Institutional and Venture Capital Pour Into Crypto Despite Market Downturn

Updated by Kyle Baird
In Brief
  • Despite the current market downturn, capital continues to pour into the crypto industry.
  • Giants like Northzone, Fidelity, JPMorgan, Charles Schwab have backed multiple digital assets platforms.
  • Investments in the web3 sector have ballooned, especially for gaming projects.
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It might be ‘crypto winter’ out there, but investments in the sector keep coming, indicating a belief in the industry’s ability to rebound and bring profits.  

Northzone

In one of the biggest moves into the crypto space recently, a London-based venture capital giant Northzone has raised €1 billion (around $1 billion) to form a fund that will focus on crypto and fintech startups.

The company that previously invested in companies like Spotify and Klarna, and web3 and DeFi startups like Sunscreen, Gro, and Magic Labs, is planning to fund companies from the early stages to initial public offerings.

Wendy Xiao Schadeck, a partner at Northzone, said the fund considers the digital assets industry as its “core sector” for them. “We’re keeping an incredibly open mind for the next generation of founders to define totally new categories as well,” she added.

Fidelity’s crypto history 

Fidelity Investments, one of the most prominent U.S. stockbrokers, is considering allowing Bitcoin trading for individual investors, sources say. There hasn’t been an official announcement to clients yet, but Fidelity does plan to provide the service to their over 34.3 million brokerage accounts.

CEO of a digital bank and crypto services platform, Galaxy Digital, Mike Novogratz, hinted that Fidelity might become its client in the near future.

“A bird told me that Fidelity, a little bird in my ear, is going to shift their retail customers into crypto soon enough. I hope that bird is right. And so we are seeing this institutional march,” he said during the SALT Conference in New York.

Fidelity “got” into Bitcoin back in 2018 by offering a Bitcoin-trading business to their hedge funds and institutional investors back in 2018. Earlier this year, it launched 401(k) retirement plan offers to corporate clients.

JPMorgan & Ownera

JPMorgan, joined by a private asset management firm LRC Group, has participated in a $20 million round for a tokenized asset infrastructure startup Ownera.

Ownera, an open-source protocol that supports securities tokenization on either public or private blockchain, plans to link tokenized platforms and traditional finance companies.

Last year JPMorgan became one of the first major U.S. banks to offer crypto trading to its clients. The company began advising their wealth-management clients access to cryptocurrency funds and raised around $45 million to offer the service through two different funds. 

KKR & Securitize 

A San Francisco-based digital asset securities company, Securitize has become the first company to offer tokenized exposure to a global investment fund, Kohlberg Kravis Roberts & Co., or KKR.

The Securitize fund is managed by Securitize’s digital asset management arm, Securitize Capital, which will provide exposure to KKR’s Health Care Strategic Growth Fund II (“HCSG II”) using the Avalanche public blockchain. 

The digital assets security platform leverages blockchain to raise capital, issue tokenized assets, onboard investors, and provide secondary trading.

Dan Parant, Managing Director and Co-Head of U.S. Private Wealth at KKR, explains the global fund’s desire to try blockchain: “With its ability to digitize operational inefficiencies and increase ease of use for individual investors, blockchain technology has the potential to play an important role in the future of private markets.”

EDX Markets

A marketplace EDXM backed by financial industry giants like Fidelity Digital Assets, Charles Schwab, Sequoia Capital, Citadel Securities, and Virtu Financial has become fully operational

EDXM is a platform that supports the trading of digital assets through trusted intermediaries available to U.S. retail and institutional investors. The platform will be powered by MEMX technology, a customer-centric market operator founded in 2019.

The representatives of the platform say they have big plans for EDXM’s future, with other significant players joining the board shortly.

We look forward to welcoming additional participants to the exchange, which will drive ongoing trading in this important asset class while creating a virtuous cycle of continually enhanced liquidity and efficiency supported by MEMX’s technology,” the Chief Executive Officer of EDX Markets Jamil Nazarali said.

Web3 is getting backed too

But it’s not only trading platforms and digital assets services that are getting funding right now.  According to the latest DappRadar report, metaverse and web3 gaming projects have raised $748 million in investments since August from investment giants like Temasek.

“The amount of investments demonstrates that despite the challenging and uncertain conditions in the digital asset markets, major investment entities remain bullish on the GameFi industry,” says the DappRadar report.

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