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Blockchain.News Interview with Co-founder and CIO of CryptAM, David Demmer on Digital Asset Management

Since the launch of the Bitcoin in 2008, interest in cryptocurrencies continue to increase exponentially over the years. As the space matures, investors are increasingly eager to add cryptocurrencies into their portfolios for more diversification, whether it is for long-term value investing or short-term profit maximization. Investors can no longer afford to ignore the impact of digital assets.

We conducted an interview with Founder and CIO of CryptAM, David Demmer, who has years of experience in traditional banking and financial industry. He is also a Co-founder of HKDAIA (Hong Kong Digital Asset Investment Association) charged with setting active and proper regulatory standards within the Asian crypto community.

What is the difference between cryptocurrency investment solution vs traditional investment solution?

Traditional markets are very different from the digital asset space. Traditional market construction risk factors are academically proven and have been around for a long time. While in the cryptocurrency market you use different risk and return factors. That mean basically only sentiment and momentum generally work well. Recent studies show that those risk factors have nothing in common compared to the traditional asset space. The digital asset space is still new. Its return drivers are uncorrelated to the traditional markets.

That said, this is a volatile market and has risk levels of around 100%. Comparing that to the return volatility of equities, 15-25%, and bonds, 4-10%, there is a meaningful gap between the digital asset space and traditional markets.

Trading in digital assets is a whole different game, when compared to traditional investing. A simple example will be that digital assets trade on a 24/7 basis where traditional markets trade only 5 days a week during pre-defined/required hours. This has a big implication on risk measurement and trading behaviors. Simply put, when calculating risk (standard deviation), 365 days is used in the calculation for the digital asset market, whereas 255 trading days are used for traditional markets. As you can see, there is a significant increase in risk associated with the digital asset market.

In addition to market risk, the digital asset market requires you to place a large emphasis on operational risk and counterparty/credit risk when dealing with exchanges. Operationally, as institutional investors get involved, the regulatory standards of digital assets will continually try to mirror those of traditional market as regulation increases.

Why is having a digital asset portfolio crucial for traditional investors?

For traditional investors that have equities, bonds, real estate and commodity exposure, we believe that it is crucial to continue to diversify. For example, an investor that holds the S&P500 (US stocks), the US’s most mature equity and liquid market, they would have seen an improvement of their longer-term risk-adjusted performance numbers by adding digital assets in small amounts, such as Bitcoin. By doing this you can significantly improve the return/risk efficiency of your long-term asset allocation portfolio.

The nature of the crypto market means that it is generally uncorrelated and hence, by adding this to your portfolio, especially now at the current state of the market, the overall asset allocation return profile can be improved. As investors gain access to this market in the future, they should be on the lookout for asset managers that can control the risk to levels they are comfortable with.

Because of the technologies driving blockchain-related digital assets, this market presents a market big opportunity as more people are looking to invest. They are all doing their homework, and they now recognize it as a new asset class. This is the reason we are a very strong believer in the cryptocurrency space, and we are excited to be here.

What are the typical challenges when creating a well-diversified digital asset portfolio compared to traditional assets?

To meet the challenges of trading in this market, we created several market timing models within our multi-strategy offering. Given the high levels of inefficiencies in this market we believe that an active management/trading approach is warranted.

It generally comes down to one thing, the correlation between different asset pairs within the crypto market. At present, crypto markets are very correlated and the intra-correlation between coins is very high. This means when the market rises/falls, most coins tend to move together in the same direction. This was true in 2018 but less so in the run-up of years 2016/2017. The only way to hedge against the risk of falling prices is to use futures as a hedge or sell out completely and re-enter at a cheaper level.

Within the crypto market, we firmly believe in diversification in the long term as this will get exposure to those potential massive outperformers. However, for the medium to short term, we expect Bitcoin to remain a top coin because of its position as a coin of liquidity and a relatively large network, which provides dispersion and distribution of power to avoid any one government controlling its fiscal and monetary characteristics.

What are the different types of digital asset portfolios?

They are the same as in traditional markets – you have active and passive management approaches. With passive funds, you track the market, and here at CryptAM we built standardized index methodologies. Examples include the FTSE and MSCI indices covering equities in the traditional markets. Digital assets are a multi-billion-dollar industry that the market does not recognize yet and we have yet to truly monetize the area of market indices.

