A cryptocurrency broker-dealer providing services to institutional and high volume investors has secured $22.7 million in funding, drawing the support of some notable backers.
Los Angeles-based SFOX announced that it had secured the funding from investors including Tribe Capital, Danhua Venture Capital, Social Capital, Digital Currency Group and the co-founder of Airbnb, Nathan Blecharczyk.
The firm, which first launched back in 2014, deals specifically with high volume traders, including institutional investors and high net worth clients. SFOX fills orders by executing transactions through several different cryptocurrency exchanges.
SFOX aims to spread the impact of large transactions on liquidity in cryptocurrency markets, described as “one of the most significant barriers to institutional cryptocurrency adoption” by Tribe Capital partner Arjun Seth.
According to financial disclosures, transaction volumes of as much as $9 billion have been processed through their platform so far, representing 12-fold growth over the last 12-month period.
With the investment, SFOX intends to set up a cryptocurrency asset management division, as well as to continue to fund their expansion into new international markets.
Chief Executive at SFOX, Akbar Thobhani, said their plans were a response to demand from investors for more options around cryptocurrency assets and investing in cryptocurrency.
“We continue to observe sustained and increasing demand from institutions that want to include cryptocurrencies as part of a diverse portfolio but are reluctant to do so because of uncertainty and volatility,” Thobhani said. “As infrastructure is built, institutions require trading products to properly hedge themselves during volatile markets. In the financial markets, there is a suite of products that help participants navigate: options, futures, repos, etc. We’re still in the early stages, but the progress in trading products is a positive sign. Options and futures have been available since 2017, and there’s a strong push for bitcoin and Ethereum ETFs.”
Without many available cryptocurrency products like ETFs, institutional investors are restricted in their options for investing in digital assets like bitcoin. SFOX aims to serve these clients as the next best option for large scale investors.
“We’ve been entrenched in this space for years…We understand the needs of institutional investors—the standards they expect, the features that are the most useful to them, and their pain points. That’s why we provide access to global liquidity: to make the high-volume transactions they need possible without negatively impacting markets,” according to the company.
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