Matt Zhang on a mission to reinvent crypto for institutional investors

Institutional interest in cryptocurrencies is increasing as the space continues to mature. A survey published on December 8 by European ...



Institutional interest in cryptocurrencies is increasing as the space continues to mature. A survey published on December 8 by European investment manager Nickel Digital Asset Management revealed that 85% of institutional investors and wealth managers have teams dedicated to review cryptocurrencies and digital assets. The study noted that the investors surveyed manage around $ 108.4 billion in assets. The London-based company also released a report in September this year showing that 62% of global institutional investors with no cryptocurrency exposure expect to make their first crypto investments over the next year.

It’s also worth noting that Wall Street veterans are starting to enter the crypto industry. Most recently, Matt Zhang, a former commercial executive at Citi World Bank, launched a new venture capital fund entirely dedicated to cryptocurrency and blockchain startups. Known as “Hivemind Capital Partners,” Zhang previously noted in a Cointelegraph article that the $ 1.5 billion multi-strategy fund will help “institutionalize crypto investing”.

Given the growing interest of institutions in cryptocurrencies, Cointelegraph spoke with Matt Zhang at Algorand’s Decipher event in Miami to learn more about Hivemind’s plans to bring crypto to institutions. Zhang also shared his thoughts on layer one networks, cryptocurrency regulations, and non-fungible tokens, or NFTs.

Cointelegraph: Thanks for joining me, Matt. Can you tell us why Algorand has become your first partner and what other partnerships can we expect?

Matt Zhang: I’m a multi-chain maximalist and I think there will be a handful of layer one networks that build some amazing projects. Algorand provides quality to businesses and institutional clients for a number of blockchain solutions. If you think blockchain is a big space, you have to bet that it will be there for the next 10 years. Therefore, the funds must find partners who can survive the next 10 years. The entire crypto ecosystem is currently just under $ 4 trillion – that’s how small we are. People need to slow down and find patient partners who want to build long term.

I am also in active discussions with many other leading networks to ensure that Hivemind will have a multi-channel network to help our investors see the best deal flows. I think the first layer is a very different product from all blockchain ecosystems in that these networks are what other crypto companies rely on. This means that if you are building a native crypto platform for services, you usually need to take advantage of one of the Layer One networks, and you may want to take advantage of one of the more important and important options. better established. Hivemind is currently in different stages with other layers. I think it will be an ongoing effort, and new partnerships could be seen as early as the next few months.

We also believe that there are many partners in the crypto ecosystem who are still using yesterday’s model in a human way to generate transaction flows. It can be effective, but I think it is necessary to use a layer one network to see the deals first. We can then use the technology to help businesses build their own platforms. This is essential and is very different from the last era of asset management.

CT: What does it mean to “institutionalize investment in crypto? “

MZ: First of all, it’s important to point out that yesterday’s investment model isn’t working in the crypto world. Second, I think there is still a lot of Wild West activity in the crypto space. If you want institutional investors to be dominant, we need to do more than just tell them that investing in crypto is a great opportunity.

“You basically have to tell investors that there is an opportunity here, but that we will also be able to provide the infrastructure to allow institutions to access in the most compliant manner. The opportunity and the way to access it must go hand in hand. “

We also want to differentiate ourselves by focusing not only on desirability, but also on the second aspect that I mentioned. Institutional investors want to ensure that they do not run operational or regulatory risks. Crypto is already interesting, so we don’t have to reinvent every aspect, but we have to rethink the operational side of things.

CT: Are you saying that institutions need to hold hands?

MZ: Well, I think we need to give institutions confidence by helping them understand crypto a bit more. Some level of education is required, but keep in mind that these people are very smart. They manage billions of dollars in assets, so they see it and know it. They will also tell you why certain things are not working. The conversation we have with institutions tells them that this is a great industry and that they believe in blockchain, but investing in crypto remains a concern. In fact, one of the biggest concerns of many institutions is operational.

“For example, institutions want to make sure that the money they donate to the fund is safe and that it is not just a cottage transaction. They want to make sure the fund is compliant and that regulators don’t have issues with how the money is being used. It all involves trust, which is something we have to build. “

I also think that a good dose of regulation is a good thing. I come from a highly regulated industry. If you want to do something mainstream, you have to work with regulators as well. All countries are now at different stages of this regulatory process. Blockchain is decentralized, and to understand what decentralization really is, it takes a lot of thought. As such, it is only fair that regulators take the time to understand and be cautious about this space.

Having said that, it is very important that regulations do not stifle innovation. Innovation must work quickly. The whole ecosystem needs to strike the right balance to allow innovation to happen, while regulations keep pace to guide us in what can be done to make growth sustainable.

CT: Does Hivemind focus on a particular region?

MZ: The beauty of crypto is that you can be based anywhere. There is this community approach no matter where you start a flywheel. Ultimately, many crypto projects will now be autonomous or an entire community will contribute. If you think that in 5-10 years, that’s where the innovation is, you can go back because it doesn’t matter where it ends.

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But, where it starts matters because there are regulations in some countries that are more “friendly”. However, we want to support the best projects wherever they are. In the United States, for example, there are many visionary founders. Since Hivemind is based in New York City, we’ll take advantage of that and try to close some business here. But we are also interested in companies in Europe and Asia. We want to be systematic in order to find these projects and to support them with all the necessary tools.

CT: What do you think of NFTs?

MZ: Personally, I think NFTs are innovative and fun. But more importantly, I’m very interested in what can be built on non-fungible tokens. Currently, NFTs are used a lot for art and games as collectibles. It’s fun, but the utility layer of NFT is what I think is the most interesting.

For example, some ticketing companies manufacture NFT event tickets. At the base layer level, the NFT is a collector’s item that serves as a memento of an event. But, this NFT can also be used as a gateway to interact with the fans moving forward. Building the next layer of opportunity on top of NFTs is what members of the crypto community will spend a lot of time thinking about – this is where I think the real value will go.