In terms of the active approach, CryptAM focuses on delivering value through a quantitative bias. We have techniques using relative overweight/underweight approaches and/or using various market timing approaches. There are also market-making and arbitrage funds, in addition to the pure venture capital style funds, which invest into projects and companies

We are an asset management company rather than just a fund. An asset management company requires many more components such as compliance, front office, back office, proper managing directors.

What are the key components to look for when choosing a secure and well-diversified digital asset portfolio?

The key component is to know all different types of portfolio construction methodologies. There are only two things that add value – liquidity and risk. This is key because without these, we would not be different from any other fund and this is where we truly add value for our customers.

Why did you choose to start this business?

Very early on, we realized that digital assets are new asset class. And now, digital assets are also recognized by institutional investors and this is a key factor for everyone in the game. We see this trend continuing even though the market is down and filled with negative news and sentiment. Banks are continuing to work with digital assets, and this is great for everyone in the game. I am also here trying to help educate all the readers out there about digital assets and this is an essential part of the game as this is still such a new area. We need to all get out there and continue to have meaningful discussions about digital assets to promote further growth and innovation.

What is so special about CryptAM? How do you differentiate yourself in the market?

We are trying to become an institutional-grade player and that is why we are still here, while many other players have dropped out since they were not conservative enough and grew too quickly. Many members in the management team are well experienced, which results in a more conservative approach overall. This is the main reason why we are different.

We welcome regulation and are open to educating and working with various jurisdictions on how to make this space more proper. Here at CryptAM, we understand that digital assets will be around whether we exist or not, but our purpose is to make this market a more professional marketplace. We add value to our customers because we:

1. provide easy access solutions for investors wishing to get broad exposure into digital assets

2. work closely with custodians to strengthen governance measures

3. aim to work closely with external administrators to ensure all the investment vehicles have proper accounting

4. work with OTC providers to access the best liquidity possible

5. have our own indexing methodologies which gives us better access to the market and risk measurement tools

What is the long-term vision of CryptAM?

Delivering value to all our clients who wish to diversify their traditional portfolios.

What types of companies or individuals use your services?

Anyone with multi-asset allocations and wants more access to diversification would be potential clients. This typically means high net worth individuals or any professional type of investor such as big institutions or multi-family offices. Digital assets will be able to provide more diversification in the future through new coins, and this includes stable coins, public coins and interesting technology projects.

How is security guaranteed and cryptocurrency hacks prevented? And how your company can balance the trade-off between security and efficiency?

Security is key. One thing to take note is that blockchains generally cannot be hacked. There have been a lot of companies that have been hacked, but you don’t read much about it. It doesn’t matter how great the fund is, without security everything falls apart. We work together with credible partners and IT security professionals to help make our company more secure. It all comes down to identity management and password management. When you talk about password management, you want to make sure that your password is not easily accessible. And in terms of identity management, you want to take active precautions such as making sure your intern doesn’t have access to trading.

Therefore, we are very strict with security. We have routines and security checks, but there is a trade-off between security and efficiency. Some things must be done manually and there is no way everything can be automated. You must make sure that the right people have the right controls at the right time. Therefore, one can not be completely efficient.

How your company deal with the extreme price differences across different platforms for the same cryptocurrency?

We see that there are more and more arbitrage deals as the market is getting more efficient. We are assuming that the market will soon eliminate this pricing differential. We have our best execution, which is driven by liquidity because we trade in large amounts and we need to make sure that we trade those amounts efficiently in the favor of our clients. That means we are naturally accessing the most liquid and efficient exchanges, and inevitably, we will experience very small price variances between exchanges.

As liquidity increases, the market becomes more efficient and, as a result, arbitragers and market makers will make less money. We see experienced market makers from traditional markets entering the digital asset market and we are not trying to compete with them. We would much rather focus on the area we’re better at, which is portfolio construction and generating alpha for our clients through quantitative research.

What are the main implications for the current trends in digital asset investment?

Prices in the digital asset market are not yet news-driven as they are in traditional markets. The digital asset market is more driven by liquidity and can be very event-driven, but not news-driven. For example, if Apple has a product release, everyone trades upon the news, and because of this reason the price will eventually fall as a result. When dealing with the digital asset market, participants are not trading based upon the news yet, as this often is not readily available for regular market participants.

