The behind-the-scene’s fintechs are proving critical to Wall Street’s adoption of crypto. This story is available exclusively to Insider subscribers. Become an Insider and start reading now.
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Two crossed lines that form an ‘X’. It indicates a way to close an interaction, or dismiss a notification. Wall Street firms and fintechs are embracing crypto and DeFi like never before.
A consumer crypto craze is pushing finance firms to offer crypto-related products and services.
These 14 fintechs are building the back-end tech to get Wall Street up to speed on crypto.
Wall Street firms are turning a corner when it comes to their acceptance of crypto and decentralized finance, but they could still use a little help getting there.
Consumer interest in crypto has driven financial stalwarts, once standoffish to digital assets, to open up to the tech. From JPMorgan enabling wealth clients access to crypto funds to Citigroup building out a crypto team to meet the rising demand for digital assets, the crypto craze has reached Wall Street.
But crypto requires a different kind of back-end tooling than traditional assets. Crypto and DeFi are enabled by blockchain technology, a digital and decentralized public ledger that sits across a network. It differs from the centralized ledger most banks use to keep track of money movement.
As firms look to offer more crypto-related services — like custody, trading, and wealth management — they’ll need to ensure the two infrastructures are compatible.
A new crop of fintechs has emerged targeting the back-end technology of crypto and DeFi. These behind-the-scenes fintechs, some of which have augmented their existing offerings to address the crypto demand, are becoming a critical layer of connective tissue for many Wall Street firms looking to bridge the gap in their tech stacks.
And just as crypto enjoyed a watershed year in 2021 among traditional finance firms, from Goldman Sachs to Bank of America , it also had a record year for private funding. In 2021, global venture funding into blockchain startups hit $25.2 billion, according to CB Insights . That’s a 713% increase over 2020 amounts.
Insider spoke to 10 investors to get the rundown on the top startups helping Wall Street get up to speed when it comes to crypto. These are 14 fintechs building Wall Street’s road to crypto and DeFi.
Alchemy
Alchemy cofounders Nikil Viswanathan and Joe Lau. Total funding: $563.9 million
Cited by: Paul Veradittakit, partner at Pantera Capital (investor)
Why it matters: Alchemy provides companies and their developers with infrastructure tools to build applications on ethereum and other blockchains. It recently raised a $200 million Series C-1 in February that pushed the fintech’s valuation north of $10 billion.
Alchemy has proven popular among blockchain-native companies, such as OpenSea , a large NFT marketplace, and Trust Wallet, the official cryptocurrency wallet of exchange Binance, according to its website.It also powers Adobe, through its NFT initiatives, and Circle, a blockchain-focused payments fintech.Its growing foothold and track record among crypto companies makes it a likely candidate for Wall Street firms to tap, Veradittakit told Insider.”They’re providing the enterprise and developer infrastructure to run nodes and servers that can easily pull data from the blockchain and be able to write to the chain, and then be able to actually have developer tools on top and APIs for enterprises and developers to make it very easy for them to build and also monitor their applications,” he said. Bloq Jeff Garzik, founder and CEO of Bloq. Total funding: $20 million Cited by: Jennifer Lee, partner at Edison Partners Why it matters: Bloq provides APIs for financial firms to connect to popular blockchain networks and their on-chain data. In addition to the APIs, Bloq also has plans to offer decentralized, off-chain computing power and decentralized storage products, according to its website.Bloq is “enabling businesses to build blockchain-enabled ecosystems and solving key business issues while providing that foundation — very cool and worth watching,” Lee told Insider.The upstart already works with Citigroup, Fidelity, and Discover, a company spokesperson confirmed to Insider.Bloq cofounder and CEO, Jeff Garzik, is no stranger to back-end technology.Before Bloq, Garzik cut his teeth in the mid-1990s as a web developer at CNN, eventually helping to launch the news outlet’s first website. He later spent time as a principal software engineer at RedHat, where he co-developed the Linux operating system.More recently, he has been on a tear creating crypto fintechs, including DeFi offering Vesper Finance, blockchain network SpaceChain, and cryptocurrency […]
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