Jack Kubinec

Amid a funding dry spell, this week saw three of the largest crypto raises in recent months.



Crypto exchange and wallet service <a href="https://blockworks.co/news/blockchain-com-raise-110m">Blockchain.com raised $110 million</a> in a Series E round led by Kingsway, the parent company of crypto exchange OSL raised $91 million via a share subscription, and tokenized currency firm Fnality announced a $95 million round led by Goldman Sachs and BNP Paribas.&nbsp;



The raises came with crypto mired in a funding slump, seeing <a href="https://blockworks.co/news/crypto-venture-capital-fundraise-q3">consecutive quarterly declines</a> in venture capital dating back to the start of 2022.&nbsp;



Blockchain.com’s $110 million round is the <a href="https://defillama.com/raises">year’s</a> fourth-largest fundraise, following Blockstream, LayerZero, and Worldcoin, according to DeFiLlama data. The company declined to disclose a valuation but Bloomberg reported a valuation of less than half of the $14 billion mark the platform secured last year.&nbsp;



With the move, Manny Stotz, CEO of UK venture firm Kingsway and Nicolas Brand, partner at VC fund Lakestar, will join Blockchain.com’s board of directors.



Hong Kong-based BC Technology Group, which owns the crypto exchange OSL, <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/1114/2023111400922.pdf">acquired</a> $91 million when crypto firm BGX purchased almost 30% of the company’s stock through a share subscription.&nbsp;



In August, OSL <a href="https://osl.com/en-US/media-coverage/hong-kong-debuts-retail-crypto-trading-hashkey-osl/">joined</a> HashKey as the first exchanges to acquire Hong Kong’s new license to facilitate retail crypto trading in the city.&nbsp;



Fnality is a fintech firm focused in part on tokenizing securities — that is, making traditional financial assets like gold or Treasury bonds synthetic and storing them on the blockchain.&nbsp;



The tokenization of real-world assets has been popular among financial institutions as of late. <a href="https://blockworks.co/news/jpmorgan-tokenized-blockchain-portfolio-avalanche">JPMorgan</a> and <a href="https://blockworks.co/news/hsbc-tokenization-custody">HSBC</a> both ramped up potential tokenization offerings in recent weeks.



The centralized finance platforms’ raises come amid a <a href="https://blockworks.co/news/cefi-making-defi-leap">longer-term slide in centralized finance funding</a> relative to decentralized platforms.&nbsp;



Read more: <a href="https://blockworks.co/news/jpmorgan-tokenized-blockchain-portfolio-avalanche">JPMorgan tests tokenized portfolios with Avalanche blockchain tech</a>



<h2 class="wp-block-heading">Tokenization’s big week continues</h2>



Tokenization company Superstate raised $14 million in a Series A led by CoinFund and Distributed Global, joining Fnality as the week’s other notable tokenization raise.&nbsp;



Superstate is helmed by Robert Leshner, who founded the DeFi lending firm Compound before leaving to create Superstate. The raise comes less than five months after Superstate’s $4 million seed round was announced. <a href="https://blockworks.co/news/regulated-financial-products-for-blockchain">The company filed an SEC prospectus at around the same time</a> to let clients store tokenized government bonds on Ethereum.&nbsp;



At Blockworks’ Permissionless conference in August, Leshner said DeFi’s onboarding of major institutions <a href="https://blockworks.co/news/compound-founder-leshner-on-defi">would require the space to compromise on crypto-native assets in favor of a focus on tokenization</a>.&nbsp;



“This is the big divide that is going to define the next ten years of DeFi,” Leshner said at the time.



<h2 class="wp-block-heading">Other notable fundraises</h2>



<ul class="wp-block-list">
<li>K-Pop fan engagement startup Modhaus <a href="https://x.com/allkpop/status/1724422089631760768?s=20">raised</a> $8 million in a Series A round led by Sfermion.&nbsp;</li>



<li>CFX Labs <a href="https://www.linkedin.com/posts/darrenfaulk_solana-based-stablecoin-remittances-get-a-activity-7130721855983808512-IylT/?trk=public_profile_like_view">raised</a> $9.5 million in seed funding to grow its remittance-focused stablecoin payment product on Solana.</li>



<li>Bitcoin ordinals project Taproot Wizards <a href="https://x.com/TaprootWizards/status/1725163116059627761?s=20">announced</a> a $7.5 million seed round led by Standard Crypto.</li>
</ul>



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Crypto funding: 3 crypto companies secure $90M+ raises

Michael McSweeney

Blockchain payments startup Fnalityhas raised a new $95 million funding round.



Goldman Sachs and BNP Paribas led the round. Euroclear, DTCC, WisdomTree and Nomura also participated.



The company is known for creating tokenized versions of major currencies, which are collateralized by cash held at central banks. So far, it has tokenized fiat currencies including US dollars, euros, British pounds, Canadian dollars, and Japanese yen.



According to the team, the primary goal of this funding is to facilitate the development of a global liquidity management ecosystem. This will support new digital payment models in both traditional wholesale financial markets, and the emerging sector of tokenized assets. Additionally, Fnality aims to establish a round-the-clock global liquidity management network, which will play a role in the implementation of these new digital payment models.



“We’re so excited about our second round of funding, securing the backing of @GoldmanSachs , @BNPParibas , @The_DTCC and many more to continue developing the first 24/7 global payments and liquidity management ecosystem for wholesale finance,” the firm <a href="https://twitter.com/fnality/status/1724405567119135210">said</a> in a post on X.