Going back to your question, STOs (security token offerings) are a big topic. Stablecoins are a type of STOs. They are a type of asset backed security. Currencies such as the USD and HKD, and commodities such as gold and oil are being tokenized as asset backed securities. As a portfolio manager, I look at the underlying asset and this provides me with a lot of diversification. Digital assets will be a key component for accessing the most diversification possible. We consider digital assets the final asset class because everything will be tokenized onto the blockchain. Not only currencies and commodities, but also funds and indices are also being tokenized, which opens access to a wide range of assets and makes diversification much easier. Therefore, we support the community since we see that the community will continue to make advancements and grow in the future.

How do you see the trends and developments of digital asset investments in Hong Kong?

This is mostly a question related to regulation. Hong Kong follows common law and because the HKD is pegged to the USD, Hong Kong tends to follow what the US is doing. As a government, you decide to create a currency and have a monetary authority to govern it or you peg it to another currency, which provides you with a lot of advantages, and yet has its risks at the same time.

So far, this strategy has helped Hong Kong significantly and Hong Kong is striving to become more relevant in the fintech sector and innovative, but at the other end it has a legal counsel. Regulation of exchanges and asset managers will be the key for the future.

In November 2018 the SFC provided a sandbox for exchanges and regulation for asset managers, and slowly Hong Kong is working towards better regulation in this area. That said, cryptocurrency is a global game. We actively search for a regulatory environment that works for us and our prospective client base. We would like to work closely with global regulators. As entrepreneurs, we strive to make social impact to make the world a better place, increasing financial inclusion, and creating value to all clients and stakeholders alike.

What are the typical concerns for individuals when they choose to invest in digital assets?

Customers are usually concerned about factors such as custody, market manipulation, credit risk, lack of regulation, licensing, KYC and AML. KYC and AML are special ones, because with Bitcoin you can see where the money is coming from up until the origination. Money is inherently anonymous so you wouldn’t know if the money originated from illegal transactions such as drug dealing, but with Bitcoin you do know. With the added transparency, which is an advantage to many people, comes new issues that arise.

What are the challenges for cryptocurrency’s transition from simply a mining process to a mature and mainstream investment option?

We want to be an exclusive asset management company for exclusive and explicit people. At the same time, we happily provide education to the public, our main purpose is to provide custom tailored solutions for specific needs. We are more like an asset management boutique because we custom-tailored solutions for eligible people. As mentioned earlier, we have provided a risk averse portfolio for one customer reducing the market risk from 97 to 37, to allow for him to manage drawdowns in crypto and wanted to have a low beta. As asset managers coming from the traditional space, this is where we feel we truly add value.

What are some of the factors that affects the cryptocurrency market and how does your company take these factors into account?

Liquidity and momentum. Liquidity is the money going in and out, the decision to enter the market. This is isolated and money either increases or decreases and because of this there is a trend of actions that follow as money flow follows the price action and creates a natural and organic momentu

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Disclaimer: The views and opinions expressed in this article are those of the interviewee and do not necessarily reflect the view of blockchain.news

This is one of several interviews coming up in the “Blockchain 2019: Industry Leaders and Voices” series aimed at raising awareness of the blockchain community. If you are interested and would like your project to be covered in one of our upcoming interviews, please contact Henry Chan at henry.chan@blockchain.news for more details

Luxembourg: The FinTech Hub For Cross Border Asset Management

Luxembourg for Finance (LFF) is a public-private partnership that acts as the agency for the development of the financial center of the small nation.

Christopher Hollifield is a Business Development Specialist for LFF and heads up investment from Chinese and African organizations. His work mainly involves advising fintech and financial companies looking to develop cross-border activity through Luxembourg based platforms. Hollifield also advises on the development of the ecosystem in Luxembourg and on synergy creation with key financial centers.

Luxembourg: Small Place with Big Finance

Luxembourg is a small country right at the center of Europe that borders France, Germany and Belgium. It has a very small population of 600,000 people but statistically around 50% of these people are foreign-born.

In his role, Hollifield spends much of his time promoting the financial potential of Luxembourg abroad and speaking with companies about what the LFF can do for them. He said, “I cover China primarily as the Head of China Desk so I’m out in Asia and China on a regular basis. In verticals, my field is FinTech so I speak with these types of companies and work with them to bring their presence to Europe.” He stressed, “It’s very important work as Luxembourg may not necessarily be the first place that springs to mind but it has very high importance both financially and in a general historical context as one of the founding members of the European Union.”

