Goldman Sachs, Nyca Partners and a group of other financial institutions including Citi, JPMorgan, NEX Group, Wells Fargo, and Y Combinator arm are finalizing a $32 million investment in Fintech startup Axoni, which develops blockchain solutions for the big banks.
The New York-based capital markets focused firm now has raised over $50 million from blue-chip investors. The Axoni’s new funding round is the latest Wall Street’s collective effort to gain traction with blockchain, which is being tested to help slash some of the transaction processing and back-office costs.
The Axoni investment comes a month after rival blockchain company R3 was reportedly thinking of an IPO. Despite intense media spotlight and headline-grabbing new additions, the company struggles amid questions about its ability to build a business around its version of blockchain. Although it managed to raise $107 million last year, some reports said it’s faltering and could be out of money by early 2019.
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Axoni helps banks and other institutions develop blockchain software to run capital markets processes such as trade affirmations in the reference data arena and the over-the-counter (OTC) equity swaps segment.
Over the past two years, it has run a number of high-profile experiments with some of the financial industry’s largest players, in areas such as post-trade processing of credit default swaps and foreign exchange. The deployments validate how distributed ledger technology can streamline multi-party workflows, reduce reconciliation costs, and provide greater transparency to financial markets.
Commenting on the news, Thomas Richardson, head of Market Structure and Electronic Trading Services at Wells Fargo Securities, said: “The adoption of distributed ledger protocols in capital markets resembles the early days of adopting TCP/IP for distributed enterprise applications. We continue to be impressed with Axoni’s ability to facilitate such adoption by identifying use cases that could benefit from blockchain technology.”