Jan 26, 2022 - Economy

FTX.US nabs $8B valuation

Illustration: Aïda Amer/Axios

FTX.US, the affiliate of cryptocurrency exchange FTX, raised $400 million in funding, valuing it at $8 billion roughly a year and a half after it launched in the U.S.

The big picture: Investors in the round included Softbank Vision Fund 2, Paradigm, Temasek, and Multicoin Capital, all of whom also invested in FTX.

Why it matters: Despite their lofty promises to upend finance, consumer-facing crypto companies have largely stayed in their digital-asset lane. FTX wants to be more than that, with this fundraise setting the stage for it to expand into multiple products.

  • Currently offering spot crypto trading, the business has made moves to enter the highly lucrative crypto derivatives market (which often is larger than the spot market outside the U.S.), NFTs, and stock trading.
  • And yes, they are also considering becoming a bank, though there are no immediate plans, says Brett Harrison, president of FTX US.
  • "I think we have a real shot at not just being a competitor to Coinbase, but a competitor to CME... and Robinhood as well," Harrison said. "After conquering crypto derivatives, there's nothing to stop us from moving onto other asset classes, for example, broad based equity index futures or fixed income futures."

Context: FTX.US certainly has a lot of traction, having grown to about 1.2 million users in a year. But it's still a fraction of Coinbase's 73 million, a fact the executive brings up himself.

Between the lines: That means beyond just organic growth and marketing, FTX.US may acquire businesses to play catch-up quickly. And it has not been shy about doing so in the past, snapping up Blockfolio in 2020 and LedgerX last year.

What's happening: Harrison sees two profiles of businesses FTX.US could acquire:

  • Companies with a large user bases interested in, but not yet trading, crypto to tackle the gap in size between its user base and those of its larger U.S. competitors.
  • Businesses with financial licenses necessary for new product lines — for example, buying a bank to gain a banking charter, should it decide to go down that route.

Of note: FTX.US is not the only U.S.-based crypto company looking into some kind of stock product: Bitstamp USA is also considering entering equities, per Bloomberg.

The bottom line: Crypto reached a whole new level of popularity in 2021. Now the giants of the space are looking to go a step further and dive into more "vanilla" assets.

Lucinda Shen co-authors our new Axios Pro newsletter on fintech deals. Subscribe at AxiosPro.com.

Go deeper