Institutional DeFi Startup Hashnote Is First to Emerge From Incubator Cumberland Labs

Decentralized asset management platform Hashnote, the first company to be launched by Web3 incubator Cumberland Labs, joins the current trend for grown-up, institutional-grade decentralized finance (DeFi).

Hashnote, which simplifies much of DeFi’s complexity and comes compliant with things such as know-your-customer (KYC) requirements, is backed with $5 million of investment from Cumberland Labs, which came out of stealth mode in July. Chicago-based crypto trading giant Cumberland – the crypto trading firm affiliated with diversified trading firm DRW – will be the first of a select group of market makers on the platform.

Decentralized lending and trading stayed robust amid last year’s collapsing dominoes of centralized crypto companies, but the DeFi space has lacked the kind of traditional finance-like infrastructure to which big institutions are accustomed. This made Hashnote’s traditional finance (TradFi) offering feel like an easy sell, said the firm’s founder and CEO Leo Mizuhara in an interview with CoinDesk.

"Last year showed the crypto space wasn’t run by adults, but rather some of these young personalities who’ve never really spent much time in finance,” Mizuhara said. “After spending 12 years at Bank of America mostly directly reporting to the chief investment officer, I joined DRW where I ran the systematic options trading group. And when I came up with the idea for Hashnote, Don Wilson [DRW founder and CEO] loved the idea, wanted to fund it immediately and had a term sheet in front of me within a week.”

Hashnote is regulated in the U.S. by the Commodities Futures Trading Commission (CFTC) as a commodity pool operator (CPO). Internationally, Hashnote is registering under the Cayman Islands Monetary Authority (CIMA) which means all its funds are KYC’d and fully whitelisted, Mizuhara said.

Cumberland Labs is an independent entity based in Singapore, said the incubator’s head of strategy Tama Churchouse.

“We’re not a subsidiary of Cumberland but obviously work closely with companies like DRW,” said Churchouse in an interview. “We work with external founders, where typically there is a large first check investment for a substantial equity position in companies where we can add a genuine competitive advantage with Cumberland and DRW. That means a deep involvement in trading, market making, engineering algorithmic systems, low latency, the whole nine yards.”

CORRECTION (Feb. 28 15:09 UTC): Corrected to indicate that Hashnote is registering under the CIMA but has not won registration yet, and that Mizhuhara mostly directly reported to the chief investment officer while at Bank of America, but was not the deputy CIO.