Blockchain-based asset-management firm Superstate raised $14 million in venture capital to develop regulated, on-chain funds that U.S. investors can access.
The round was led by CoinFund and Distributed Global. Arrington Capital, Breyer Capital, CMT Digital, Department of XYZ, Folius Ventures, Galaxy Digital, HackVC, Modular Capital, Nascent and Road Capital Management also participated.
Superstate focuses on developing regulated, compliant investment vehicles using public blockchains that U.S-based investors are able to access. The company – helmed by Robert Leshner, founder of decentralized finance (DeFi) lending platform Compound (COMP) – has earmarked the funds for team expansion, creating private funds for institutional investors and crafting a framework for tokenized public funds.
The investment highlights the growing trend toward the use of tokenized assets as traditional finance and blockchain technology converge. Tokenization means converting traditional investments such as bonds or gold – known as real-world assets (RWA) – into virtual representations that can be recorded on a blockchain as a token.
Even big banks have joined the race to unlock what some say are the advantages of tokenization: increased efficiency and transparency, speedier settlements and broader access to investors. Asset-management firm 21.co forecasts that the tokenized asset market could grow to $10 trillion by the end of the decade.
"The first-generation tokenized funds fall short," Leshner said in the press release. "They either function within private blockchains or exist in off-shore entities, removing access for U.S. investors."
Earlier this year, Superstate filed to create a short-term U.S. government bond fund using the Ethereum blockchain as a secondary record-keeper.
“Superstate’s approach to tokenization will bridge the gap between high-quality, compliant financial products and the massive advantages and innovation DeFi is poised to offer to traditional finance,” Jake Brukhman, founder and CEO of CoinFund, said in a statement.
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