Despite its small geographic size, Luxembourg is a major financial center for Europe. Hollifield said, “It’s the second largest asset management location in the world with something like five trillion US dollars of assets under management. It also has very strong insurance sectors, corporate banking sectors, and, capital markets activity. Particularly because of its small size, it’s always been focused on cross border activity. That’s really Luxembourg’s kind of raison d’etre (purpose)—to provide an international hub right at the center of Europe.”

According to Hollifield the LFF, “The cross border financial activity of Luxembourg itself sets us apart from competitors. It doesn’t really have a domestic market but it has had this focus on cross-border financial activities since before the 80s, which has facilitated its development as a major asset management sector.” He explained, “Luxembourg funds are distributed in 72 geographies across the world, I mean 80% of the foreign funds in Hong Kong are Luxembourg-based.”

Blockchain for Finance

According to Hollifield, blockchain and financial technologies are definitely changing the nature of financial centers and it’s something that Luxembourg takes very seriously. He said, “FinTech is one of the areas where Luxembourg actually has a really big domestic market because of being an established financial services axis. Back in 2016, the LFF together with a number of other actors set up an institution called The LHoFT, the Luxembourg House of FinTech, which kind of acts as a platform to help FinTech companies and blockchain companies engage with the traditional financial center of Luxembourg. The LHoFT has something like 74 members now directly in Luxembourg and a network of something like a couple of hundred. We really see the technology as creating a seismic shift in the industry, definitely replacing lots of the infrastructure back end of financial services.”

Hollifield elaborated on an exciting blockchain use case called FundsDLT, a prototype for greater speed, efficiency, and accessibility in cross-border asset management, which was designed in collaboration with KPMG. He said, “It’s essentially a blockchain-based platform that provides the ability to transfer funds and shares over a blockchain network. It was actually set up by a subsidiary of Luxembourg Stock Exchange, Fundsquare, a couple of years ago and it held its first proof of concept back in 2017. It’s coming to a stage now, hopefully, where it will become an operational project.”

Another upcoming wider European blockchain project in development is Infrachain. Hollifield said, “Infrachain is slightly different, it is partially state-backed and what it is trying to establish a base layer blockchain on which you can then build applications and launch private chains. It is being set up by several private partners, not solely based in Luxembourg but a network of partners across the European Union. Its basic purpose is to establish a safe and regulatory compliant infrastructural base for further developments and blockchain projects.”

“There’s a couple of other things happening in the Luxembourg private sector. In Luxembourg. Tokeny is a company that provides a tokenization service for assets to the standard of method compliance security, it is based on the Ethereum blockchain.” Hollifield continued, “I would strongly advise your readers who are interested to go and check out the LHoFT’s FinTech map, which highlights the considerable sector of blockchain-based companies in Luxembourg.”

Luxembourg for Sustainable Finance

The future looks bright for financial technology in Luxembourg, but what are the immediate next steps in LFF’s road map? Hollifield stated, “Our two main priorities are, on the one hand FinTech and developing connections internationally with some of the financial centers in that field. And on the other hand, a big priority for us is sustainable finance.”

According to Hollifield, “Luxembourg is actually the largest center for sustainable bonds in the world, it holds something like 50% of all green bonds—all listed in Luxembourg.” He concluded, “That’s a real trend that we see actually, the increasing use of ESG investment decisions, not solely in bond issuance but also in investment funds. That’s a market on which we are looking to further capitalize.”

Laser Digital Secures In-Principal Approval from Abu Dhabi Global Market

Key Takeaways

Laser Digital, a subsidiary of Nomura, receives In-Principal Approval from Abu Dhabi Global Market’s Financial Services Regulatory Authority.

The approval paves the way for Laser Digital to offer broker-dealer and asset management services in the UAE, subject to certain conditions.

Abu Dhabi was chosen for its progressive regulatory environment, particularly in the digital asset sector.

Regulatory Milestone

Laser Digital, the digital asset subsidiary of Nomura, announced on September 26, 2023, that it has obtained In-Principal Approval (IPA) from the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM). The IPA is a significant step toward formal regulatory licensing, which will be granted once Laser Digital meets specific conditions. Upon fulfilling these conditions, the company will be authorized to provide broker-dealer services and asset/fund management services related to both virtual and traditional assets in the United Arab Emirates (UAE).

