Henri Arslanian, co-founder and managing partner of Nine Blocks Capital Management, was the keynote speaker at the first Cayman Finance member event of 2025 on 22 Jan.
Henri Arslanian, co-founder and managing partner of crypto hedge fund Nine Blocks Capital Management, predicted this year is going to be a “game changer” for crypto and finance in general at the first Cayman Finance member event of 2025 at the Kimpton Seafire Resort on Wednesday, 22 Jan.
Arslanian, a media personality and crypto advocate with more than 500,000 followers on LinkedIn and regular appearances on TV and in the international business press, highlighted several key digital asset trends for the year.
US crypto revival
The former PwC partner illustrated the impact of the US crypto revival with the 180 degree turns that US President Donald Trump or Blackrock chief Larry Fink have made on the topic. Trump declared to make the US the crypto capital of the world, advocated for a strategic national bitcoin reserve and launched his own meme coin, while asset manager Blackrock was first to release highly successful US-based Bitcoin exchange-traded funds (ETFs) to the market.
Arslanian told the 220 guests at the event the change of government in the United States will lead to more regulatory clarity and increased hiring in the US. About 75% of job openings at US crypto firms are already no longer overseas but domestic.
There will also be increasing institutional adoption and M&A activity as financial services firms have no choice but to look at their crypto strategy, he noted.
Continued Bitcoin adoption and stablecoin growth
Arslanian believes in the continued growth and adoption of Bitcoin.
“Bitcoin ETFs were the most successful ETFs in history,” he said, adding that in terms of assets under management Bitcoin ETFs are equivalent to gold ETFs.
As a standalone asset, the crypto market is currently valued at $3.5 trillion, with Bitcoin alone having a market capitalisation of more than $2 trillion – about 10% of the market value of gold.
Arslanian argued this makes it interesting as a potential strategic reserve asset, particularly for many smaller developing economies. “The big question to watch here is, will smaller countries adopt Bitcoin and explore having strategic reserves?”
Another area underpinning crypto adoption is the increased use of stablecoins which have reached a market capitalisation of $200 billion.
Stablecoins have democratised access to the US dollar and can solve real problems, particularly around cross-border payments, which can be cumbersome and expensive through traditional banking channels, Arslanian said.
He suggested banks should consider issuing their own stablecoins as the barriers to entry have become lower.
Opportunities and challenges for crypto hedge funds
In the funds space, where the Cayman Islands has become a leader for crypto hedge funds, it is unlikely the US revival will have an effect as tax and visa issues persist, and US-linked funds find it a challenge to trade on global platforms.
Arslanian likened the situation for crypto funds to where regular hedge funds found themselves in the 1990s as an indicator for both their growth potential and for many challenges that still need to be overcome.
He noted that according to an AIMA study more than 50% of crypto hedge funds have had their bank accounts closed compared to less than 5% for traditional hedge funds. Crypto prime brokerage solutions lack the breadth and features that traditional prime brokers offer. And there is still a limited choice of service that can properly handle digital assets.
In a fireside chat with Walkers Partner Melissa Lim, Arslanian said he is “a big believer in Cayman” and his firm has seven entities, including funds, on island.
He suggested Cayman should pursue crypto hedge funds and other verticals, where it already has a lead. “I think that Cayman has a massive opportunity when it comes to providing regulatory clarity on crypto hedge funds, on DAOs and everything related to DeFi. These are obviously spaces that are up for grabs,” he said.
