Key Takeaways
- • Matthew Homer, former senior superintendent of crypto regulation at the New York Department of Financial Services, launched Department of XYZ, a crypto-focused venture fund that raised $5.1 million in its initial close.
- • The fund is backed by a blue-chip roster of limited partners including the Winklevoss twins, Compound founder Robert Leshner, and Multicoin Capital's Kyle Samani, alongside former regulators from multiple government agencies.
- • Department of XYZ positions itself as a regulatory advisory resource rather than a lead investor, with Homer stating the fund will serve as "regulatory friends on speed dial" for portfolio companies navigating compliance landscapes.
- • Homer's career trajectory—from FDIC banking regulator (2012) through DFS crypto supervision (2019–2021) to venture investing—represents a rare pivot for government regulators into active venture capital with operational advisory responsibilities.
- • The fund explicitly targets the market gap in regulatory expertise on venture cap tables, addressing what Homer identifies as an underserved advisory niche in blockchain and crypto financing.
Summary
Matthew Homer, who spent nearly a decade in financial services regulation including a tenure as senior superintendent overseeing cryptocurrency at New York's Department of Financial Services, has launched Department of XYZ, a blockchain-focused venture fund that closed its initial raise at $5.1 million. The fund marks an unusual career transition for a high-level regulator: rather than pivoting to corporate legal counsel or political advisory roles—the traditional path for ex-regulators in crypto—Homer is operating as a founding partner and investor in a venture vehicle.
The fund's capitalization reflects strong backing from prominent crypto industry figures and entrepreneurs. Limited partners include Cameron and Tyler Winklevoss (Bitcoin exchange Gemini founders), Robert Leshner (founder of Compound, a decentralized lending protocol), and Kyle Samani (co-founder of Multicoin Capital). The LP roster also incorporates former regulators from multiple federal and state agencies, creating a hybrid institutional-regulatory advisory structure on the cap table.
Homer's strategy diverges meaningfully from traditional venture capital. Rather than deploying large checks to lead funding rounds, Department of XYZ positions itself as a specialized advisory resource embedded directly into portfolio companies. In remarks to Fortune, Homer articulated this thesis: "There's no one that is really owning the regulatory lane." The fund aims to provide what Homer terms "regulatory friends on speed dial"—embedded expertise addressing compliance, regulatory strategy, and government relations challenges that crypto startups encounter as they scale.
Homer's regulatory background spans three agencies over twelve years. He began at the Federal Deposit Insurance Corporation in 2012, when cryptocurrency remained largely outside regulatory purview. He subsequently held a policy role at Quovo (later acquired by Plaid) before joining New York's DFS in 2019, where he led the research and innovation division overseeing crypto supervision until his 2021 departure. He spent the interim period at venture firm Nyca Partners before founding Department of XYZ, building on his direct experience navigating regulatory frameworks that have become increasingly complex for crypto businesses.
This fundraise underscores growing demand for specialized regulatory capital in venture ecosystems. The concentration of former and current regulatory figures among LPs signals that institutional investors view regulatory expertise as a material competitive advantage for early-stage crypto infrastructure and financial services businesses navigating an evolving compliance landscape.
The fund's capitalization reflects strong backing from prominent crypto industry figures and entrepreneurs. Limited partners include Cameron and Tyler Winklevoss (Bitcoin exchange Gemini founders), Robert Leshner (founder of Compound, a decentralized lending protocol), and Kyle Samani (co-founder of Multicoin Capital). The LP roster also incorporates former regulators from multiple federal and state agencies, creating a hybrid institutional-regulatory advisory structure on the cap table.
Homer's strategy diverges meaningfully from traditional venture capital. Rather than deploying large checks to lead funding rounds, Department of XYZ positions itself as a specialized advisory resource embedded directly into portfolio companies. In remarks to Fortune, Homer articulated this thesis: "There's no one that is really owning the regulatory lane." The fund aims to provide what Homer terms "regulatory friends on speed dial"—embedded expertise addressing compliance, regulatory strategy, and government relations challenges that crypto startups encounter as they scale.
Homer's regulatory background spans three agencies over twelve years. He began at the Federal Deposit Insurance Corporation in 2012, when cryptocurrency remained largely outside regulatory purview. He subsequently held a policy role at Quovo (later acquired by Plaid) before joining New York's DFS in 2019, where he led the research and innovation division overseeing crypto supervision until his 2021 departure. He spent the interim period at venture firm Nyca Partners before founding Department of XYZ, building on his direct experience navigating regulatory frameworks that have become increasingly complex for crypto businesses.
This fundraise underscores growing demand for specialized regulatory capital in venture ecosystems. The concentration of former and current regulatory figures among LPs signals that institutional investors view regulatory expertise as a material competitive advantage for early-stage crypto infrastructure and financial services businesses navigating an evolving compliance landscape.
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