Crypto player Babel Finance secures US$80 million in funding, lifting valuation to US$2 billion

This valuation elevates Babel, which limits its crypto business to Bitcoin, Ether and stablecoins, to unicorn status. PHOTO: REUTERS

SINGAPORE - Crypto financial services provider Babel Finance has secured funds of US$80 million (S$110 million), bringing its valuation to US$2 billion, elevating it to unicorn status.

Co-founder and chief executive Del Wang, 32, said the firm is looking to fund its expansion to Latin America, Europe and Africa, as well as build up its compliance team and for licensing purposes.

"We're expanding globally, particularly to developing nations because crypto development in these places is a bit behind. But in the past two years, their institutional market has grown rapidly.

"We estimate that it will grow even faster in future. As it is, some local institutions have emerged, including exchanges and wallets, and we hope to be their financial services provider," he said.

Regulations in different jurisdictions vary, so the company is looking to "build up our compliance team and engage law firms to help", said Mr Wang.

Babel has licences in Luxembourg, Hong Kong and Britain, and is working with regulators in Singapore, Hong Kong, the United States, Australia and Dubai to secure more licences.

The firm, which employs more than 170 people, is also looking to innovate its systems and products - something Mr Wang said would lend a huge boost to the firm's competitiveness.

Key investors in Series B fund raising include Jeneration Capital and 10T Holdings, as well as existing shareholders Dragonfly Capital and BAI Capital. Others include Circle Ventures and a number of family offices in the Asia-Pacific region.

A start-up company attains unicorn status when it has a value of more than US$1 billion. 

Babel, based in Singapore and Hong Kong, is one of the largest service providers to institutions in the crypto market.

About half of its revenue last year came from its crypto lending arm that makes money off net interest margin. The other half came from its trading business where the firm gets an intermediary fee, similar to what traditional market players do.

At the end of last year, the firm said it had an outstanding loan balance of more than US$3 billion, an average monthly trading volume of US$800 million in derivatives, and had structured and traded more than US$20 billion in options products.

Currently, Babel serves about 500 clients, of which 60 per cent are institutional investors and the remaining 40 per cent are ultra high net worth individuals and family offices. Institutional investors make up 80 per cent of the firm's business.

With more and more big names such as Goldman Sachs and Julius Baer dipping into the digital asset space, Mr Wang said, "we'd be greatly impacted if they become our direct competitors, but I don't think it will happen for another one to two years, so we still have some lead time".

He added: "What's working in Babel's favour is that we have the expertise in crypto and have the experience in dealing with the volatility of the market." 

He added that blockchain technology will form the backbone of the next-generation financial ecosystem, but that time is needed to develop the industry's regulation framework.

Set up in Hong Kong in 2018, Babel limits its crypto business to Bitcoin, Ether and Stablecoin, and deals with only institutional investors and not retail investors.

The current round of fund raising comes a year after Babel raised US$40 million in Series A funding.

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