Hong Kong-based crypto lender and asset manager Babel Finance secured $40m in funding from investors including Zoo Capital, Sequoia Capital China and Dragonfly Capital.
The company intends to use the funds to expand operations and its business reach. Furthermore, t will also invest further in product development, compliance and talent acquisition, seeking especially banking professionals and lawyers to work on regulatory requirements.
Founded in 2018 and led by Flex Yang and Del Wang, Babel Finance is a crypto financial service provider offering crypto lending, asset management and prime financing to institutions and investors worldwide.
Babel will soon apply for business licenses in America, Europe and Asia with the goal of meeting the growing demand for crypto investment from mainstream investors.
Commenting on the round, Yang said, “The alliance with our new investors from traditional finance is a critical step for us to offer more innovative products, strengthen compliance controls, and ultimately provide a full suite of reliable services to meet the growing demand from mainstream investors who are keen to add crypto assets in their portfolio.”
To add on, Dragonfly Capital managing partner Bo Feng said, “Babel Finance has an ambitious goal of building a robust financial infrastructure for the crypto industry, which goes in tandem with the evolving trend towards the institutionalization of this industry. We are confident in their potential to become an international leader.”
As of February 2021, the company served more than 500 institutional clients and its crypto lending business reached a balance of $2bn in cryptocurrency. Combining financial innovation with prudent risk management, the company has a monthly trading volume of $8bn, it said.
Yang added that while the round didn’t add much to free cash flow, it marked an alliance with traditional finance players.
The Series A fundraising, which also included BAI Capital and Tiger Global Management, is a testament to the growing investor interest in Asia’s cryptocurrency players as traditional finance players like Sequoia and Tiger Global pumped in money towards digital asset firms, it said.
The crypto industry has been witnessing much action in the past few months. Elon Musk bought $1.5bn in bitcoin and declared Tesla would begin accepting the digital token as payments. That sparked a massive rally around bitcoin resulting in the digital asset breaking all its records and soaring beyond $60,000. More recently, Ethereum surged past $4,000 this week hitting a market value of $483.4bn.
Compared to the US, Asia’s crypto sector has witnessed a less friendly regulatory environment.
Although regulators in China have banned crypto exchanges as well as initial coin offerings, Yang said he was encouraged by deputy central bank governor Li Bo saying last month they were studying crypto as an investment tool. “Regulatory uncertainty has been a source of risk for us. If the government moves toward more clarity, it’s a good thing for us,” Yang said.
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