI kind of speculation in 2023, like it was driving the tulip mania long, long time ago. So I think, you know, investor psychology is always a key factor in this kind of acceleration, and that's what triggers trends. So, you know, there is some sign of people positioning themselves. There's still a lot of dry powder on the sideline, and I think we're just at the start of this movement.
Thank you. I'll give you a break now, Jean-Marie.
Thanks .
In two minutes. We've got a question from one of our shareholders, Russell Newton. Please, can you expand on the currency translation difference line item?
Sure, no problem. So the consolidated results for the CoinShares Group are presented in GBP. It's the functional and presentational currency on a consolidated basis. However, one of the very important subsidiaries within the group is CoinShares Capital Markets. And, you know, that's where the vast majority of our balance sheet is held. So on a consolidated basis, the vast majority of the balance sheet comes from CoinShares Capital Markets, which is actually denominated in US dollar. So when the consolidation occurs from one period to the next, any significant movement in the GBP, USD FX rates will manifest as either a gain or loss, which is posted through other comprehensive income at the bottom of the profit and loss statement. It's an accounting entry. It's not cash impacting or anything like that.
It's a presentational accounting entry. Over the first half of the year, the, the FX movements between GBP and USD resulted in quite a significant loss. Over Q3, that trend reversed, resulting in a gain, and as of the end of September, the, you know, the net movement over that period is fairly negligible, as, as the rate at the end of September is, comparable to that at the start of the year. And so there will always be a bit of a movement there through other comprehensive income when doing that, consolidation, if you have subsidiaries that are denominated in different currencies.
As time goes on, because CoinShares Capital Markets is such a large part of the group, it's effectively the nerve center of the entire group, that strengthens the argument for us to actually consider changing our presentational functional currency of the entire group, which is something that we're looking at doing as we move into 2024. So if that does happen, and we move into a position where we're actually presenting the group results in USD, that movement in and of itself will more or less vanish because it's all arising from what's happening within CSCM.
Thanks very much. Another one for you, Richard, from Edison Group. What is the near-term marketing plan for the CoinShares Physical platform?
Okay. Speaking a little bit on behalf of our head of marketing here, but I'll-
You know it very well, Richard.
Yeah, I'll give it a shot. So one of the main focuses will be, you know, continuation of what we know already works, which is strategic partnerships with broker platforms. You know, they've been instrumental in driving inflows into our products, so we're, you know, we're gonna carry on doing that. One of the things that's gonna change moving into 2024 is a direct-to-consumer focus and marketing campaign in Germany, again, replicating what we've done in the past in Sweden.
So they're the two main things, but I think it's also important to remember that all of our marketing is underpinned by the research that we do and the ongoing content production, and it's available on our website for all to see, which is designed to continue to educate people about crypto, and simultaneously, hopefully raise our own profile and our brand while doing so.
Okay, thanks very much. Back to you again, Jean-Marie, same from Edison. In your quarterly report, you say that investor composition of the CoinShares physical product suite demonstrates a continued improvement in market penetration in contrast to your competitors. Can you provide some additional comments on this?
Yeah, we try to do some exercise where we isolate effectively from the data available, or more specifically, the share count, what is held for purpose of long-term investment and what is held for purpose of short-term speculation on the basis trade action, for instance. So some people can hold CoinShares Physical for long-term appreciation, and some people can hold it as a long leg against a short leg on CME. The long leg and short leg on CME is a kind of trade which creates a lot of fluctuation in AUM, and will create a massive amount of inflow and potentially a lot of outflow when the base is collapsed.
So once you isolate this kind of, I would say, investor activity from your share count, and this investor activity being the one not paying long-term fee, but paying very short-term fee, you can see that CoinShares penetration in the retail market and the market in general across Europe is in constant growth versus some of our competitors, which are slightly declining or static.
Thank you very much. On the understanding that the current Ethereum staking yield is close to 4%, which is driven by the current amount of Ethereum stake and the network activity, what are your expectations in terms of the current staking yields over the coming months?
Okay, now we're gonna get technical. Okay, so staking yield, Ethereum, I think you need to... There, there's a few parameters to take into consideration instead of giving an answer, which would be like out of the blue. So right now, there is around 23% of the network which is staked. So staking reward come from two things: they come from the consensus layer and they come from the execution layer. Right now, we have a very dynamic consensus layer, which is paying what it's supposed to be paying, and will suffer a decay as there is more and more, I would say, staked ETH on the network. And then you have the execution layer, which right now is very weak. We're talking about, you know, 0.95% right now out of the total APR.
