TRM Labs Raises $1.7M as Crypto Firms Warm Up to Compliance

Digital assets operators, including crypto exchanges, are increasingly turning to regtech solutions.

Regtech startup TRM Labs has raised $1.7 million in a seed financing round led by Blockchain Capital and joined by Tapas Capital, Green D Ventures, and The MBA Fund, with participation from strategic angel investors.

The San Francisco-based company said the funding would be used to continue to scale-up and accelerate development of the product while increases its market presence, including immediately hiring new team members.

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TRM’s platform uses AI and machine learning to help compliance teams at crypto firms enhance their risk management for supervising communications and automatically detect suspicious activity like money laundering and market manipulation.

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The cross-border and stateless nature of cryptocurrencies throws up different challenges to regulators, even if they decide to devise formal guidelines to govern the asset class.

Crypto firms warm up to regtech

As such, digital assets operators, including crypto exchanges, are increasingly turning to regtech solutions to help provide background checks on their customers as they find themselves under increasing scrutiny from regulators over possible violation of securities and AML rules.

Commenting on the news, Spencer Bogart, General Partner at Blockchain Capital, said: “The TRM team is very well suited to execute on this opportunity. The founders of TRM, Esteban Castaño and Rahul Raina, have deep experience across enterprise software, blockchain, and product design. We think TRM can significantly accelerate crypto’s adoption by helping issuers and exchanges increase trust by being compliant on Day 1.”

TRM CEO and co-founder Esteban Castaño added: “We believe that cryptocurrency is going to be a democratizing force in the world that lets anyone exchange value and access financial services. But to get there, we need to make it easier for everyone to be compliant. Just as the Internet led to an explosion of new content, crypto is leading to an explosion of new financial products and markets. We need regulatory and compliance infrastructure that scales with this new world.”

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