Cryptocurrency startup Elliptic recently held a Series B funding round which was joined by a venture arm of Wells Fargo & Company. According to recent information, Wells Fargo decided to invest as much as $5 million into the startup, which also attracted several other major banking giants.
Apart from Wells Fargo itself, Elliptic previously also received a major investment of $23 million. This earlier funding was led by SBI Holdings Inc., a major banking corporation based in Japan.
Elliptic to Use The Funds For The Development of Its New Product
Elliptic commented on the new cashflow by saying that it plans to use the funds for expanding its Asian wing. However, it also aims to use a portion of the funds to continue the development of its product, known as Elliptic Discovery.
The product is a risk-management solution, which the startup created for banks. Once it is completed, it would allow banks and financial institutions to assess the potential risks associated with cryptocurrency trading.
Basil Darwish, the Strategic Capital Managing Director ag Wells Fargo, commented on the move by saying that the bank was pleased to participate in the financing round. Darwish noted that Elliptic is developing an innovative risk managing solution, which the bank was glad to support.
How Can Elliptic Discovery Push Crypto Adoption
Elliptic’s risk management solution could be a major game-changer for the crypto industry, as it could allow banks to start doing business with cryptocurrency exchanges more freely. Traditional financial institutions have already shown interest in the digital currency industry, but they are still looking for a regulatory compliant way to approach it.
Naturally, banks require security and reduced risks in order to do business with any organization or company, and with digital currencies still being largely unregulated, this has prevented them from approaching the sector.
It is worth noting that decentralized exchanges (DEXes) are on the rise, as well. One example is Dexive, an advanced, social, decentralized exchange that, like other DEXes, doesn’t require its users to deposit the money into its own wallet. Dexive especially is an advanced exchange that offers all the tools necessary for easy and successful crypto trading, with an easy-to-use interface and advanced security.
Many of them are now either developing their own cryptocurrencies, in the form of CBDCs (Central Bank Digital Currencies) or are waiting for Facebook’s Libra.
Meanwhile, numerous centralized cryptocurrency exchanges have also made a considerable effort to become regulatory compliant. One obvious example of this is TAGZ, a major Australian cryptocurrency exchange that only saw launch last year. However, thanks to the fact that it is fully regulated and licensed, it attracted numerous users from all over the world.
This allowed it to become the largest crypto exchange by trading volume less than a year after its launch. Meanwhile, it provides all the services that crypto traders could need, including the ability to buy, sell, send, receive, and trade some of the most popular digital coins. While TAGZ still does not follow the new trend of zero-fee crypto trading which is spreading in other parts of the world, its trading fees are fixed at 0.01%, which is still way below the industry’s standard.
Meanwhile, it offers a number of different cryptos, including Bitcoin, Ethereum, Litecoin, Dash, XRP, EOS, Bitcoin Cash, and others.
With the exchanges such as TAGZ already being regulatory compliant, all that the banks require is a way of accessing them, which is where Elliptic’s product comes in.
The company’s co-founder, Tom Robinson, recently spoke to CoinDesk and during the interview, he said that previously, banks just didn’t know much about exchanges, which included those that were interested in opening an account with them.
With Elliptic Discovery, the banks would gain the necessary insight into the risk associated with the exchange, and with doing business with it.
In other words, the banks would be able to assess whether the exchange is safe enough to work with it or not. While it is unlikely that every exchange will be up to the banks’ standards, those that are would thus build valuable bridges between the traditional and modern parts of the financial industry.
Banks Are Already Finding Ways to Use Cryptocurrency
As mentioned, numerous central banks around the world are currently working on the development of their own cryptocurrencies. Some were inspired to take on such projects due to the announcement of Facebook’s Libra. China’s central bank — The People’s Bank of China (PBoC) — is a prime example of this.
Others have decided to start such projects, or at least look into the possibility, due to the upcoming digital yuan itself. Japan’s LDP officials, for example, are concerned about both of the upcoming coins. While multiple previous reports claimed that Japan has no intention of launching a CBDC, the country’s ruling party members have since started developing the concept due to concerns of digital yuan’s potential influence.
In the end, Elliptic’s product might be able to bridge the gap between crypto exchanges and traditional banks, which is likely to serve as yet another major step towards mass crypto adoption around the world.