Institutional cryptocurrency dealer SFOX has completed an initial round of funding backed by the co-founder of Airbnb, Nathan Blecharczyk, raising $22.7 million. The funds will be used for the development of an asset management platform for institutional investors.
Led by Social Capital and Tribe Capital, the Series A funding round also included investments from other top names in the industry, including Blockchain Capital, Khosla Ventures, and Y Combinator.
Change and growth at SFOX
According to the CEO of SFOX, Akbar Thobhani, the company has so far been able to offer its clients an access point to cryptocurrency investments, and also best best prices:
“The distributed nature of cryptocurrency has given rise to a large breadth of exchanges around the globe, creating a fragmented market and limited liquidity,” Thobhani told CCN. “Over the last four years, we’ve been able to provide our clients a single point of access and the best price execution by building the necessary smart routing technology to navigate and connect these global markets and exchanges.”
SFOX has also grown fast and expanded rapidly this year. Since it was launched in 2014, SFOX has transacted $9 billion and has grown to see its client base increase 12-fold in 2018, despite the downturn cryptocurrencies have suffered over the recent months. This is entirely surprising considering that the cryptocurrency market has seen declining trading volumes, making it harder for institutional investors to enter or exit without causing huge price swings.
This new funding will be used to create more sophisticated cryptocurrency asset management services, helping an increasing number of large investors manage crypto portfolios. Thobhani told CNN that he is now spending less time to educate his potential clients, especially on the industry basics such as “what is Bitcoin”, and now focusses more time explaining the best practices to manage crypto assets as well as the difference between asset classes.
What’s stopping a wave of institutional cryptocurrency investment?
SFOX focuses on institutional investors, helping them route orders through various exchanges as well as execute large crypto trades. And even though the $22.7 million funding is expected to see the company reach out to more clients, the volatility and uncertainty of the cryptocurrency market are two of the main factors scaring institutional investors away.
Companies know that there’s a lot of money to be made with cryptocurrency, but as it currently stands, the risks seem too high. This means that SFOX has to foster a safer environment for the investors and advise them on the best practices to see that they maximize on the capital they have raised.
Through treating cryptocurrency management more like regular asset management, rather than educating users on the basics, SFOX are taking big steps in helping forge crypto’s space in the financial mainstream.