San Francisco-based startup Wyre Inc, a fintech and cross-border payments firm, has acquired blockchain-based smart contract platform Hedgy, which previously raised $1.2 million in a seed funding round.
Wyre’s purchase of Hedgy strengthens the US firm’s efforts to help lower the barriers to entry for fintech entrepreneurs by offering them compliant ports into a regulated fiat world.
Wyre and Hedgy are primarily focused on facilitating accessibility to financial instruments around the world and both companies’ offerings are enabled by blockchain.
However, Wyre’s main focus is cross-border payments, with a particular emphasis on those sent between China and the US. The startup uses blockchain to settle transactions, acting as an intermediary between businesses in both countries. The acquisition of Hedgy’s platform technology brings the company closer to offering a derivatives software product that is compliant with US commodity regulations.
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Hedgy is well-known for its derivatives product aimed at commercial Bitcoin miners, which allows them to effectively lock in a future price at which they can sell bitcoins, using a smart contract to settle the transaction on the blockchain.
According to Wyre’s statement in Medium, which didn’t disclose the financial terms, it aims to offer a less toxic OTC trading experience by introducing blockchain technology to the traditional over-the-counter financial market.
It added: “Looking at the FX market, and other more mature asset classes, we see a lot of them have well developed, related derivatives trading. Derivatives involve leverage and afford FX traders with an opportunity to make more efficient use of their capital (but also exposes them to the potential for increased losses or gains).”
Wyre also believes that there may be compelling use cases for derivatives in current and futures levels of volatility.
“Bitcoin and other crypto assets are likely to be no different in time, but we feel that it may be some time before volatility settles down enough for derivatives trading to gain significant momentum. In the interim, as markets still carry what is likely to be higher levels of volatility over the longer term, we’re expecting derivatives may have value in several different scenarios,” it concluded.