Hong Kong’s Hex Trust Seeks New Funding Amid Rising Appetite for Crypto

Hex Trust, a leading cryptocurrency custodian based in Hong Kong, is set to seek additional funding later this year, driven by a resurgence in the crypto market. Founded in 2017, Hex Trust has positioned itself as a key player in the Asian crypto market, offering secure custody solutions to institutional clients. The firm’s latest move comes as it aims to achieve profitability and expand its services amid rising demand for digital assets.

Market Dynamics and Funding Strategy

Hex Trust’s co-founder and CEO, Alessio Quaglini, revealed that the company plans to start consultations for a new funding round, although the exact timing remains uncertain. This initiative follows a noticeable uptick in trading volumes and investor interest in cryptocurrencies since late 2023. The firm is yet to decide whether the funding round will occur in the first or second half of the year, depending on market conditions and investor sentiment.

Achieving Profitability and Overcoming Challenges

Hex Trust has implemented several cost-saving measures in 2023, setting a clear path towards profitability for the current year. However, the company faces significant challenges, particularly with Hong Kong’s evolving regulatory landscape. New regulations proposed by the Hong Kong government require licensed centralized crypto exchanges to develop and operate their own custody solutions, which could potentially limit the market for third-party custodians like Hex Trust.

Despite these challenges, Quaglini remains optimistic about the firm’s future. He expressed more concern about proposed regulations affecting over-the-counter (OTC) services, a significant segment of Hex Trust’s business. The government’s plan to restrict crypto-to-crypto trades via OTC platforms unless they obtain a crypto exchange license could prompt Hex Trust to consider relocating to more crypto-friendly jurisdictions.

Investment and Valuation History

To date, Hex Trust has raised a total of $104 million from 37 investors, including prominent names like Animoca Brands, Ripple, and Liberty City Ventures. The company’s valuation surged to $300 million following its latest Series B funding round in March 2022. These investments have enabled Hex Trust to enhance its service offerings and expand its market presence.

Strategic Partnerships and Regulatory Adaptation

Hex Trust’s strategy includes forming strategic partnerships to strengthen its market position. The firm recently secured a full operating license in Dubai, highlighting its commitment to expanding its footprint in key global markets. This move aligns with its broader strategy to adapt to varying regulatory environments and capitalize on growth opportunities in different regions.

The Broader Implications for the Crypto Custody Industry

Hex Trust’s funding ambitions and market strategies reflect broader trends within the crypto custody industry. As institutional interest in digital assets grows, the demand for secure and compliant custody solutions is increasing. Firms like Hex Trust are at the forefront of this evolution, adapting to regulatory changes and market dynamics to meet the needs of institutional investors.

Conclusion

Hex Trust’s pursuit of new funding amid rising crypto market activity underscores the dynamic nature of the cryptocurrency industry. By navigating regulatory challenges and leveraging strategic partnerships, Hex Trust aims to solidify its position as a leading crypto custodian. As the firm moves towards profitability and expands its services, it will play a crucial role in shaping the future of digital asset custody in Asia and beyond. The success of its funding round and strategic initiatives will be pivotal in determining its long-term growth and market impact.