Blockchain and fintech-business founder and investor Jason Jones has joined ConsenSys to run its newly formed asset-management group.
With the job title of entrepreneur in residence, New York-based Jones oversees a team fostering entrepreneurs in capital markets that are developing the infrastructure for finance in a decentralized context. (He continues to run other businesses, including a fintech investment group, Cardinal Rose; robo-advisor builder NSR Invest; and blockchain conferences companies.)
“Every component of capital markets is being reinvented for blockchain, and we’re seeing real businesses emerge,” Jones said. “In asset management, we’re seeing a shift from digital assets to tokenization of real assets.” He lists real estate, credit or securitization, and supply-chain finance as the most active areas. “Over the next three years, these are deep categories where we can deploy a ton of money.”
Right now ConsenSys is investing in startups deal by deal, although it is likely to set up a multi-asset, multi-manager fund structure for fintech. Jones is looking to add asset managers that ConsenSys can bring into its incubator and grow a track record. He is also open to working with traditional hedge funds or other investment firms to do a joint venture or a segregated managed account in the crypto space.
Building decentralized infrastructure
ConsenSys was founded by Joe Lubin, the co-creator of Ethereum, as a foundation to foster the network and related ecosystem, and to help blockchain and tokenization go mainstream.
To date the most developed applications it is incubating are those establishing infrastructure, primarily based on the Ethereum protocol: wallets, cloud computing, and developer suites.
But of the roughly 50 companies incubated by ConsenSys, about half are fintech-related. Jones is working with the existing fintech players to help them develop. He also connects them to ConsenSys’s solutions group, which works with enterprises, including banks and insurance companies.
“We’re building these to get them out into the market, and our solutions group can then select and combine these for specific enterprise customers,” he told DigFin.
Jones says the challenge for ConsenSys overall is still solving the technology so it can scale.
Ethereum’s more famous co-creator, Vitalik Buterin, is leading efforts to enable Ethereum to scale to levels that make it robust for enterprises, while retaining the advantages in security and decentralization that public, permissionless blockchains offer. (See our story on the company behind EOS, an emerging competitor network.)
The smart B2C robot
As Ethereum developers wrestle with the tech, the business models for ConsenSys companies are still evolving. “We’re taking traditional capital markets infrastructure and deploying it onto the blockchain, but we haven’t yet seen natively digital business models emerge” in fintech, Jones said.
And many aspects of capital-markets infrastructure are still missing in the decentralized world. For example, Jones notes that custody solutions have emerged, but not a prime broker model, combining safekeeping with balance sheets.
The sheer number of centralized crypto exchanges also creates the need for investors to integrate across many platforms, and manage and route orders. “ConsenSys is incubating fintechs to build this infrastructure so we can institutionally deploy investments,” Jones said. “Tokenization will come, and big asset managers will want to invest in these.”
What’s the longer-term vision? What can ConsenSys try to stitch together from all of these disparate projects?
“The company I’m looking for is a true robo-advisor,” Jones told an audience from a discussion at Singapore Fintech Festival. “It’s a speech-based A.I.-powered robot that I can talk to, that can help me with all of my personal accounts, and has the intelligence to proactively tell me where I should put my money. I’m talking about a B2C smart robot that can determine how everyone will manage their money, and there will be lots of innovation around that.”