By Grant Ferowich
Digital Asset Holdings completed a Series B financing round with a $40 million capital infusion, according to an October 16 announcement. The firm is led by CEO Blythe Masters, an investment banking powerhouse who was instrumental in creating credit default swaps.
Jefferson River Capital was the lead investor in the capital raise that brought the company’s total outside investment up to more than $110 million. The capital will help Digital Asset grow its presence around the globe, the company said.
JP Morgan, IBM, Goldman Sachs Group, Citi, and Accenture have previously invested in the venture as well. The latest announcement states old and new investors were involved but only Jefferson River was mentioned in particular. DAH did not disclose how much equity was distributed.
The company announced that Clyde Rodriguez had joined DAH as CIO and CTO of Engineering after leaving a co-CTO role at hedge fund Two Sigma Investments.
“Clyde is a respected technology executive with a strong track record of leading engineering teams to develop mission-critical enterprise software that supports hundreds of millions of customers worldwide,” Masters said in a news release.
The New York-based firm focuses on back-end traditional banking infrastructure that Masters says is an underserved market. The “highly costly” post-trade environment has “ironically lagged behind” the revolution in the front-end trading environment, the executive said December 8 last year.
A arms race has engulfed the front-end trading atmosphere for the past 20 years. High frequency trading firms like Citadel and Optiver have grown exponentially. Robinhood offers zero-commission equity trading on a mobile app. (In the cryptocurrency sphere, Cobinhood seeks to replicate the zero-fee model.)
“I think its probably fair to say that the traditional banking or financial intermediation business is facing something of an existential threat. From a [return on equity] perspective, it’s nothing but bad news. We’re in a compressed revenue environment, we’re in a high and rising cost environment, and regulatory capital requirements have gone nothing other than exponentially upwards, and indeed seem to be continuing to do so,” the former JP Morgan banker explained in a fireside chat.
The Depository Trust & Clearing Corporation, which clears and settles all securities and bonds in the US post-trade, and the Australian Stock Exchange count among the company’s clients so far.
“We’ve had our heads down, buried, working furiously toward the development of what will be the world’s first production implementations of distributed ledger technology (DLT) on an enterprise-grade scale,” Masters said December 8 last year.
DLT can provide an auditable, verifiable record of transaction for responding to regulatory requirements securely and in real time.
The latest funding round appears to be aimed at applying the architecture to integrate with regulatory landscapes around the globe, including markets with especially strict rules.
Speaking on the blockchain technology in 2015, Masters was optimistic. “You should be taking this technology as seriously as you should have been taking the development of the Internet in the early 1990s,” the Englishwoman said at Sandler O’Neill & Partners investment conference in 2015. “It’s analogous to email for money,” she said.
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