Northstake: Simplifying the way Institutions Invest in Crypto Products
Northstake is a regulated Virtual Asset Service Provider (VASP, FTID: 17520) under DFSA and AMLD5. The company is pioneering a proprietary multi-chain crypto staking platform allowing financial instruments to be built on top and offer exposure to yield bearing crypto assets. By removing the barriers to crypto and ensuring compliance within the current and future EU regulatory scope (MiCA/AMLR), investors may build yield generating crypto products leveraging their platform and distribution model Northstake bridge TradFi and crypto by simplifying the way institutions invest in crypto products.
I had the pleasure to interview Jesper Johansen, Founder and CEO of Northstake.
Northstake: how did you come up with this idea?
I have been following and advising on blockchain technology since 2017, when institutional adoption was still in its infancy. During 2021, I realised the market for crypto asset service providers that services institutional clients were nascent while blockchain technology has matured to the point where it has become investible for institutional investors. As proof-of-stake blockchains seem to be the prevalent blockchain technology, then starting a crypto asset service provider building regulatory compliant staking products seemed to be just the thing.
What are the challenges faced by institutional investors and how do you overcome them?
Investing in crypto assets are challenging due to the technical nature of holing and staking the assets. Protocol level staking, in contrast to lending and borrowing, which may mistaken for staking, requires technical and operational expertise. Institutional investors, who are unable or unwilling to develop these capabilities inhouse, may opt for a crypto asset service provider or a structured product. Also, the lack of regulatory clarity and harmonised legal definitions may sway risk-off institutional investors from engaging, however, as regulation matures, think MiCA, then institutional investors will be much better positioned to allocate to this new and exciting asset class. We expect that with regulation, we will see true institutional adoption.
What are your plans for 2023?
Launching our regulatory compliant ETH staking product as a structured product that incorporates staking rewards (yield), which is physically backed 1:1 and far superior to any ETP/ETF currently out there. Northstake can build almost any yield generating reference asset into a structured product, which we will also launch in Q1 2023.
Any comment on the current crypto market situation?
The current market situation and sentiment underscores the need for regulatory clarity, which we believe can co-exist in a decentralised world. Irrespective of which industry you find yourself in, crypto or tradFi, fraud will always exist and should be combatted.