And this execution layer is a function of how much execution is happening on the network, effectively, how many transactions are clearing on the network. So as activity on different L2, such as Base or the new announced L2 from Kraken, is taking off, you will see this execution layer start to compensate and go back up. So it's not just gonna be declining, it can start to go up. So to come back to your question, you know, where is it gonna be in one year? If you asked the same question to Vitalik a year ago, Vitalik would have said, "My terminal value is 1.5%. I think we will be there in six months." So by September, Vitalik was expecting to be at 1.5%.
Now, the market is proving him wrong, for various reasons. There is some more interesting trade to do than staking in the market. And the proof of that is like the queue on the staking capacity, which was up to 68 days to deploy validators is now down to zero or close to zero. I think we're talking 39 hours. So this kind of collapse is indicating that the market as it stands has, I would say, reached a state of maturity in term of like the capacity, who wants to be staked. We are monitoring this queue very closely because as soon as this queue start to grow up, that's when we're gonna see an acceleration in the decay. Now, where will it be in one year time?
I think when reaching a line, looking at projection and building our, you know, budget and, and different part of projection, we're keeping it on a very, very low decay for the, for the year upcoming. And like 3.5% is probably where we will be looking at. This number can be, I would say, tuned up or down, depending on the activity on the execution layer. So more activity will certainly give it more boost, less activity certainly give us less. So, you know, net, net, I think 3.5% for the end of 2024 is a good, is a good, is a good target.
Thank you very much. In terms of CoinShares' physical Ethereum ETP holders, when will CoinShares be live with the Ethereum staking?
That's another good question. Look, there is different way to do it. There is a way to do it like a pirate and to do it properly. And on CoinShares, unfortunately, or fortunately, sometime we want to do it the proper way. So I know it's not what everybody wants, but it has to be done in by respecting the rules of engagement of this very complex ETF and ETP and all the SPV, and we have to request a vote from the members. The product being issued in the U.K., listed in Germany and other countries, make it extremely complicated to get people to vote. And by people, I mean not all that vote on the proposal. So we already added a cycle of vote, which didn't reach quorum with nobody showing up.
There is no single shareholder showing up, so we need to do another cycle of vote to make sure we can, I would say, turn on the functionality of staking. Everything is ready. Our partners are ready, our infrastructure is ready. Everything is ready to go. We're just missing this crucial last piece of vote to be able to turn the staking reward on on our ETPs. I know the team is working very hard on that front to convince some shareholder to join the calls and vote at the AGM. But, you know, hopefully, next round will be a bit more successful on this one.
Thank you very much. Just moving back to HCW. Jean-Marie, are there any quantifiable measures of the Invesco partnership that might indicate how a North American market is receiving CoinShares linked products?
Okay. No, there is none, because it's not distributed in North America. It is listed in Mexico, we said, but it's not listed in the US or in Canada, as the remit of Invesco North America, and we are only trading with Invesco EMEA. However, if, you know, an extension of this question is how is our product received versus as a EMEA version versus a North American version of Invesco? I think the equivalent of our product in the US, by Invesco, has $5 billion of AUM, which is, you know, a fraction of what we have. So our product has been very successful on that front.
Thank you. And then the final question. Please, could you add some color to the hedge fund solutions? How is the product going to be marketed and distributed, and how exactly has CoinShares received SEC approval, or please discuss, discuss the situation?
Thanks, Jeri. That's a pretty tricky question, I think. So yeah, so this, the distribution effectively is approved through our broker-dealer. Our broker-dealer is FINRA approved. The broker-dealer, I would say, rules of engagement is at a state level, so you have to be approved state by state. So our broker-dealer right now is approved, I think, in 35 states. If it's not close to 40, we should be all done by the end of the year to have capacity to distribute in the entire U.S. Our product are not American product. Our product are, I would say, Jersey-based SPV with a feeder, which is a Delaware feeder, so it's a master-feeder typical structure for hedge fund.
We have an offshore feeder and onshore U.S. Delaware feeder, which allows U.S. taxable investors to participate in the product. So it's a very common structure, which you will see in most hedge fund.
Great. Thank you very much. That concludes the questions for today. We'd like to thank everyone for joining.