Ben Strack

Crypto infrastructure provider Taurus is gearing up to open offices in Paris and Dubai — and boost its engineering team via incoming capital from two prominent banks.&nbsp;



The plans come after Credit Suisse led Taurus’ $65 million funding round. That news broke on Tuesday. Deutsche Bank also participated in the capital infusion.&nbsp;



André Helfenstein, chief executive for two of the bank’s Switzerland affiliates, said in a statement that the company, via its partnership with Taurus, is looking to be the leading Swiss bank in the digital assets space.&nbsp;



“We continue to embrace new and innovative technologies, and expect to soon launch several digital asset services for clients on both the issuing and the investment side,&#8221; Helfenstein said.



Founded in 2018, Geneva-based Taurus offers clients the ability to manage cryptoassets, execute staking, tokenize assets and process digital currencies of their choice.&nbsp;&nbsp;



Taurus co-founder Lamine Brahimi said in a statement it would utilize Credit Suisse’s expertise to develop a platform that covers any type of digital assets, beyond just cryptocurrencies.



The link-up with Credit Suisse comes after France-based Banque Delubac &amp; Cie collaborated with Taurus last April to launch its digital asset offering.



Brahimi told Blockworks at the time that he <a href="https://blockworks.co/news/french-bank-delubac-cie-first-to-offer-regulated-digital-asset-services">expected more incumbent banks to follow Banque Delubac &amp; Cie</a> in moving into the space.&nbsp;



<h2>What’s next for Taurus?</h2>



Brahimi said there’s “premium” working with strategic partners versus pure financial investors.



“Being able to scale some transactions we&#8217;ve made — equity, debt, structured products — with such banks with a global footprint will be win-win-win,” the co-founder told Blockworks in a statement on Tuesday. “[Credit Suisse and Deutsche Bank] have or are integrating our tech and you will see landmark transactions in the coming months.”



In addition to making engineering hires, the company intends to use the $65 million to open up more offices and maintain “stringent” security, risk and compliance requirements.



Brahimi said engineers make up roughly 70% of Taurus’ current staff. The Ethereum <a href="https://ethereum.foundation/" target="_blank" rel="noreferrer noopener">Foundation</a> selected Taurus in May 2021 to lead a security review of Ethereum beacon clients. 



As for global expansion, Taurus said it’s looking to enter the European Union with an office in Paris. There are also plans in place to establish a Middle Eastern foothold via an office in Dubai.&nbsp;



Dubai, which <a href="https://blockworks.co/news/dubai-is-the-latest-government-to-roll-out-crypto-law-set-up-regulator">rolled out its first crypto legislation</a> in March 2022, said last month it has become <a href="https://blockworks.co/news/dubai-free-zone-now-home-to-more-than-500-crypto-startups">home to more than 500 crypto companies</a>.&nbsp;



“It&#8217;s important to be close to our clients and key financial centers where we see an acceleration,” Brahimi said. “Paris and the UAE are good hubs also to serve neighboring financial centers.”



Brahimi said he expects regulatory clarity to come around tokenized securities in most key financial centers — as well as stricter enforcement around the boundary between a cryptocurrency and a security.



“We might see some commercial stablecoins initiatives led by regulated institutions,” he said. “As a tech firm that is itself regulated, Taurus is ideally positioned to serve clients looking for top-notch security and regulatory compliance.”



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‘Landmark Transactions’ To Come After Credit Suisse Deal, Taurus Exec Says

<div id="highlights-block_6279151e68063" class="highlights">
 <ul>
 <li>“If you only think about the old ways of doing things, you miss the new things,” ZX Squared Capital’s CK Zheng says</li>
 <li>The hedge fund aims to reduce risk via options and futures to spur greater crypto adoption</li>
 </ul>
 
</div>



A 30-year Wall Street veteran with a Ph.D. in finance is now focused on offering investors risk-adjusted exposure to crypto.



CK Zheng left Credit Suisse last year to co-found crypto hedge fund <a href="https://www.zx2.io" target="_blank" rel="noreferrer noopener">ZX Squared Capital</a>. 



After working in interest rate derivatives trading at Bank of America and Susquehanna International Group for the first four years of his career, Zheng moved on to Morgan Stanley for five years, where he was an executive director of valuation risk management.



He joined Credit Suisse in 2004 and spent the next 17 years there as the financial services titan’s global head of valuation risk. There, he managed 150 people and focused on assessing risk and value across private equities, mortgages, fixed income, equities and derivatives.&nbsp;



<blockquote class="wp-block-quote">“The way I see it, crypto is another asset class emerging, and I find there’s a lot of interesting ideas that can combine traditional finance with the crypto space,” Zheng told Blockworks. </blockquote>



Zheng noted that last year was when he first began realizing that crypto was “here to stay” and would “boom” for decades to come.



Crypto received more media coverage in 2021, he noted, and there was a “snowball effect” of more people getting involved.&nbsp;



Bitcoin reached an all-time high of roughly $69,000 last November. The asset last week <a href="https://cms.blockworks.co/bitcoin-hit-hard-by-inflation-fears-suffers-worst-daily-drop-since-january/" target="_blank" rel="noreferrer noopener">recorded its worst daily drop</a> in four months and was priced around $32,900 on Monday morning.



