5 Fintech Companies Helping Investors Build Wealth From Crypto Markets

• The crypto market largely focuses on private and institutional investors.
• Some crypto companies are serving the wealth management gap.
• Insider spoke to industry experts about the cryptofintechs serving wealth managers on their radar.

The growth of the crypto community in recent years has largely been focused on two distinct groups: retail and institutional investors.

While the former served as the foundation for the emergence of digital assets in the first place, in recent years the industry has pushed to accommodate large financial firms that can help further legitimize the space.

But between the two groups exists another important cohort: wealth managers. With an estimated $38 trillion in client assets, according to McKinsey, the wealth management industry represents an area with unique needs separate from both mom-and-pop investors and large, traditional institutional players.

One issue is that the industry is largely waiting for regulatory bodies such as the Securities and Exchange Commission to issue more detailed guidelines on how to interact with crypto assets. Insider reported earlier this year that insurers have been very selective in the type of crypto policies they offer wealth management firms due to the lack of government regulation.

That, in turn, adds to the downsides that many wealth managers see in advising on digital assets, leading some to choose to wait and see.

But others, like the curious and crypto zealots in the profession, dare to venture into the space for their clients despite the unknown. Even bigger players have jumped in. Last summer, both JPMorgan and Wells Fargo began offering crypto products to wealth clients.

And while the market has been challenging this year—the price of ether and bitcoin have both fallen around 60% since the start of the year—many investors see the so-called crypto winter as an opportunity to buy low.

As a result, wealth management firms are turning to certain fintechs for help. Insider spoke to a handful of wealth management investors, consultants and c-suite executives to identify key crypto-fintechs that are helping wealth management firms make the leap into crypto.

These are five fintechs helping wealth managers tap into the crypto market.

Name: Piecemeal investments

Total capital raised: 85 million dollars

What it does: Asset manager that operates several crypto-focused index funds.

Biography: Bitwise oversees $1.3 billion, by the end of 2021, for 1,500 wealth management firms, managing 12 private and two listed funds with access to more than 30 cryptoassets. This year it also launched a separately managed account.

CEO Hunter Horsley created the company in 2017 with co-founder Hong Kim to provide retail investors with a passive way to engage in the crypto markets.

“We heard from friends in finance across the buy and sell side and at the big tech companies, ‘I’d like to invest in crypto, but I don’t have time to figure it all out and monitor it all the time.'” This was a widespread perspective,” Horsley said.

The company launched one of the first ever crypto index funds in 2017 which has become one of the largest cryptocurrency index funds on the market. It came with a crypto ETF and a DeFi index fund.

Bitwise is run by a staff of 70 people spread between the New York headquarters and the San Francisco office.

Name: Eaglebrook Advisors

Total capital raised: 25 million dollars

What it does: Allows financial advisors to invest directly in digital assets such as bitcoin and ether through separately managed accounts.

Biography: In 2018, Chris King was at Morgan Creek Capital investing in digital assets and crypto-focused companies when he noticed how underserved wealth management was when it came to crypto.

“All of these infrastructure and digital asset companies were either building for the private or institutional investor market. And they all ignored the market in between, which is the wealth management market,” King said.

As the son of a Merrill Lynch financial advisor for whom he also interned, King was no stranger to the space. Then in 2019, at the age of 23, he launched Eaglebrook Advisors.

With 25 employees, Eaglebrook serves 75 investment advisory firms and more than 500 financial advisors, representing approximately $142 million in assets under management.

In addition, the digital asset platform integrates with popular reporting tools for financial advisors such as Orion, Black Diamond and Addepar.

Name: Fire blocks

Total capital raised: 1 billion dollars

What it does: Back-end technology for managing digital assets.

Biography: Fireblocks provides a digital asset infrastructure that acts as a wallet and network to hold and move digital assets securely, and supports over 20 blockchains.

With security a top concern for asset managers entering the crypto space, Fireblocks can help firms build secure custody operations for digital assets.

The company, which was launched in 2018, has clients that include hedge funds, regional and global banks – including BNY Mellon – companies and digital asset marketplaces such as MoonPay and Crypto.com.

Fireblocks was started by Michael Shaulov, CEO; Pavel Berengoltz, Vice President of Research and Development; and Idan Ofrat, Chief Technology Officer.

The Israel-based trio served in the Isreal Defense Force and worked together at a cyber security firm called Check Point.

In 2017, the three men were part of a third-party consulting team flown out to South Korea to look into The Lazarus Group’s hack of two South Korean crypto exchanges. They walked away from the experience and saw two possibilities: use cryptography in cybersecurity and provide crypto markets with a secure way to hold assets.

They launched Fireblocks out of Tel Aviv, but have headquarters in New York and offices in Boston, London and Singapore, all housing 550 employees. The bulk of the company’s clientele is in Western Europe and the Americas, but Fireblock’s head of corporate strategy Adam Levine said it has customers on every continent except Antarctica.

Name: Inveniam

Total capital raised: 70 million dollars

What it does: A software developer tokenizes private market data using blockchain technology

Biography: Inveniam CEO and founder Patrick O’Meara bought a blockchain fintech company through an investment fund from a Forbes 400 family he advised and used fintech to launch Inveniam in 2017.

Inveniam tokenizes private market data via blockchain technology, which helps private funds get real-time performance metrics on their assets.

The startup has raised $35 billion on its platform from around 350 funds and 20 clients. Their clients are from around the world and include asset management firms, banks and sovereign wealth funds. Cushman and Wakefield, one of the world’s largest commercial real estate services, is among the clientele.

Inveniam has attracted strategic investors such as Apex Group, a financial firm that announced in September it would roll out Inveniam’s products to institutional investors and family offices that use its services representing $3 trillion in client assets.

“We think the macro trend around transparency, observability in private and alternatives is a trend that’s only going to grow. And there’s a regulatory tailwind behind us,” O’Meara said.

Name: OnRamp Invest

Total capital raised: $13 million, according to Pitchbook.

What it does: Helps financial advisors manage clients’ crypto assets

Bio: Since financial advisors are unable to open client accounts with crypto custodians as they would normally do with a stock portfolio, many of them were unable to help their clients with crypto assets.

With OnRamp, financial advisors can open an account with qualified custodians such as Gemini or Prime Trust to buy and trade bitcoin or ethereum for their clients.

CEO Eric Ervin started his career in financial services as a financial advisor before becoming a startup entrepreneur. His first startup was an ETF and index fund provider called Reality Shares, which he sold to Siren ETFs in 2020 at the age of 42. Later that year, he launched OnRamp Invest while also launching a quantitative crypto-asset hedge fund, Blockforce Capital, that he still running today.

According to Ervin, Blockforce shares some of its quantum algorithms with OnRamp’s financial advisor clients who want to manage portfolios “with a little more heavy duty research.”

OnRamp has 25 employees and serves 35 wealth management firms that collectively manage approximately $35 billion in client funds. Fintech raised $7 million in Series A in June with investors Jam Fintop Capital, Fintop Capital and EJF Capital.