MiCA-licensed crypto asset manager Tesseract unveils compliance-minded yield vaults

EU-regulated crypto-asset service provider Tesseract Investment Oy is launching a new investment vault platform designed for institutional and professional investors.

The move adds to the Helsinki-based Tesseract’s existing business lines as a MiCA-regulated DeFi asset manager that generates yield-as-a-service for clients including Bitstamp, which is now owned by Robinhood. 

“Our clients were telling us for the longest time, ‘Look, listen, we appreciate the yield that you can get us. But given the user experience of vaults, we find that it’s kind of quaint,'” Tesseract Group CEO James Harris told The Block in an interview. 

“Ultimately, when you compete with vaults — vaults are real-time positioning that are effectively intrinsically linked to your wallet. You can’t compete with that as a user experience,” Harris added. 

Tesseract Dedicated Client Vaults were designed specifically for compliance-minded customers. Each vault is a distinct smart contract assigned to a single client, managed by Tesseract. 

Harris noted that many existing vault options, like Morpho vaults built by curators like Steakhouse or Gauntlet, often involve pooled investments, which may be treated as collective investment schemes under MiCA, making yield-bearing vault tokens potentially unlicensed securities.

Tesseract clients will instead be able to spin up their own vaults using their wallet, maintaining 100% ownership over their vault token supply. They can also operate segregated managed accounts, as mandated by MiCA, Harris said.

“Our role as the curator is effectively, we have the permissions to make investments on their behalf, but we can’t do much else because we’ve set the governance, we’ve set the fees, [and] we’ve set the policies at the beginning with them,” Harris said. “They’ve picked the investment mandate, and they’ve picked the underlying protocols that are whitelisted and approved that could be interacted with.”

The vaults are hard-coded to only interact with those particular mandates and parameters, according to Harris.

Tesseract is set to offer a range of risk options, from basic yield optimization to specific asset looping strategies via suv-vaults. At launch, the firm is targeting strategies involving wrapped bitcoin, ether, and stablecoins. Tesseract will charge management and performance fees. 

Regulatory niche 

Throughout the interview, Harris said multiple times that Tesseract’s offering is not “a vampire attack” on the existing permissionless vault ecosystem, but instead its complement. The firm is targeting asset managers, custodians, platforms, ETPs, and other institutional users who need greater regulatory assurance.

“I’m participating in the best way I know how, and I’m trying to make it so that it doesn’t break any of the promises and great innovation that we’ve seen on the decentralized finance side. That would be a terrible outcome,” Harris said. “We feel that this is additive and that it’s the best possible compromise of creating a compliant version whilst not losing the ethos behind it.”

Tesseract was granted a full MiCA CASP license from the Finnish FSA. The firm, founded in 2017, counts over $500 million in assets under management, and its borrow-lend platform has originated over $1 billion in loans. It launched its yield platform in 2022. 

Harris noted that the vaults are largely standardized at the protocol level, though clients will have a wide degree of discretion to set their investment mandates. The vaults are built on IPOR Fusion’s Plasma Vault architecture, using the battle-tested ERC-4626 compliant smart contract standard, which offers deterministic risk enforcement, per-vault isolation, embedded compliance, and onchain portfolio calculation, according to the statement. 

“IPOR Fusion was designed to meet the needs of institutional capital operating on-chain strategies with the same structural safeguards they expect in the traditional world,” IPOR Labs CEO Darren Camas said. “After a year of close collaboration with Tesseract, pressure-testing every layer of the architecture, we are pleased to expand this collaboration as Tesseract brings Fusion-powered vaults to its institutional clientele.”

Tesseract tested its vaults with six pilot participants, including crypto ETP issuer 21Shares. 

“The ETP use case is a very, very interesting one because effectively at the moment, ETPs provide staking returns. And of course, it would be wonderful to add returns that are non-staking based that can be achieved across DeFi,” Harris said. “The risks are different, but you can have a different profile.”

Tesseract last raised funds via its $25 million Series A in 2021. 

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