Darren Sissons discusses American Express
American Express Co.’s venture arm has invested in the FalconX cryptocurrency trading platform, another sign that large financial services providers are tiptoeing into the digital-asset sphere.
The credit-card provider didn’t disclose the amount invested in the San Mateo, California-based startup, which raised US$17 million in May from the likes of Accel, Coinbase Ventures and a fund affiliated with Fidelity Investments’ parent company.
AmEx has been investigating cryptocurrencies for years. In 2019, the company rolled out an app that uses blockchain -- the digital ledger behind many cryptocurrencies -- to let contractors and vendors reconcile invoices and time sheets. Amex Ventures remains an investor in Abra, which allows for trading of cryptocurrencies. AmEx has also tested using blockchain to let merchants create tailored offers involving membership rewards points, and enabling international business-to-business payments.
“Amex Ventures invests in startups as a way to better understand emerging areas of the payments ecosystem,” Harshul Sanghi, global head of Amex Ventures, said in a statement.
FalconX’s revenue has increased by 350 per cent since May, thought it declined to be more specific. The platform is doing around US$3 billion in transaction volume monthly, and has 250 institutional clients, said Raghu Yarlagadda, FalconX’s chief executive and co-founder. An increasing number of traditional service providers and hedge funds have become interested in cryptocurrencies, he said.
“We are actually at the front and center of seeing this institutional growth,” Yarlagadda said in an interview.
Earlier this year, companies such as MicroStrategy Inc. and Square Inc. invested in Bitcoin. Guggenheim Partners LLC recently said it might invest up to 10 per cent of its US$5.3 billion Macro Opportunities Fund in a Bitcoin trust.
FalconX wants to build a payment service using crypto, and could learn from AmEx’s experience, Yarlagadda said.