Original | Odaily Planet Daily (@OdailyChina)
Author | Nanzi (@Assassin_Malvo)
On September 30, the crypto financial services platform Matrixport announced that it has acquired the crypto asset management company Crypto Finance (Asset Management) AG (CFAM) from the Deutsche Börse Group.
In the 15th year since the birth of Bitcoin and cryptocurrencies, we have witnessed Bitcoin becoming the 8th largest asset globally, and the approval of the Bitcoin spot ETF. The wave of crypto mainstream adoption is unstoppable.
The influx of traditional capital with the Bitcoin spot ETF, as well as the third-world users entering the TON ecosystem, all reflect the increased penetration of the crypto industry to a new level. With the expansion of user base and capital, various investment and wealth management demands are expected to see a new round of explosive growth amid this wave.
However, governments around the world have not fully embraced the crypto industry, compliance has become a focus for many countries, and also a challenge and strategic point in market competition, so leading institutions are all competing for policy opportunities and market share in different regions.
As a licensed and compliant asset management company in Switzerland, the acquisition of CFAM marks Matrixport's successful entry into the pan-European crypto asset management market. Matrixport will leverage CFAM's existing pan-European market access and sales network to provide comprehensive compliant crypto services to qualified institutions, individual investors, underwriters, and retail clients.
I. The Wave of Crypto Mainstream Adoption and the Rise of Asset Management Demands
BCG data shows that by the end of 2023, the global asset management industry's assets under management (AuM) will reach about $118.7 trillion, while the global stock market capitalization will be $115.0 trillion during the same period, indicating the high demand and steady development of asset management in traditional finance.
Increase in market size and allocation proportion: The asset size of the crypto market has grown from $100 million to $2 trillion in the past decade, while the largest GBTC asset management scale was about $20 billion before the approval of the Bitcoin spot ETF, and the asset management scales of other companies like CoinShares, Bitwise, and 21Shares were in the range of hundreds of millions to tens of billions of dollars. Although the Bitcoin spot ETF brought a net inflow of $19.3 billion, there is still ample room for growth in allocation scale compared to the traditional market.
Change in asset attributes: With the increase in scale, the attributes of top tokens like Bitcoin and ETH have shifted more from Alpha returns to Beta allocation, with characteristics like inflation resistance and value storage becoming increasingly prominent and valued by people.
Demand overflow driven by the expansion of user base: On the other hand, the user base and structure of the crypto market have undergone tremendous changes, with traditional asset management giants like BlackRock starting large-scale deployments in Bitcoin spot ETFs, introducing a large number of stock investors, while users in emerging markets like Africa have also joined the market with the rise of the TON ecosystem. The massive increase in user scale has led to further demand for structured products.
IBIT net assets (left axis), Bitcoin price (right axis)
Although the public's acceptance of crypto has made a qualitative leap, there is still a key issue to be addressed before achieving Massive Adoption - compliance. The US SEC has repeatedly accused multiple crypto protocols and companies of selling unregistered securities, and exchanges are rushing to apply for licenses in Dubai and Hong Kong, all of which reflect the trend and necessity of compliance.
Focusing on the pan-European region, the EU has passed and is gradually implementing the European Crypto Asset Market Regulation (MiCA). MiCA has deeply regulated the licensing, reserve capital, and risk control of operations. Due to the introduction of MiCA, Coinbase will delist non-compliant stablecoins like USDT in the European Economic Area by December, Bybit will terminate services in France, and Binance has banned its European users from using its copy trading service, indicating that failure to complete compliance in a timely manner will lead to various obstacles. MiCA will come into full effect this December, and compliance is imminent for all entities operating in the relevant regions.
II. Acquisition of CFAM: Entering the Trillion-Dollar Pan-European Market
Leading Licenses and External Resources
CFAM, the asset management company acquired by Matrixport, was established in 2017. According to FINMA's official information, only 31 entities have been authorized as securities firms, and CFAM is one of them. Furthermore, CFAM is the first crypto asset management company to be granted a license by the Swiss Financial Market Supervisory Authority (FINMA), allowing it to sell crypto-related collective investment schemes to qualified institutional and individual investors, underwriters, and retail clients.
