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Digital currencies

Hangzhou-backed blockchain firm raises HK$100m via digital token fund to invest in Japanese cryptocurrency

Grandshores is hunting the next blockchain unicorns backed by a 10 billion yuan Hangzhou government-backed global fund

PUBLISHED : Tuesday, 18 September, 2018, 6:31am
UPDATED : Tuesday, 18 September, 2018, 3:47pm

Grandshores Technology Group, a Hong Kong-listed contractor-turned-blockchain investor, plans to raise HK$100 million (US$12.7 million) via a digital token fund to finance a yen-backed cryptocurrency project.

Grandshores Technology’s pivot to blockchain investment is the result of an acquisition of SHIS by a company controlled by Yongjie Yao in May and its subsequent back door listing.

Yao is also a founding partner of the 10 billion yuan (US$1.45 billion) Hangzhou Grandshores Fund backed by the Hangzhou government.

The other backers of the fund include Li Xiaolai, the bitcoin tycoon of China.

The Grandshores Technology chairman said the company would tap qualified investors outside China to raise funds denominated in tether, a US-dollar backed stablecoin and list it on a cryptocurrency exchange.

Stablecoin is a cryptocurrency pegged to a stable asset such as gold or hard currencies like the US dollar.

Yao said Grandshores was seeking to fund start-ups and cryptocurrency projects globally as he believes some blockchain unicorn-hopefuls were on track to disrupt the traditional financial system and break monopolies currently enjoyed by tech and internet giants.

“Blockchain will become the mainstream technology in the next three to five years,” said Yao, who is also a part-time lecturer at Zhejiang University in Hangzhou. “We are entering the next stage of blockchain evolution, a stage which is akin to when computer operating system was transiting from MS-DOS [disk operating system] to MS-Windows.”

For the yen stablecoin project, Yao said the founding partners of the Hangzhou Grandshores fund, are currently working with a mid-tier Japanese bank, whose name he refused to divulge, in creating a stablecoin.

Yao said he sees demand for a yen-linked stablecoin, and is hopeful of launching the token by the end of this year or early 2019 and the next anchor currencies Grandshores will explore are the Hong Kong dollar and Australian dollar.

“We believe cryptocurrency traders and exchanges will be potential takers of these stablecoin,” he said.

Many cryptocurrency exchanges already trade bitcoin and other cryptocurrencies such as ethereum and EOS against tether. Grandshores Technology’s yen stablecoin could provide an alternative that can be traded on these exchanges.

Yao was also an early investor in Canaan, the world’s second largest maker of bitcoin mining rigs which is seeking to raise US$1 billion and list in Hong Kong.

He has invested 107 million yuan in Canaan since 2015 through his own blockchain venture fund, and is expecting returns “to the tune of several hundred times”.

Currently, the founding partners of Hangzhou Grandshores fund, together with some of its affiliated funds under Grandshores Technology, have invested 500 million yuan globally in blockchain and cryptocurrency projects outside China. These include Zcash, an open-source cryptocurrency that offers selective transparency of transactions; blockchain start-up GX Chain and blockchain-based social media network ONO.

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