Still, many believe crypto is a scam, Zheng said, noting Warren Buffett’s recent comments. The CEO of Berkshire Hathaway said at a shareholders meeting that he wouldn’t buy all the bitcoin in the world for $25.&nbsp;



“If you only think about the old ways of doing things, you miss the new things,” Zheng said.



<blockquote class="wp-block-quote">“If you think about a big investment return, you really have to think about the long-term trend and see where that trend leads to not today, not tomorrow, but 10 years down the road.”</blockquote>



ZX Squared Capital is designed for TradFi and crypto-native investors that want exposure to crypto but don’t want to stomach the asset class’s volatility.



The fund uses quantitative strategies with options and futures to reduce its portfolio volatility to a level between 30 to 40%, Zheng explained, versus bitcoin&#8217;s current volatility of between 80% and 100%.



Zheng created the fund with Felix Xu and Yemu Xu, the CEO and co-founder, respectively, of decentralized finance (DeFi) product provider Bella Protocol. Combining their crypto-native minds with Zheng’s TradFi knowledge was key for ZX Squared Capital, Yemu said.&nbsp;&nbsp;



“When [Zheng] brings that profound experience into the crypto space, I think that’s going to be huge,” he added. “Risk management is something that we keep in mind first and foremost.”



The fund’s fundraising target is $200 million in 2022 and $1 billion in 3 years.



<h3>TradFi versus crypto</h3>



While many of Zheng’s former TradFi colleagues are interested in blockchain technology, the executive noted that crypto’s market capitalization of nearly $2 trillion remains less than Apple’s.



“The reality is traditional finance is 100 times bigger than crypto,” he said. “A majority of people look at equity, credit, and fixed income, and there’s still a lot of money to be made.”



Though regulation and compliance concerns continue to keep some investors and financial companies from getting involved, Zheng said he is confident governments will work with TradFi and crypto companies to pave the way for greater adoption.&nbsp;



He pointed to Goldman Sachs, which made an <a href="https://cms.blockworks.co/goldman-sachs-makes-milestone-crypto-trade-with-galaxy-digital/" target="_blank" rel="noreferrer noopener">over the counter (OTC) crypto transaction</a> with Galaxy Digital in March, as an example of a big financial player “rolling up its sleeves.” He said he expects competitors, such as Morgan Stanley, to follow.



Wall Street firms will get involved in segments in which they can be profitable, Zheng said, adding that crypto derivatives could be a good gateway for traditional institutions.&nbsp;&nbsp;



“Today you look at stocks, you look at bonds and the many other asset classes — it’s either fully valued or overvalued, and there’s a lot of concern about the Fed’s tightening cycle,” he said. “So people have to think about where they put their assets and how to invest in the future.”



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Gone Crypto: TradFi Vet Who Started Crypto Hedge Fund Talks Future of the Space

Macauley Peterson

<div id="highlights-block_615c4b5f3cf81" class="highlights">
 <ul>
 <li>Alaia tokenized shares will be admitted for trading on Taurus Digital Exchange</li>
 <li>Security tokens regulated by the Swiss Capital Markets and Technology Association (“CMTA”) standards, using the Ethereum public blockchain</li>
 </ul>
 
</div>



Part of the promise of blockchain technology is its supposed ability to improve the issuance and exchange of tokenized securities to make them more secure, efficient and transparent than is possible in traditional finance. The practical application of security tokens, however, has been slow to develop, largely due to regulatory hurdles.



One country that seems to be ahead of the rest is Switzerland, where standards developed by the Capital Markets and Technology Association (CMTA) are now seeing adoption in capital markets.



The Geneva-based <a href="https://www.taurushq.com/" target="_blank" rel="noreferrer noopener">Taurus</a> has developed a suite of tools to enable companies to tokenize their shares on Ethereum in a regulatory-compliant manner. Today, Taurus announced that Alaia SA, a startup that develops and manages sport and hospitality infrastructure, has successfully done just that, with the shares deposited at the banking giant Credit Suisse and soon to be available on the secondary market via <a href="https://t-dx.com/" target="_blank" rel="noreferrer noopener">Taurus Digital Exchange</a>.



Lamine Brahimi, co-founder of Taurus, said in a statement, “we are committed to supporting entrepreneurs and financial institutions to make private assets digital,” referring to the prospect as “corporate finance 2.0.” 



Taurus’ product line, called Capital, Protect and Explorer, enables the “end-to-end digital management of Alaia shares and their representation in Credit Suisse booking systems,” according to Taurus’ <a href="https://blog.taurushq.com/alaia-tokenises-its-shares-with-credit-suisse-powered-by-taurus/" target="_blank" rel="noreferrer noopener">press release</a>.



The company simplifies the process for banks, exchanges, broker dealers and large NFT platforms, for example, by facilitating gasless transactions on Ethereum for their clients. Taurus’ smart contracts handle the transaction fees to settle share transactions on-chain.



<meta charset="utf-8">Brahimi told Blockworks the CMTA standard being employed was “an improved version of [earlier standards] with all things related to company shares (investors, whitelisting, corporate actions).” The CMTA “<a href="https://www.cmta.ch/content/52/cmta-blueprint-for-the-tokenization-of-shares-of-swiss-corporations.pdf" target="_blank" rel="noreferrer noopener">blueprint for the tokenization of shares</a>” was developed in September 2018, and outlines a process for Swiss corporations to follow. 



Initially only Ethereum and Tezos are supported blockchains for the security tokens, but the firm plans to support additional chains in the future, he noted.