The total number of cryptocurrencies that have been developed around the world recently topped 2,000. With Bitcoin and other cryptocurrencies down from record highs marked last year, now is a great time to buy into this growing industry. One problem, though, is how to get the best exposure for your investment. Getty Images
New cryptocurrency hedge funds have continued to appear despite the market headwinds of 2018. Dozens of new funds have appeared so far this year, and there are now more than 1,500, giving investors the opportunity to buy Bitcoin and altcoins as well as stakes in blockchain companies. If 2017 was the year of Bitcoin, 2018 is proving to be the year of crypto hedge funds.
Black Star Capital, which achieved one of the largest initial coin offerings ever in Japan last year, is developing a unique platform named Zeta that gives investors access to the crypto hedge fund market. Zeta is basically a one-stop shopping portal for hedge fund investments and opens up a market that was previously limited to professionals and institutional investors.
“We believe that economic activities in society should be principally free,” Hirai and colleagues write in a series of white papers that describe Spindle and the platform to use it, known as the Zeta initiative. “To create autonomous human beings, Zeta aims to establish a transparent and fair platform that will enable more people to enjoy a rich life through investment/asset management.”
Named after one of the shows in the Mobile Suit Gundam anime franchise, Zeta gives users access to investment opportunities that are currently limited to hedge fund players. It’s also the first matchmaking platform, not unlike Tinder in the online dating world, to bring together investors and cryptocurrency funds. Zeta uses smart contract technology to record unalterable transactions in the blockchain, eliminating banks and securities companies that have traditionally acted as middlemen between investors and asset managers. Unlike many rival currencies, all transactions in Spindle must be indelibly recorded with blockchain technology.
“Blockchain technology could make financial markets fair, and that’s why we’ve raised funds via Spindle,” says Hirai. “To enrich the lives of ordinary people who aren’t professional institutional investors, we need a system that isn’t dominated by traditional banks and central banks. That’s what we’re building with Spindle and Zeta.”
On the Zeta platform, investors will be able to put money into funds by using the Spindle (SPD) crypto currency. Users first purchase SPD, which is then converted to the cryptocurrency of the target fund. The platform will also accept investments in Bitcoin, Ethereum and other currencies.
A unique crypto investment tool
“We’re not aware of any other platform with the services that will be available on Zeta,” says Black Star Capital CEO Masamitsu Hirai. “There are some websites with information about funds, but there are no user-friendly sites that are doing this. We’d like to position Zeta as a gateway for investing in the crypto hedge fund world.”
To help users make sense of the growing crypto hedge fund market, Zeta has a unique database with key information and graphs for each fund. Depending on what information is disclosed by particular funds, the database entries can show fund managers, objectives, weightings and relative risk levels. Black Star Capital is also planning to introduce a fund rating system for Zeta. The platform will open to the public in October 2018 with a database of about 215 funds; this will expand to cover the entire fund industry.
“We’re aiming to tailor our services to investors depending on where they live,” says Black Star Capital founder Shuichi Uda, who previously worked as an Investment Adviser in London. “Investment regulations differ in countries like the U.S. and China, but we’re very likely to begin the service to professionals or high net worth individuals who have enough assets and knowledge to make sound market judgments. After this initial phase, we aim to expand to ordinary investors.”
Ready to grow in London
The rollout of Zeta comes as Black Star Capital is opening its new headquarters in London. Although it was founded in Japan, the company relocated to the U.K. for strategic reasons—after the U.S., the U.K. is one of the top locations for crypto fund launches for 2018, according to Crypto Fund Research.
“We chose London for our office because we have experience working in the city and it seems like just about everyone is talking about cryptocurrencies there,” says Uda. “Senior bankers in the U.K. are knowledgeable about crypto currencies, and some private bankers in Guernsey, Malta & Cyprus are moving assets into Bitcoin. We haven’t seen these kinds of discussions in Japan. While Japan led the crypto market last year, it was based on individual investors, not institutional ones, putting money into Bitcoin and other coins.”
The Japanese financial indu...