Blockworks: Talos’ Buy of Portfolio Tool Developer — Ho-hum or Big Deal?

Wealth management firm founder says deal is “a strong bullish signal” that more institutional money managers are set to jump into crypto

The latest acquisition by crypto trading tech provider Talos fits into a larger trend of interest in industry portfolio management solutions — which some say is a bullish indicator for further institutional adoption of crypto.

In Talos’ most recent expansion, the firm has bought D3X systems, which develops technology to support systematic investment strategies, as a way to allow clients to build crypto portfolios, the company said on Tuesday.

A spokesperson declined to disclose specific terms of the deal.

D3X was founded in 2018 by Xavier Witdouck, a former executive at AQR Capital, BlackRock UBS and Bank of America. The firm is perhaps best known for its systematic investment software-as-a-service (SaaS) platform, called QuantHub.

Specifically, the acquisition brings more portfolio design tools used in TradFi to the crypto sphere, industry participants noted — including back-testing, factor modeling, optimization, rebalancing, as well as risk and return attribution reporting.

“The top asset managers in the world use quant tools, and they need similar tools when investing in digital assets,” Talos CEO Anton Katz told Blockworks in an email. “We believe this end-to-end support of the investment lifecycle will help accelerate the institutional adoption of digital assets.”

The deal comes a couple weeks after Talos linked up with Coinbase Prime in a partnership designed to give Talos clients access to spot crypto liquidity and custody services.  

White-label crypto platforms of interest
Sell-side providers looking to offer investment services via Talos’ white-label platform, as well as buy-side institutions, were demonstrating demand for such offerings that D3X provides, according to Katz.

The company is now better positioned to support the work flows of registered investment advisers (RIAs), ETP issuers and providers of separately managed accounts (SMAs), the executive said.

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