Q9 Capital building end-to-end crypto services

Q9 Capital is the first technology startup to win two of the AMTD DigFin Innovation Awards, one for investment solutions and the other for capital markets. It’s bagged DigFinnies as best solutions provider for digital-assets investment, and for trading.

These awards are granted by a panel of independent judges, who were impressed by the breadth of Q9’s offering and its rapid growth story serving both Hong Kong and global investors.

“We’re continuously innovating to build new products,” said James Quinn, managing director at Q9 Capital. “We’ve developed products to enable clients to spend crypto, lend it, borrow it. We help them safekeep their assets, invest it into structured products, and earn a yield.”

The company has made a splash in its home city by supporting digital artists and collectors operating on blockchain-driven platforms, including the use of non-fungible tokens, or NFTs, as claims of ownership on virtual assets.

After sponsoring several popular exhibitions in the city, Q9 Capital then opened a big retail space in the heart of Central and made the entrance a giant art fair.

Quinn recently shared his vision for the industry.

What makes Q9 Capital stand out from other crypto-related businesses?

James Quinn: Certain platforms just do one thing. An exchange just sells coins; a brokerage just does lending. We’re making crypto easy by adding every kind of service an investor needs, from front to back. 

So Q9 aspires to be a one-stop shop for crypto?

We serve all investors, including retail, but some of our offerings are limited to professional investors, for regulatory reasons. Regardless, what we are saying to all investors is to leave the expertise to us. No one can be an expert in everything. There’s a lot of information out there about crypto – too much information. Think of how long it takes a person to become knowledgeable about their job. Now think of all the different aspects to investing crypto, from earning a yield to investing in projects or buying collectibles. A lot of specialist knowledge goes into that. And that’s our full-time commitment. And when the next innovation comes out, we’ll build a capability for our customers.

Can you give us an example of new innovations?

Sure. A lot of investors may have bought Bitcoin or Ethereum, and they don’t know what to do with it. Q9 has just rolled out an auto-invest function. With a few simple clicks, you can allocate your crypto to various baskets. One basket could be to our yield product, called Earn. Another could be to just enjoy a broad exposure to the crypto market.

When you talk about baskets, it sounds similar to exchange-traded funds. Some investors might think it’s just easier to buy an equities ETF, and take advantage of dollar-cost averaging.

You can do that in crypto too, only it’s actually better because the actual coins are yours. When you invest in an ETF, you’re holding units in a strategy that’s owned and operated by someone else, the fund manager. You don’t own those individual shares, you just own a piece of the fund manager’s basket.

With a crypto basket, whether it’s to a specific yield-bearing product or just exposure to a market index, the underlying assets are yours. You can rebalance the basket and still own the coins, which gives you extra control. I see crypto as disrupting passive equity ETFs and bringing ownership back to the end investor.

That sounds more like a segregated managed account.

You’re right, it’s similar, but there’s no need for a special account or a managed-account setup. Cryptocurrencies are all bearable assets.

The crypto marketplace is always volatile, especially this year. Should people wait for things to settle?

Customers ask us this question every day. They ask, “Is crypto in a bubble?” They see their kids are buying crypto and wonder what’s the responsible thing to do. They look at valuations and ask us, “Am I too late?”

We have introduced auto-investment strategies for traders. We’ve just seen bitcoin lost 50 percent of its value in just three months, and some coins did even worse. Yet we’ve also seen client onboards increase dramatically during the same period. People are very much still interested.

We are introducing AutoInvest for those looking for broad exposure. People looking for reasonable returns over time should consider other options, such as yield products that can produce compound returns well above what a bank pays out as interest in a deposit.

Still, it must be a harder conversation when markets are going down.

Of course, it’s easier for people to buy when prices are going up. But as mentnioned, our customer onboarding continues at pace. People are still signing up. The financial industry has really changed. More recently, a big driver has been demand for NFTs. That’s been huge.

What’s attracting investors now?

There are two types of investors in crypto other than full-time blockchain professionals.

One is the open-minded skeptic: the person who has doubts about crypto, but asks, “What if I’m wrong?” There’s some FOMO there, some fear of missing out on a generational change in finance. A lot of these people are also interested in blockchain, they see how it’s transforming industries, but they just aren’t sure how to take advantage of it. 

The second category of investor is the crypto-passive: the person who already owns some Bitcoin or Ethereum, but who isn’t doing much with the assets. They’re not earning a yield or rebalancing their coins as market conditions change.

At Q9, we have services to meet the needs of all these different kinds of investors.

You mentioned NFTs have been a driver of demand. You’ve turned your office lobby into a digital-art collection. How do people get started?

The fact is that when you hold a digital asset, any digital asset, you have to learn what a wallet is. The vast majority own some Ethereum, so we advise people start by owning that, or another Layer-1 blockchain protocol.

NFTs, by the way, are way bigger than digital art. They are going to be important to gaming and to participating in the metaverse.