Australia’s Holon Global moved ahead of BlackRock with funds riding on the back of the crypto winter

While BlackRock Inc, the world’s largest asset manager, generated headlines last week with the announcement of a planned Bitcoin fund, Australia’s Holon Global Investments – albeit not in BlackRock’s league – was ahead of the curve.

Holon, which describes itself as a next-generation fund manager focused on Web3 infrastructure, launched three cryptocurrency funds in June in the depths of the so-called “crypto winter” or when the capitalization of the crypto markets had fallen to $793 billion from a November high of about 3 trillion dollars, a drop of more than a staggering 70%.

Holon’s funds are in market leaders Bitcoin, Ethereum and the lesser-known Filecoin. Holon is a participant in the Filecoin network, and has 27 petabytes of installed data storage capacity out in western Sydney.

The company, which collaborates with the American firm Gemini Trust Co. founded by Cameron and Tyler Winklevoss to provide cryptocurrency custody services, said it expects its funds to find a market among those who do not have much experience in direct trading on exchanges.

“[There’s been] a massive risk environment and it’s perhaps more attractive to get in now than it was in the past,” Holon Investments Australia managing director Rory Scott said, explaining that November’s record highs may have kept some investors out of the market.

This year’s crypto decline was fueled by the estimated USD 40 billion collapse of stablecoin project Terra/Luna in May, while the US Federal Reserve’s campaign to tackle 40-year high inflation by raising interest rates has also seen crypto prices slide along with broader equity markets.

“It’s interesting whether this is a prolonged crypto winter or whether this is a macro-driven event, that there’s just a risk-off across all assets, and when the Fed starts to cool its jets on raising interest rates, then we start to see a slight uptick in price, Scott said.

Whatever the case, Gemini’s CEO and head of Asia Pacific operations, Feroze Medora, said he is confident about crypto’s long-term prospects.

“We’ve seen several winters before and the industry as a whole always seems to come back stronger after each winter,” he said. “Interest from an institutional perspective brings a long-term growth trend to the cryptocurrency industry and to the use of blockchain technology as well,” he said, referring to BlackRock’s planned fund.

Pensions & rules

After announcing plans to expand into Asia and Australia, Gemini set up shop in Singapore in the latter half of last year.

“[Australia] is an attractive place for anyone to do business,” Scott said, “it’s an obvious place for Gemini to be looking to do business.” Primary among those reasons, according to Scott, is the size of Australia’s superannuation or superannuation fund industry, which was valued at $2.3 trillion by the 2021 Willis Towers Watson Global Pensions Asset Study.

This puts Australia’s pension funds as the fifth largest in the world and growing at a mandated 10% per annum. While there is currently little appetite for crypto investment from this capital, Scott said it would not be long before larger fund managers start moving into the asset class.

Australia is also seemingly positioned to regulate cryptocurrency, despite the recent federal election bringing the Labor Party into government perceived to be more crypto-shy than the Liberal Party it replaced.

The country’s Senate conducted a comprehensive report on cryptocurrency and its possible impact on the fintech sector late last year, and made a number of recommendations that the previous government wanted to adopt.

How many the new Labor government will bring in remains to be seen, but Australia’s Treasury Department is now preparing its own report on crypto asset service providers after receiving input from the industry in Australia.

Recently, the Reserve Bank of Australia announced a partnership with the Digital Finance Cooperative Research Center to explore use cases for a digital central bank currency in Australia.

One of Australia’s strengths is the consultative approach the regulator has with cryptocurrency institutions, Medora said. “A globally regulated cryptocurrency framework is going to be a significant positive growth for crypto in general.”

Scott said the funds have an annual management fee of 0.4% and an additional 0.4% to cover costs, compared to the 1.25% fee charged by the first group of spot exchange-traded cryptocurrency funds to list on Australia’s CBOE exchange previously this year.

The three Holon funds were chosen to represent three growth areas in Web3, Scott said. Bitcoin is the transfer of value, Ethereum the functionality of Web3 on which many protocols are built, and Filecoin represents the data storage layer, he said.

“Our whole thesis is that this is the infrastructure that you can invest in that will ultimately benefit from the incremental things that people will build on top of it over time,” Scott said. “That was the driver behind why we have these three exposures available to investors.”