Zach Anderson
Sep 23, 2025 17:30
YZi Labs, a $10bn investment firm, is considering opening a fund for external capital and investors, aiming to diversify into emerging sectors like AI and robotics.
YZi Labs, the $10 billion investment firm controlled by Binance co-founder Changpeng “CZ” Zhao, is weighing plans to open the fund to outside capital and external investors, marking a potential watershed moment for one of the cryptocurrency industry’s largest private investment vehicles.
The fund’s head, Ella Zhang, confirmed the consideration in a Financial Times interview, stating “There’s always a lot of external investors interested. We will eventually consider turning it into an external-facing fund. We just think it’s not there yet.”
From Family Office to Investment Powerhouse
YZi Labs, spun out of Binance in January, ranks among the world’s largest crypto investors, managing the fortune of Binance co-founder Changpeng “CZ” Zhao along with capital from a handful of early executives, including co-founder Yi He. The move would mark a significant evolution for the firm, which was rebranded from Binance Labs and currently manages the wealth of Zhao and fellow Binance co-founder Yi He.
The transformation from a family office structure to a public-facing investment fund would represent one of the most significant developments in institutional crypto investment. YZi Labs’ portfolio includes prominent crypto and Web3 projects such as Aptos Labs, Polygon, 1inch Network, Sky Mavis, and infrastructure and security firms like LayerZero, Mysten Labs and CertiK. It has over 230 companies in its portfolio.
Learning from Previous Experience
The potential opening comes after the firm gained valuable experience with external capital. The fund accepted about $300 million in outside funding in 2022, but later returned part of it, citing the overwhelming scale of capital already under management. Zhang emphasized that due to the firm’s massive scale of managed assets and its ultra-long-term investment strategy, it is currently difficult to meet the return expectations of external investors in the short term.
This cautious approach reflects the complexities of managing external investor expectations while maintaining the firm’s strategic vision. The company realized the complications involved with balancing those investors’ expectations with a large internal portfolio.
Strategic Diversification Beyond Crypto
While cryptocurrency investments dominate YZi Labs’ current portfolio, the firm is actively diversifying into emerging sectors. Digital assets account for about 70% of YZi Labs’ investments, but its interest in AI and robotics is growing. Roughly 70% of the book sits in crypto, but the team has been leaning into AI, biotech, and robotics.
Zhang explained the firm’s cautious timeline: “In AI and biotech we’re still early, we’re forming our team. When we have that expertise, we have the confidence level, we’ll open up for external investors,” adding that it would be a “huge responsibility.”
Regulatory Winds Shifting
The timing of YZi Labs’ consideration appears aligned with a more favorable regulatory environment in the United States. Zhang told the FT the Securities and Exchange Commission (SEC) recently requested a private demo of companies backed by YZi Labs, after its chair missed the fund’s demo day at the New York Stock Exchange, signaling a more crypto-friendly stance from US regulators.
“Paul Atkins and other commissioners, they are very open-minded,” she said. Atkins has served as chair of the SEC since April 2025. This regulatory thaw represents a significant shift from previous administrations’ approach to cryptocurrency investment vehicles.
Market Timing and Institutional Demand
The potential opening coincides with surging institutional interest in cryptocurrency investments. Zhang disclosed that during this summer’s financing boom, YZi Labs received investment proposals from “over 50 teams” seeking to purchase tokens in large quantities. This trend reflects the rapidly growing demand from institutional investors for cryptocurrency allocation.
The broader market is seeing similar trends, with Galaxy Digital raising $175 million for its first externally backed venture fund in June. This exceeded the initial $150 million target and shows growing appetite for crypto-native investments.
The CZ Factor and Market Influence
Despite legal challenges that saw Zhao step down from Binance’s leadership, his influence in the cryptocurrency space remains substantial. Zhao resigned from Binance last year after pleading guilty to a US criminal charge over failure to implement Anti-Money Laundering (AML) controls. He served a four-month prison sentence and is now seeking a pardon from US President Donald Trump. Despite stepping down, he remains Binance’s largest shareholder.
Zhao, who co-founded Binance in 2017 and built it into the world’s largest crypto exchange, amassed a fortune of more than $80 billion through his majority stake, according to Forbes.
Recent Investment Activity
YZi Labs has remained active in the market despite considerations about its future structure. Recent YZi Labs investments include additional funding for Ethena Labs as well as BNB-focused crypto treasury firms B Strategy and CEA Industries. The firm has also doubled its position in Ethena’s USDe stablecoin project, showing growing confidence in USDe’s synthetic dollar approach to stablecoin technology.
Industry Implications
If YZi Labs proceeds with opening to external investors, it could reshape the landscape of crypto investment funds. Opening to external investors would not only expand its capital base but also position the firm as a more influential player across multiple industries.
If YZi Labs follows a similar path, it could offer diversified access to some of the most promising digital projects in one vehicle, similar to how other successful crypto investment products have democratized access to the sector.
The potential transformation of YZi Labs represents more than just a structural change for one investment firm—it signals the maturation of cryptocurrency investment infrastructure and the growing institutionalization of digital assets. With regulatory clarity improving and institutional demand accelerating, the company has not yet confirmed a timeline, and YZi Labs declined to comment on specific plans.
As the cryptocurrency industry continues to evolve, YZi Labs’ eventual decision on external investors could serve as a bellwether for how traditional investment structures adapt to accommodate the unique characteristics of digital asset portfolios at unprecedented scales.
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