On January 1, 2020, Switzerland introduced the Financial Institutions Act (FinIA), requiring all asset management companies to obtain a FINMA license to operate. According to Finalix's data, there are about 2,400 asset management companies in Switzerland, but only 250 successfully obtained the license in the first year and a half after the regulation came into effect, and by the end of 2023 there were 1,187 licensed institutions.
The licenses issued by FINMA to asset management companies are divided into two categories: the "EAM license" and the "Collective Investment Scheme Manager license". The former is supervised by a regulator other than FINMA, with relatively lower procedural, reporting, and audit requirements, mainly suitable for simple products. CFAM's license is the latter, which is directly supervised by FINMA, the most comprehensive and stringent license for crypto asset management in the Swiss market, covering a wide range of products, including complex funds targeting institutional clients, ensuring full compliance management for complex fund products.
In addition, CFAM is the first member of the Swiss Asset Management Association (AMAS) that focuses on providing crypto asset management services. It also has deep cooperation with the financial service provider APEX Group, which has over $1 trillion in assets under management, and has the resources and capabilities to quickly launch and issue crypto ETPs and AMCs. ETPs are crypto currency exchange-traded products, and AMCs are actively managed certificates issued by financial institutions for excess return investment strategies.
ETP is a tool that tracks the underlying securities, indices or other financial products, the most well-known subclass of which is ETF. By analogy with shopping, users can individually select various fruits such as apples and bananas, or they can directly buy a pre-mixed fruit basket, avoiding the hassle of selection. ETF is like such a mixed fruit basket, giving users the ability to purchase a portfolio of cryptocurrencies. For the cryptocurrency industry, the most critical feature of ETP is that it has lowered the investment threshold for users, increasing the potential market size by several orders of magnitude. Native cryptocurrency investment requires creating a cryptocurrency wallet, selecting an appropriate exchange, and facing potential security risks, while ETP eliminates these issues. The Bitcoin spot ETF approved in the US in January this year has accumulated a net inflow of $19.36 billion, with a net asset value of $61.89 billion, accounting for 4.7% of Bitcoin's total market capitalization, demonstrating the wide applicability and large capacity of ETP products. The combination of Matrixport's high-quality products and the vast pan-European market space is expected to bring a new growth curve to crypto assets.
Global Compliance Strategic Layout
It is reported that Matrixport has obtained compliance licenses in multiple regions, such as the Hong Kong trust license and the US money services license, and the acquisition of CFAM is an important step in Matrixport's global compliance strategic layout. As the first FINMA-authorized cryptocurrency asset management company, the acquisition of CFAM marks Matrixport's successful entry into the Swiss and European cryptocurrency asset management market.
First, according to data disclosed by the Swiss government in 2021, the total assets of Swiss pension funds reached CHF 1,159 billion (approximately $1,350 billion). Through CFAM's FINMA license, Matrixport's products are expected to officially enter this market.
Furthermore, CFAM also has pan-European market access and the corresponding sales network. After the acquisition, Matrixport will be able to provide comprehensive cryptocurrency asset management services to qualified institutions and individual investors, as well as underwriting institutions, in the relevant regions, and its ETP products can be sold through third-party channels, further expanding the promotion scope of the products.
Resource Integration, Entering a New Peak
Product Iteration: In the past year, CFAM has expanded its product line (6+ 1 product line), covering retail and qualified investors, including the first FINMA-regulated cryptocurrency mutual fund Crypto Market Index Fund, the low-risk hedge fund Systematic DLT Fund, and the CFMOM ETP targeting high-growth users. In addition, CFAM has also collaborated with APEX Group, which has over $1 trillion in assets under management, to design and launch customized cryptocurrency strategy products for other asset managers, banks, and family offices through the latter's white-label services.
