Bank of New York Mellon invests in Crypto Startup

BNY Mellon’s strategic investment in Fireblocks is part of a larger round of financing that Fireblocks announced on Thursday, after news of the investment was first reported by The Wall Street Journal. The New York startup raised $ 133 million from investors, including hedge fund Coatue Management LLC and venture capital firm Ribbit Capital and Stripes. BNY Mellon did not disclose the size of its investment.

Fireblocks was founded in 2018 by veterans of the Israeli military intelligence services. The C-Series financing round gives the company a valuation of more than $ 900 million, said a person familiar with the matter. Fireblocks has raised $ 179 million so far, including the new round.

Cryptocurrencies have enjoyed a wave of interest this year from major financial firms and corporations. These include Mastercard Inc.,

who said he intends to support some cryptocurrencies in his network and Tesla Inc.,

who bought $ 1.5 billion in bitcoin for his treasury.

Amid growing interest, Bitcoin has nearly doubled in value since the beginning of the year and traded over $ 58,000 on Thursday. The largest cryptocurrency exchange in the US, Coinbase Global Inc., recently submitted plans to go public on the Nasdaq stock market.

BNY Mellon is one of the largest custody banks in the world. Such banks play a key role in global financing, ensuring the safe storage of assets held by institutional investors, such as pension funds and mutual funds.

One of the reasons money managers have been reluctant to invest in cryptocurrencies – in addition to their volatility and uncertain regulatory status – is the lack of reputable custodians for digital assets. Secure storage is especially important in encryption due to the frequency of cyber attacks. Collectively, hackers have been stealing billions of dollars in digital currencies since Bitcoin debuted in 2009.

BNY Mellon says it is entering cryptocurrency custody to serve a growing interest in digital assets among institutional investors. “There is a very significant demand for digital assets in general,” said Roman Regelman, executive director of BNY Mellon’s digital activities and services. “I’m becoming part of the mainstream.”

Earlier this month, the payment giant PayPal Holdings Inc.

acquired a Fireblocks rival, Curv, in another sign of interest in crypto-custody technology. State Street Body.

, one of the other major custody banks, also says it works at a digital asset custody service.

Fireblocks has developed what is actually a cryptocurrency safe, along with a cryptographic version of the Swift money transfer network used by banks.

In February, more than $ 100 billion in digital assets were moved through the Fireblocks network, more than double the level of three months earlier, the company says. This rapid growth reflects the rally of bitcoin, ether and other cryptocurrencies, as well as the increase in network usage. Fireblocks says it has more than 200 customers, including some of the largest cryptocurrency trading firms.

The startup also works with five other multinational banks in addition to BNY Mellon, according to Fireblocks CEO and co-founder Michael Shaulov. He refused to identify the banks.

Earlier, Mr. Shaulov ran a startup specializing in mobile device security, Lacoon Mobile Security, which was acquired by Check Point Software Technologies Ltd., listed on the Nasdaq, in 2015.

In the early 2000s, he served in Unit 8200 of the Israeli Defense Forces, the country equivalent of the National Security Agency. The other two co-founders of Fireblocks and many of its engineers have similar environments.

In an interview, Mr. Shaulov said that his experiences in the secret unit lay the foundations of his career in cybersecurity. “Once you understand how attackers work or how attackers operate in their most advanced capacity, it gives you an advantage in understanding how to build defense systems,” he said.

An Israeli Defense Forces spokesman declined to comment.

Write to Alexander Osipovich at [email protected]