Citi, Accel back Hong Kong crypto start-up Xalts
Citi Ventures and Accel have invested in Hong Kong-based Xalts, a start-up founded by former HSBC and Meta personnel, with a view to facilitating digital asset management for institutional investors.
The transaction – billed as a marriage of Wall Street and Silicon Valley in support of crypto adoption – amounts to USD 6m. It is Citi Ventures’ first investment in a digital asset manager.
Sandeep Nailwal, founder of India-based blockchain infrastructure provider Polygon, also participated. Polygon raised a USD 450m round in February featuring several mainstream investors, including Accel.
Xalts was set up earlier this year by HSBC trader Ashutosh Goel and Supreet Kaur, a former executive at Meta Asia, previously Facebook. They have taken the roles of CIO and COO, respectively.
The idea is to drive “real-money” institutional participation in the digital asset ecosystem. The company plans to launch a range of fund products linked to digital assets, including mutual funds and exchange-traded funds listed on several global exchanges.
Xalts is collaborating with several asset managers and staking infrastructure providers on its fund projects. It is also working with a structured product and repackaging platform on projects that will allow institutions to issue structured notes with embedded crypto options.
"What came to the forefront this past summer in several large crypto firms was a lack of basic controls, checks and balances which most of us take for granted in the financial industry,” Goal said in a statement, referencing the recent sector downturn known as crypto winter.
“With Xalts, we are building innovative, institutional-grade investment products and solutions which focus on high compliance and control standards - things institutional investors care about. The next leg of growth in digital assets will be driven by institutional participation in the asset class. We are starting to see the early signs of that with a lot of new initiatives coming from banks and asset managers.”
Mainstream financial institutions’ embrace of blockchain is an accelerating trend. Professional investors traded USD 1.1trn of cryptocurrencies on Coinbase Global in 2021 compared with USD 120bn in 2020. Earlier this month, Charles Schwab, Citadel Securities and Fidelity Investments announced the launch of a cryptocurrency exchange, EDX Markets
Recent Asian activity on this front includes Japan’s Nomura Holdings has launched a business called Laser Venture Capital that will invest in companies in the blockchain and digital assets space. The VC unit is the first offering from a broader initiative called Laser Digital that will also explore secondary trading and investor products.
“There is a lot of pent-up demand from institutional investors to participate in the digital asset class. However, a lot of institutions we are speaking with are not able to access this ecosystem directly. Our products and solutions bridge this gap without compromising the high standards of safety and compliance expected by institutional investors,” Kaur added.
Xalts expects to have a team of 30 by year-end across Hong Kong, Singapore, Dubai, and Geneva.
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