Integration of Talent and Sales Resources: The original CFAM team has over 20 years of experience in the asset management industry. After the acquisition, the original organization will be renamed and merged into Matrixport Asset Management (MAM). According to the group's plan, Matrixport will complete the asset restructuring of CFAM in the fourth quarter of 2024 and quickly invest in the research and development of new products, realizing its own Multi-Strategy fund. Based on the existing funds acquired, Matrixport will further enrich its asset management product line, providing qualified institutions and individual investors, underwriters, and retail investors in the pan-European market with integrated cryptocurrency asset management services and solutions that combine innovation and compliance.
III. Matrixport Analysis: A Global One-Stop Cryptocurrency Financial Service Platform
Clearly, the acquisition of CFAM is of great strategic significance to Matrixport. So, what different investment opportunities and experiences will users or investors gain from this?
Since CFAM has pan-European market access qualifications, for users in the pan-European region, the purchase of ETP products through pan-European exchanges or national stock exchanges is only a matter of certain regulatory procedures, making it more convenient to access, acquire and invest in Matrixport's various high-quality products.
For Matrixport's existing global users, with the influx of incremental funds from the pan-European region, the trading activity and capital depth will see significant growth, further enhancing the liquidity and stability of Matrixport's products. At the same time, after the integration of CFAM's talents, products, and resources with Matrixport, the richness of the product matrix and the user experience are expected to be improved, providing comprehensive choices and high-quality products for global users.
So, what are Matrixport's product systems and services?
Product and Service Details
Matrixport was established in 2019 and is a global one-stop cryptocurrency financial service platform with $6 billion in asset management and custody.
Matrixport provides a hierarchical and diverse range of wealth management products for individual investors, institutional investors, and ecosystem project parties, including entry-level products such as demand deposits and fixed-income investments, as well as basic wealth management products like Shark Fin and Trend Smart Yield, as well as advanced products like Dual Currency, Seagull, and Snowball. For users who want to participate in on-chain yield-generating activities, Matrixport also provides proxy on-chain services such as ETH Staking and reStaking. Whether you are a newcomer to the industry, an independent whale, or a large institution, and regardless of your risk preference, you can find high-quality, high-capacity wealth management services that meet your needs on Matrixport.
Matrixport not only tailors its products to the needs of a wide range of users, but also actively implements a global compliance development strategy. For example, in terms of licenses, Matrixport has obtained compliance licenses such as the Hong Kong trust company license and money lender license, the US money services license, and is also an FCA-compliant authorized representative company in the UK and a member of the FINMA SRO-VFQ in Switzerland.
The image below shows some of Matrixport's products, covering multi-level structured products for users with different risk preferences. Low-risk users can choose basic products like demand deposits, Shark Fin, and Trend Smart Yield, while advanced users can also participate in Matrixport's option-based advanced structured products like Snowball and Seagull.
Matrixport also launched the more stable "government bond yield" product through its Matrixdock brand, introducing a synthetic asset STBT based on short-term US Treasuries through transparent RWA on-chain services, allowing holders to enjoy the risk-free yield of US Treasuries. In addition, Matrixport's Matrixdock also launched the gold tokenization product XAUm in September, targeting the "next new asset class" with a scale of over $100 trillion.
Matrixport's one-stop platform application is open for multi-terminal download, and users can download the iOS, Android and other versions through the official link (click to jump). Users can easily find the required wealth management products through the homepage navigation, complete the deposit and corresponding level of KYC, and quickly and conveniently start investing and asset management.
In addition to investment products, Matrixport provides various sharing channels for investment insights, aiming to provide users with cutting-edge and professional investment references. At the same time, Matrixport will also regularly output important events, market insights, and structured investment strategies through its official Telegram channel and official X account.
Conclusion: Entering a New Stage of Global Compliance and Development
The expansion of the cryptocurrency industry has become an unstoppable trend, and with the arrival of US interest rate cuts, the scale of capital outflows will continue to rise. In this round of interest rate cut cycle, the scale of cryptocurrency asset management may continue to grow by several orders of magnitude. Through the acquisition of CFAM, Matrixport has officially entered the pan-European market, taking a key step in its global compliance strategy, and is expected to seize the opportunity in the wave of asset management, ushering in a new round of explosive growth.