Strategic Choice of Location

The decision to establish operations in Abu Dhabi was influenced by ADGM’s forward-thinking and transparent regulatory framework. ADGM has been proactive in fostering cross-industry dialogue and collaboration, making it an attractive destination for companies in the digital asset sector, such as Laser Digital.

Leadership and Operations

Laser Digital was co-founded last autumn by Steve Ashley, former head of Nomura’s wholesale division, and Jez Mohideen, Nomura’s ex-Chief Digital Officer. The company is headquartered in Switzerland and has additional offices in the UAE and the UK. Jez Mohideen leads the UAE entity, with Cameron Dickie serving as Head of Distribution.

Industry Reactions

Arvind Ramamurthy, Chief of Market Development at ADGM, welcomed Laser Digital’s addition to their financial ecosystem. He stated, “Laser is developing investment services in virtual assets that are both dynamic and transparent. Their investment offerings align well with ADGM and the FSRA’s international best practices.”

Jez Mohideen, CEO of Laser Digital, expressed gratitude for the opportunity to operate in ADGM, citing its “comprehensive and clear regulatory framework.”

Disclaimer & Copyright Notice: The content of this article is for informational purposes only and is not intended as financial advice. Always consult with a professional before making any financial decisions. This material is the exclusive property of Blockchain.News. Unauthorized use, duplication, or distribution without express permission is prohibited. Proper credit and direction to the original content are required for any permitted use.

Enabling Innovation in Asset Management: SFC's Approach

Key Takeaways

Christina Choi, Executive Director of Investment Products at the Securities and Futures Commission (SFC), spoke at the Bloomberg Buy-Side Forum Hong Kong 2023.
Choi emphasized the role of technology, particularly AI and blockchain, in transforming the asset management industry.
The SFC is working on guidelines for tokenization of SFC-authorized investment products.

SFC’s Dual Role in Asset Management

Christina Choi, Executive Director of Investment Products at the Securities and Futures Commission (SFC), addressed the Bloomberg Buy-Side Forum in Hong Kong on September 26, 2023. She outlined the SFC’s dual role: protecting investors and upholding market integrity, and strengthening Hong Kong’s position as a global asset management hub. The SFC aims to balance regulation and innovation, ensuring that technology advancements like AI and blockchain can be integrated into the asset management industry without compromising market integrity.

Technology’s Impact on Asset Management

Choi highlighted the rapid advancements in technology, specifically mentioning the miniaturization of chip technology from 90 nanometres to just three nanometres in two decades. She linked these technological leaps to the potential for “tiny changes” in the asset management industry that could result in significant market development.

Tokenization of Retail Investment Products

One of the most notable points in Choi’s speech was the discussion on tokenization of SFC-authorized investment products. Tokenization refers to the use of blockchain technology to create digital tokens that represent fractional ownership in an investment product. Choi mentioned that the SFC is currently working on detailed guidelines for tokenization, particularly focusing on primary dealing at this stage due to the nascent state of Virtual Asset Trading Platforms (VATPs) in Hong Kong.

Regulation Enables Innovation

Choi stressed that while innovation is crucial, it must be balanced with robust regulation to ensure sustainable development and investor protection. She cited historical examples like the Global Financial Crisis of 2007-08 and the fallout of unregulated crypto platforms to emphasize the importance of regulation.

Closing Remarks

In her closing remarks, Choi drew an analogy between regulation and machine learning, stating that just as “machine learning without regularization” is problematic, so is “innovation without regulation.”

FTX Japan Launches Blockchain-based Proof of Solvency to Enhance Transparency and Security

In an effort to enhance transparency and bolster the trust of its customers, FTX Japan has unveiled a blockchain-based technology known as Proof of Solvency (PoS). This initiative was announced by Seth Melamed, the COO of FTX Japan, through a series of tweets on September 28, 2023. The newly introduced Proof of Solvency mechanism enables the company to prove, in an unalterable manner, that the reserves of the exchange surpass the assets held in custody for customers.

