Earlier today Blockchain announced that it had raised $30mln in a Series A financing round. The deal matched BitPay’s $30mln Series A round for the largest single round of venture investing in the bitcoin sector in what is an active market for deals (more in the Digital Currency Magnates Crypto Deals Table).
The most popular provider of web-based and mobile bitcoin wallets in the world, with 2.3mln wallets and $26bln of transaction volume since being founded by Ben Reeves in 2011, Blockchain collects a small fee on bitcoin transactions using its solutions. Having bootstrapped its operations until now, according to Blockchain, the $30mln investment will help it “scale its product & engineering teams, in order to develop innovative new features for its users.” Lasting until now without venture funds is notable, as despite any cash infusions, Blockchain has made a few acquisitions and spent development resources into upgrades of its mobile apps.
Beyond the size of the funding, the deal is notable for its list of investors. Included in its list of investors is Lightspeed Ventures which has operated a bitcoin-based fund since the first half of 2013, as well as Sir Richard Branson who participated in BitPay’s $30mln round. Also participating in the funding round, and new to the space is Wicklow Capital. Created by Daniel Tierney and Stephen Schuler, who currently are KCG Board Members and GETCO Co-Founders, Wicklow Capital has quickly become a prominent name in the emerging FinTech space. Previous investments for Wicklow include participating in funding rounds of MotifInvesting and P2P lenders SoFi and Lending Club.
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With Wicklow’s founder’s experience in GETCO/KCG and equity market-making and trading, the current investment in Blockchain displays the interest bitcoins are gaining from the Wall Street sector. Earlier in the year, Coinsetter announced its bitcoin trading exchange had become FIX compliant, providing financial industry standard connectivity for market makers to add liquidity onto the platform.
While focus has been on the trading opportunities in bitcoin due to its large price swings (most recently on the downside), the financial industry has also begun to see potential in the future of decentralized P2P exchanges. In the way that OTC Markets and Nasdaq have led volumes of physical exchanges to transact nearly all of their trading electronically, and marginalized the role of floor specialists, decentralized exchanges may be the next evolvement of trading.
In a similar evolvement of the financial industry, the P2P lending model was more or less ignored by banks for their first few years of existence. However, banks are currently paying attention to the sector as major P2P lending platform operators such as Lending Club and Zopa have begun to grab market share. As such, while we may still be years away from seeing P2P decentralized exchanges becoming major players in the capital markets, the product is gaining interest from established traders as they position themselves for the future.