US crypto VC firm CoinFund expands in Asia after first hire in Hong Kong, with clear regulations a pull factor

The city pledged a year ago to embrace the cryptocurrency sector and to become a hub for virtual asset businesses, with policies including a mandatory licensing regime that allows centralised exchanges to accept retail investors. Meanwhile, Singapore and Dubai have also emerged as attractive destinations for crypto firms with both installing new licensing regimes for the industry.

CoinFund landed in Hong Kong partly because of its advantages including its status as a large and reputable capital market, its new scheme to attract talent, and the city’s importance throughout the evolution of the crypto industry, Lapidus said.

“If you look at the history of how this industry has evolved, there has always been very active participation from Hong Kong and China, in particular in the early days,” he said, adding that a lot of crypto miners used to be based in Hong Kong and that a lot of exchanges were started in the city. “So I almost view it as one of the more natural places for innovation and for experimentation.”

Investment in the crypto space is continuing to plunge as the market struggles to recover from a series of collapses last year. The industry saw US$1.8 billion invested across 309 deals in the third quarter this year, a 28 per cent decline from the previous quarter and a nearly 70 per cent drop from the same period last year, according to PitchBook data.

However, CoinFund in July raised US$158 million for a new fund to back early crypto start-ups. Although it plans to expand in Asia it does not have a mandate for how much to invest in firms in the region, according to Lapidus.