Proof of Solvency (PoS) is a method utilized to demonstrate a company’s capability to meet its long-term financial obligations, merging traditional financial audit practices with blockchain transparency. Highlighted by ICONOMI’s blockchain audit conducted by Deloitte on April 5, 2018, PoS comprises two core components: Proof of Liabilities and Proof of Reserves. Through the Merkle Tree approach, individual users can verify their account balances and overall liabilities without disclosing personal information, ensuring data integrity. Proof of Reserves entails disclosing total reserves encompassing digital and fiat assets, verified through blockchain addresses, bank, and exchange account information. Deloitte’s audit, covering 80 digital assets, confirmed ICONOMI’s $210.2M reserves surpassing its $133.6M liabilities, thus establishing its solvency. This PoS framework enhances transparency, security, and trust among stakeholders while maintaining user privacy.

The PoS is a significant stride towards addressing a central issue in the cryptocurrency market and, by extension, traditional financial markets. The technology aims to provide market participants, who have entrusted their assets to exchanges or financial institutions, with increased safety and information transparency. By doing so, it tackles the technical problem of information provision in a secured and transparent manner, which is a matter of concern for many in the industry.

FTX Japan has been ardently adhering to legal regulations by strictly managing the segregation of customer assets. However, with the introduction of PoS, the reliance on subjective verification or claims by the management has been replaced with cryptographic proofs such as Zero-Knowledge Proofs. These proofs and the corresponding results are reflected on the blockchain, thus allowing an objective verification of the asset management status by the customers of FTX Japan.

The PoS service is available to all customers of FTX Japan as well as the Liquid Japan platform. Customers can easily verify their balances with a mere three clicks via the Liquid GUI. Furthermore, details of the PoS are scheduled to be published weekly on the Ethereum blockchain, according to Melamed. This initiative is seen as a vital step towards resumption, and FTX Japan believes it to be a high-quality service for all participants in the cryptocurrency ecosystem.

The launch of the Proof of Solvency by FTX Japan underscores the growing importance of transparency and trust in the evolving digital asset marketplace. By leveraging blockchain technology, FTX Japan has established a robust mechanism to provide clear evidence of its financial solvency to its customers, thereby setting a positive precedent in the industry for security and transparency.

SEBA Bank Secures SFC License, Expanding Crypto Services to Hong Kong

Switzerland-based cryptocurrency bank SEBA Bank has marked a significant milestone by obtaining a license from the Hong Kong Securities and Futures Commission (SFC). The license, granted on November 3rd, represents a crucial step for SEBA in expanding its cryptocurrency services in the Asia Pacific region. SEBA Hong Kong, a subsidiary of SEBA Bank, is now authorized to offer a range of cryptocurrency-related services within the area, as confirmed by the SFC’s official website.

SEBA Bank established its first Hong Kong office in November 2022, underlining its strategy to broaden its service spectrum in Asia. Following an initial permission in principle from the SFC in August 2023 for virtual asset trading services, the recent licensing confirms SEBA’s operational expansion outside its home country, including a presence in Abu Dhabi.

With this new license, SEBA can engage in the trading and distribution of all securities, encompassing digital asset-related products like over-the-counter (OTC) derivatives. Moreover, the license allows SEBA to provide advisory services on securities and digital assets and manage assets for discretionary accounts, which include both traditional and digital assets.

SEBA’s services, facilitated by this license, will cater to institutional and professional investors such as corporate treasuries, funds, family offices, and high-net-worth individuals. Franz Bergmueller, the Chief Executive Officer of SEBA, expressed enthusiasm in an official statement, highlighting Hong Kong’s pivotal role in the cryptocurrency economy since Bitcoin’s inception and the bank’s eagerness to contribute to Hong Kong’s digital asset market.

Hong Kong’s rigorous licensing system permits only a select few platforms to cater to both local and foreign clients, including retail customers. Upon the government’s announcement to license crypto-related businesses, approximately one hundred firms showed interest in establishing Hong Kong branches. However, only a handful have successfully navigated the regulatory landscape to obtain clearance.

CBI and Liminal Collaborate for Digital Asset Security in India Amid Crypto Scams

Strategic Alliance for Digital Asset Security

India’s Central Bureau of Investigation (CBI) has engaged Liminal, a Singapore-based digital asset custodian, to manage and secure digital assets confiscated in criminal investigations. This strategic partnership emerges against the backdrop of a surge in cryptocurrency-related frauds in India, highlighting the growing concerns in this sector.

