Have crypto, will invest: The race to manage other people’s crypto assets

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The advent of token crowdsales or ‘initial coin offerings’ (ICOs) has spurred blockchain startups around the world to launch their own cryptocurrencies to raise money. At present, at least 1,500 tokens have been created.

For inexperienced or first-time investors, setting up a wallet to hold cryptocurrency, knowing what to invest in, and navigating the dizzying number of tokens – while keeping track of price fluctuations – can be challenging.

Mohit Mamoria, CEO of Authorito Capital, says he sees this struggle among users of his cryptocurrency hedge fund. “They want to invest in crypto but they do not know how to get started.”

He continues, “That’s where we come into the picture and say, we [will] help you buy bitcoin. Then you send us those bitcoins and we will manage those crypto investments for the next five years.”

In 2017, the price of bitcoin jumped from around US$1,000 to US$19,000 at its peak. The price of ether also grew from less than US$100 to almost US$1,500 at its highest.

Over the past year, the rising price of bitcoin has drawn investors from all backgrounds, both retail and institutional. Despite the price drop this month, appetite for trading and investment remains high, with top exchanges turning over more than US$1 billion in trade volume daily, according to CoinMarketCap.

In addition to more established coins like bitcoin, investors are also turning to more volatile tokens – conceived from ICOs – for a faster return.

However, many investors lack the know-how and resources to successfully manage their own portfolio. This gap has created a small, but growing industry of cryptocurrency funds and middlemen. Some blockchain startups are even building marketplaces for asset managers and aspiring crypto investors, such as Slovenia-based ICONOMI, which has dubbed itself the ‘Uber of fund management.’

“Retail investors are interested in buying into crypto index funds as an easy way to gain passive exposure to the cryptocurrency market,” says T.M Lee, co-founder of CoinGecko, a cryptocurrency ranking and analysis site.

For investors, it’s advantageous to “spread the risk across different cryptocurrencies […] and to not have manage multiple different wallets,” he adds.

Tokenized funds

As a young industry, cryptocurrency asset management is still very much in the experimentation phase. Some manage less than US$25 million of capital, while others have around US$150 million.

Pain points

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