Digital Asset Holdings, a startup trying to bring the technology behind bitcoin to mainstream finance, on Friday raised $50 million from a host of blue chip Wall Street and City names.
The company raised the sum from ABN AMRO, Accenture, ASX Limited, BNP Paribas, Broadridge Financial Solutions, Citi, CME Ventures, Deutsche Börse Group, ICAP, JPMorgan, Santander InnoVentures, The Depository Trust & Clearing Corporation (DTCC) and The PNC Financial Services Group.
Executives from JPMorgan, BNP Paribas, Deutsche Börse Group, and DTCC will join Digital Asset Holdings’ board as part of the deal.
Digital Asset Holdings also announced that it has signed a deal with one of its investors, ASX Limited, to develop a blockchain-based post-trade solution for Australia’s stock exchange, which ASX runs.
The blockchain protocol was first developed to underpin and run digital currency bitcoin. It uses complex cryptography and a wide network of records — known as a “distributed ledger” — to eliminate the need for a central bank or middle man to regulate transactions.
Entrepreneurs and financiers alike hope the technology can be adapted to traditional finance to strip out huge amounts of cost for things like trading and payments.
Mariano Belinky, Managing Partner at Santander InnoVentures, told BI over email: “Distributed ledger is one of the most innovative technologies we’ve seen emerge in financial services, offering opportunities to create more efficient processes across back-office clearing and settlement of payments and securities.”
Digital Asset Holdings says in the release announcing the ASX deal:
Distributed Ledger Technology provides the opportunity to radically simplify and speed-up post-trade processing. For ASX clients it could remove risk and reduce back-office administration and compliance costs, while investors could experience significantly faster settlement of equity transactions — potentially in near real-time.
When a trade on the stock exchange happens it is carried out by a clearing counterparty who makes sure either side pays up and carries the risk if either defaults. There is then the process of “settlement”, where central authorities update all their registers to make note of who owns what.
Blockchain technology offers the promise of cutting all this out, allowing someone to send a digital token representing the share directly to whoever they’re trading with. It essentially allows cash-style transactions online.
The big fundraise comes shortly after reports that the company, which is run by former JPMorgan executive Blythe Masters, was struggling to raise money.
Masters says in today’s statement:
These investments represent a tremendous endorsement of Digital Asset from banks, exchanges, settlement and clearing firms, central securities depositories, and market infrastructure and professional services providers.
Our strategic investors have come together from across the financial services industry to help drive global adoption of transformative solutions which enhance the vital services that they provide.
Blythe Masters, who helped pioneered credit derivatives in the 1990s, joined the startup from JP Morgan last March. Digital Asset Holdings, launched last year, aims to adapt blockchain technology to mainstream finance.
Digital Asset Holdings says in its statement that its “products serve the entire financial ecosystem through the creation of tailored business logic applications using privately permission networks that employ a cryptographically secure and shared infrastructure.”
The investment comes a week after Digital Asset Holdings announced it is opening an office in London and has poached a Goldman Sachs and ex-JPMorgan executive to join the business.