Rising Concerns Over Cryptocurrency Frauds

Recently, India has witnessed a spate of cryptocurrency scams, leading to significant financial losses and several arrests. Two of the most notable cases include a $300 million scam with 18 arrests and a $120 million fraud resulting in at least two arrests. These incidents underscore the increasing challenges in regulating the digital asset ecosystem and preventing its misuse for illicit activities.

Liminal’s Role in Enhancing Digital Asset Security

Liminal, under the leadership of Mahin Gupta, co-founder of ZebPay, an early player in India’s cryptocurrency exchange market, has stepped up to the challenge. The company, known for its robust security measures, raised $4.7 million in mid-2022 from prominent investors like Elevation Capital, Andreas Antonopoulos, Balaji Srinivasan, and Sandeep Nailwal. Liminal’s expertise in creating multi-signature and multi-party computation wallets positions it as a capable partner for the CBI in ensuring the security of seized digital assets.

Senior Vice President of Strategy and Business Operations at Liminal, Manan Vora, expressed pride in their collaboration with the CBI, stating, “We consider our partnership with the CBI as a testament to our unwavering dedication to building a safe and regulated digital asset ecosystem in India. As experts in the field, we feel it’s our responsibility to assist law enforcement agencies with rigorous security protocols.”

CBI’s Discretion in Ongoing Investigations

The CBI, known for its discretion in ongoing investigations, has not disclosed specific details of the operations involving confiscated digital assets. However, their gratitude towards Liminal for their assistance and involvement in securing these assets has been publicly acknowledged.

The CBI’s initiative to partner with Liminal for the custody of seized digital assets marks a critical step in addressing the security challenges in the cryptocurrency sector. This collaboration not only reinforces the need for enhanced security measures but also showcases the potential of public-private partnerships in regulating and safeguarding the digital asset ecosystem in India.

Superstate Gains $14m in Series A Led by Distributed Global and CoinFund

Superstate, an innovative asset management firm, announced today the successful closure of its Series A financing round, raising $14 million. This funding will catalyze the firm’s mission to offer cutting-edge investment solutions to institutional investors, while paving the way for democratizing investment opportunities through advanced blockchain tokenization.

The Series A round, a noteworthy achievement following their $4 million Seed financing in June 2023, was co-led by Distributed Global and CoinFund. It witnessed substantial participation from industry giants like Breyer Capital, Galaxy, Arrington Capital, Road Capital, CMT Digital, Folius Ventures, Nascent, Hack VC, Modular Capital, and Department of XYZ, underscoring the broad interest in Superstate’s vision.

Robert Leshner, Co-founder and CEO of Superstate, highlighted the firm’s dedication to reshaping the investment landscape. “The future of investments are programmable, compliant, and transparent,” he said. Superstate aims to transcend the limitations of first-generation tokenized funds, which were constrained to private blockchains or offshore entities, thus barring U.S. investors.

The newly raised capital is earmarked for expanding Superstate’s team, launching private funds aimed at institutional investors, and forging a path for tokenized, publicly registered investment funds. This strategic allocation of resources is aimed at cementing Superstate’s position as a leader in the digital asset management space.

Superstate is championing the creation of regulated, self-custodied on-chain funds that promise exposure to traditional assets through innovative on-chain investment products. These funds are set to capitalize on the speed, programmability, and compliance benefits of blockchain tokenization. Key advantages of these on-chain funds include investor-directed ownership, facilitating rapid and unrestricted control over assets; next-generation utility, allowing for programmable and compatible assets with on-chain contracts and applications; and transparent, embedded compliance, ensuring real-time regulatory adherence.

In June 2023, Superstate took a significant step by filing a draft prospectus with the U.S. Security and Exchange Commission for the Superstate Short-Term Government Bond Fund. This initiative, an open-ended mutual fund, plans to incorporate a secondary record of ownership on the Ethereum blockchain, illustrating Superstate’s commitment to integrating traditional finance with innovative blockchain technology.

Jake Brukhman, Founder & CEO of CoinFund, expressed his enthusiasm for Superstate’s novel approach. “Superstate’s approach to tokenization will bridge the gap between high-quality compliant financial products and the massive advantages and innovation DeFi is poised to offer to traditional finance,” he remarked.

Superstate’s pioneering efforts in modernizing the infrastructure of investment funds underscore the firm’s commitment to offering investment products that leverage the advantages of blockchain tokenization, such as speed, programmability, and compliance. For more information about their offerings for institutional investors, visit Superstate.co.

