Matt Zhang on a mission to reinvent crypto for institutional investors
Matt Zhang, founder of Hivemind Funds Companions and former Citi manager, explains the biggest challenges faced by institutions looking to invest in crypto.
Institutional interest in cryptocurrencies is growing as the space continues to grow. A survey published December 8th by European investment manager Nickel Electronic Asset Administration found that 85% of institutional investors and asset managers have dedicated teams for reviewing funds, electronics and digital assets. The study finds that surveyed investors have $ 108.4 billion in assets under management. The London-based company also released a report in September this year showing that 62% of global institutional investors with no crypto exposure expect to make crypto investments in the next year.
Also of note are Wall Street veterans who are beginning to get involved in the crypto industry. Most recently, Matt Zhang, a former trading manager at global bank Citi, launched a new venture fund specifically for crypto and blockchain startups. Known as “Hivemind Cash Partners,” Zhang previously noted in an article on Cointelegraph that the $ 1.5 billion overweight fund would help “institutionalize crypto investments.”
Given the growing interest from institutions in cryptocurrencies, Cointelegraph spoke to Matt Zhang during Algorand’s Decryption event in Miami to learn more about Hivemind’s plans to bring crypto to the world. Zhang also shared his thoughts on layer-one networks, cryptocurrency regulations, and inedible tokens or NFTs.
Cointelegraph: Thank you for joining me, Matt Zhang. Can you tell us why Algorand will be your first partner And what other partnerships can be expected?
Matt Zhang: I’m a multi-channel maximalist and I believe there will be a handful of Layer-One networks building great projects. Algorand provides high quality corporate and institutional clients for multiple blockchain solutions. If you think blockchain is a huge space, you have to bet that it will be around for the next 10 years. Therefore, the funds have to find partners who will survive the next 10 years. The entire crypto ecosystem is now close to $ 4 trillion – that’s how small we are. People have to slow down and find patient partners who want to build long-term.
I am also in active discussions with many other leading Tier 1 networks to ensure that Hivemind has an omnidirectional network that will help our investors see the best transaction flows. I think layer one is a very different product among all blockchain ecosystems in the sense that these networks are what other crypto companies are built on. That means that when building a crypto-native platform for services you will typically need to use one of the Layer 1 networks and may want to use one of the larger established options. Hivemind is currently in different stages with other classes. I think this will be an ongoing effort and new partnerships are likely to emerge over the next few months.
We also think there are many partners in the crypto ecosystem who are still using yesterday’s model in a human way to control the flow of transactions. This could work, but I think it is necessary to use a Layer 1 network to view previous transactions. We can then use this technology to help companies build their own platforms. This is essential and very different from the earlier era of wealth management.
CT: “What does institutionalization of crypto investments mean?”
MZ: First of all, it is important to point out that yesterday’s investment model does not work in the crypto world. Second, I think there is still a lot of Wild West activity going on in the crypto space. If you want institutional investors to dominate, we need to do more than just tell them that crypto investing is a great opportunity.
“Basically, you have to tell investors that there is an opportunity here, but we will also be able to provide the infrastructure to enable companies to approach in the most legally compliant way possible. The opportunity and its approach must be coordinated. “
We also want to differentiate ourselves by focusing not only on the opportunity, but also on the second aspect mentioned. Institutional investors want to ensure that they are not exposed to operational or regulatory risks. Cryptocurrencies are inherently fun, so we don’t have to reinvent every aspect, but we do have to rethink how things work.
CT: Are you saying that organizations need to hold hands?
MZ: I think we need to build trust in institutions by helping them understand crypto a little better. Education is required, but remember that these people are very intelligent. They manage trillions of dollars in assets for them to see and know. They will also tell you why certain things don’t work. The conversation we have with institutions is that they say this is a great area and they believe in blockchain, but investing in crypto is still a problem. In fact, one of the top concerns for many organizations is operations.
“For example, institutions want to make sure that the money they give to the fund is safe and not just a do-it-yourself operation. You want to make sure the fund is compliant and the managers have no problem with how the money is being spent. All of this has to do with trust that we need to build. “
I also think the prescribed amount is good. I come from a highly regulated industry. If you want to make something mainstream, you also have to work with regulators. All countries are now at different stages of this regulatory journey. Blockchain is decentralized and understanding what really decentralization is takes a lot of thought. Therefore, it is only fair for regulators to take the time to understand this space and be careful.
However, it is very important that regulation does not block innovation. Innovation has to work quickly. The whole ecosystem needs to strike a good balance to allow innovation while the regulations stay up to date to show us what can be done for sustainable growth.
CT: Does Hivemind focus on a specific area?
MZ: The nice thing about cryptocurrency is that you can be based anywhere. There’s that community approach no matter where you start with the flywheel. After all, many crypto projects today are self-administered or an entire community contributes to them. If you think innovation will get there in 5-10 years, you can work backwards because it doesn’t matter where it ends.
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However, it is important to get started as some “friendlier” countries have regulations. However, we want to support the best projects wherever they are. In America, for example, there are many visionary founders. Since Hivemind is based in New York, we’ll take advantage of this and try to do business here. But we are also interested in companies in Europe and Asia. We wanted the system to find these projects and support them with all the necessary tools.
CT: What do you think of NFT?
MZ: Personally, I find NFT very creative and interesting. But more importantly, I’m very interested in what can be built on immutable tokens. Currently, NFTs are used a lot for art and games as collectibles. That’s interesting, but the NFT’s utility layer is more interesting in my opinion.
For example, some ticket companies offer NFT event tickets. In the basic class, the NFT is a collection that serves as a souvenir of an event. However, this NFT can also be used as a gateway for future interaction with fans. Building the next level of opportunity on NFT is something everyone in the crypto community will be concerned about – this is where real value will develop, in my opinion.