Fnality previously raised $63 million in 2019 from a clutch of banking firms, back when the project’s first iteration was known as the Utility Settlement Coin. Its stated goal was to create a system for wholesale payments across a range of major currencies, including USD, EUR and JPY, among others.&nbsp;



Some of the investors in that earlier round — including BNY Mellon, Barclays, Santander and Nasdaq’s venture arm, among others — also took part in the Series B funding round.&nbsp;



&#8220;Our Series B funding round represents the financial sector’s desire for a central bank money backed blockchain-based settlement solution that bridges the gap between traditional finance (TradFi) and decentralised finance (DeFi) in wholesale markets,” Rhomaios Ram, Fnality’s chief executive, said in a statement.



Wholesale payment refers to transactions between financial institutions. This area has attracted interest from distributed system developers and investors, including <a href="https://blockworks.co/news/jpmorgan-blockchain-payments">JPMorgan</a>.



Central banks have explored the use of digital currencies, though not necessarily blockchain-based, for wholesale payments applications.&nbsp;



The Bank of International Settlements recently published the results of a wholesale CBDC trial in conjunction with Singapore, Switzerland and France.&nbsp;



Read More: <a href="https://blockworks.co/news/bis-cbdc-project-mariana-concludes">Wholesale CBDCs and automatic market makers could be the perfect pair, BIS finds</a>



“In the tested experimental setup, central banks are able to manage their wCBDC without necessarily operating or controlling the underlying infrastructure. Commercial banks can use the wCBDCs to engage in instant FX trading and settlement, avoiding credit and settlement risk and improving efficiency,” the BIS paper noted at the time.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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Goldman, BNP Paribas lead Fnality’s $95M round

Liz Coyne

The Challenges of ‘Permissionless’ at the Institutional Level

Sam Reynolds

<div id="highlights-block_619cc68ffce2f" class="highlights">
 <ul>
 <li>Everyone wants access to DeFi yields, but governments are standing in the way</li>
 <li>Regulators worry DeFi could collapse and have reverberating effects throughout the global economy</li>
 </ul>
 
</div>



The double-digit yields that are the defining factor of Decentralized Finance (DeFi) are attractive to retail investors and institutions that are clamoring for an alternative to bonds, equities, or the paltry return on savings accounts.&nbsp;



As <a href="https://cms.blockworks.co/what-are-corporations-going-to-do-with-all-that-extra-cash-put-it-in-defi/" target="_blank" rel="noreferrer noopener">Blockworks covered earlier this year</a>, there’s nearly $4 trillion in cash that corporations have on hand, and most of it is sitting in savings accounts and earning around 0% in interest. Corporations want to fix this, and there are plenty of company treasurers that have an eye on the yields that DeFi savings protocols like Compound or Celsius pay out.



On stage at Blockworks’ recent DAS London event, panelists discussed the investment case for DeFi — and what’s standing in its way.&nbsp;



FinTech consultancy Fnality’s Angus Fletcher, its Senior Commercial and Regulatory Advisor, explained that institutions want access to the yields, and, for the time being, the space is being allowed to grow. Institutions, he said, are looking at how to provide services in the space.&nbsp;



But it’s not an easy task.&nbsp;



Richard Muirhead, a managing partner at VC fund Fabric, called the regulatory process “monumentally dysfunctional” and there’s a great amount of uncertainty and fear as to what’s actually allowed.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“It’s a nightmare talking to lawyers, regulators in different jurisdictions, because essentially there is no truth out there,” he said.</blockquote>



According to Muirhead, regulators are concerned about AI and blockchain evolution undermining geopolitical security.



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="600" height="400" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_4662.jpg" alt="Richard Muirhead, Fabric" class="wp-image-11704" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_4662.jpg?w=600 600w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_4662.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_4662.jpg?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_4662.jpg?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_4662.jpg?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/IW5_4662.jpg?w=80 80w" sizes="auto, (max-width: 600px) 100vw, 600px" /><figcaption><meta charset="utf-8">Richard Muirhead, Fabric; Source: Ian Walton for Blockworks</figcaption></figure></div>



Fnality’s Fletcher added that regulators tend to understand what’s going on, but have a fear that it could be a bubble in the making. Fletcher went on to say that some regulators even think that this could bring material benefits to the market — they just don’t want it to turn out to be the next <a href="https://www.washingtonpost.com/business/2020/03/09/market-crash-was-coming-even-before-coronavirus/" target="_blank" rel="noreferrer noopener">derivatives bubble</a>.  



“They are absolutely petrified that this will end up like the derivatives bubble, and they will have no one to blame,” he said, pointing to their treatment of stablecoins as an example.&nbsp;



All this comes as crypto has begun building a lobbying machine in Washington D.C. As the <a href="https://www.washingtonpost.com/business/2021/11/16/crypto-lobby-struggles/" target="_blank" rel="noreferrer noopener">Washington Post</a> reported recently, Fidelity, Square and Coinbase are launching the Crypto Council for Innovation to “demonstrate the transformational promise of crypto.” 



However, the Post also reports that in the seven months since the organization’s founding, not a lot has happened as the group has been bogged down in Washingtonian-style bureaucracy. An industry built on lightning fast transactions now has to deal with a slow-moving leviathan. Until it does, regulatory uncertainty persists.



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