(Oct 15): A startup in Tokyo backed by Coinbase Ventures plans to launch a digital asset fund as early as this year to expand the cryptocurrency investments it manages for wealthy clients.
Since setting up Hyperithm Co Ltd. in 2018, Chief Executive Officer Lloyd Lee, 28, grew his client crypto assets under management to about US$100 million, mainly by borrowing their digital assets and employing investment strategies such as options arbitrage to enhance returns.
Next up for his firm’s expansion, Lee aims to raise up to 10 billion yen (US$88 million) for a dedicated fund targeting annual returns of at least 15%. The vehicle would be open to institutional and qualified investors and could be up and running later this year or early next year, he said.
“There are clients who want higher-risk, higher-return opportunities,” Lee said in a recent interview.
Getting a successful digital-asset fund off the ground would be rare in a market like Japan, where cryptocurrencies are growing in popularity despite tougher regulations for these businesses than in many other countries. Lee, whose firm also operates in South Korea with around 80 clients, sees a largely untapped base in Japan where it currently has about 20 customers.
Lee came from South Korea to Japan in 2017 to work for the founding family of ABC Cooking Studio Co Ltd., which runs cooking schools in Japan and overseas. After initially using Bitcoin as a cheaper way to remit his salary back home to South Korea, he founded Hyperithm the following year.
His company caters to people who already have crypto assets and want to increase their holdings, he said, typically rich individuals who invested in digital assets some years ago and don’t yet want to cash out. In August, the company raised US$11 million in a series B funding round from investors including Coinbase Ventures.
The crypto wealth management business in Japan opened in March this year, borrowing clients’ Bitcoin and other tokens, paying them 6% interest in return. But Lee’s ambitions don’t end there.
“We are also considering doing a crypto exchange business in Japan,” Lee said. “We are considering options such as getting regulatory approval by ourselves,” or through alliance with other companies, he said.