BlackRock's Strategic Shift: Layoffs Amidst Bitcoin ETF Anticipation

The world’s biggest asset management, BlackRock Inc., is now making news for two significant innovations that are a reflection of the strategic modifications it has made in response to the ever-changing financial environment.

BlackRock has just made the announcement that it would be significantly reducing its personnel. roughly three percent of its workforce throughout the globe, which amounts to roughly 600 people, would be impacted by this relocation. This move is reminiscent of a similar step that was made in 2023, which suggests that there will be a trend of yearly modifications to the staff depending on performance. The company has already reduced the number of workers by 500 earlier this year, so this is the second wave of layoffs that they have implemented this year. As part of BlackRock’s larger plan to navigate through the present market issues, the company has decided to lay off employees. This decision reflects the company’s proactive effort to retaining its competitive advantage. These choices will have a significant impact on the company’s finances, including the imposition of a restructuring charge of $91 million during the fourth quarter of 2022. This charge will largely cover severance and pay adjustments for workers who will be impacted by the decision.

BlackRock is presently at the forefront of a substantial development in the bitcoin industry, which is taking place simultaneously. Currently, the company is waiting for the decision that the United States Securities and Exchange Commission (SEC) will make on its application for a spot Bitcoin Exchange-Traded Fund (ETF). It is predicted that this decision will be made by January 10, 2024, and the cryptocurrency world is eagerly anticipating it. As indicated by the latest update filing that BlackRock made with the Nasdaq for its Bitcoin exchange-traded fund (ETF) proposal, BlackRock has been increasing the intensity of its attempts to match with SEC requirements. In addition, the corporation has taken the initiative to seed its Bitcoin exchange-traded fund (ETF) with ten million dollars in cash, demonstrating its faith in a positive conclusion. The SEC has only allowed cryptocurrency exchange-traded funds (ETFs) that are related to futures contracts up to this point, so the approval of this ETF would be a significant step forward. It is anticipated that this event will have substantial repercussions for the cryptocurrency market, which may result in the opening of new doors for both institutional and individual investors alike.

Nomura's Laser Digital Partners with WebN Group to Launch Libre Protocol on Polygon

Nomura’s Laser Digital and WebN Group have recently announced the launch of the Libre protocol, a pioneering fund tokenization infrastructure leveraging Polygon technology. This groundbreaking development is scheduled to go live in the first quarter of 2024.

Libre, an institutional Web3 protocol, represents a significant collaboration between Laser Digital, the crypto arm of the global financial services firm Nomura, and WebN Group, a hub for fintech and Web3 innovation. This initiative has garnered backing from influential industry players, including Brevan Howard co-founder Alan Howard.

The Libre protocol aims to reshape the alternative investments landscape by utilizing asset tokenization and smart contracts. It is designed to enable regulatory-compliant issuance and management of these investments. Developed with the Polygon Chain Development Kit (CDK), Libre offers a zero-knowledge-powered Layer 2 blockchain solution on Ethereum, enhancing scalability and security.

Institutional heavyweights Brevan Howard and Hamilton Lane are poised to be the first users of the Libre platform, marking a significant step in the adoption of blockchain technology for enhancing the distribution and accessibility of alternative asset funds. The protocol’s features extend beyond primary issuance services, including capabilities like collateralized lending and automated rebalancing of private investment portfolios, setting a new standard for wealth management APIs.

The broader context of fund tokenization reveals a rapidly evolving sector, with major financial institutions like JPMorgan, WisdomTree, and Standard Chartered’s SC Ventures launching similar initiatives. These developments underscore a growing recognition of the transformative potential of blockchain technology in asset management.

Libre’s launch is not just about technological advancement; it represents a compliance-focused approach to the tokenization of funds. With plans to operate initially in jurisdictions like Singapore, Abu Dhabi, and Luxembourg, Libre will enable issuers and distributors to navigate complex regulatory landscapes efficiently. This strategic compliance, combined with innovative technology, positions Libre to significantly impact the global asset management industry.

In conclusion, the collaboration between Nomura’s Laser Digital and WebN Group to create the Libre protocol heralds a new era in the tokenization of funds. This initiative stands at the forefront of blockchain adoption in the asset management sector, promising to unlock new investment opportunities and enhance operational efficiencies across the board.