(Rejected 2) Why Wells Fargo Invests $5M in U.K-Based Crypto Analytic Firm Elliptic
Wells Fargo Strategic Capital, the venture arm of the fourth largest bank in the U.S., is investing $5 million to Elliptic, a UK-based provider of crypto asset risk management solutions. Wells Fargo brings Elliptic’s Series B funding up to a total of $28 million. Wells joins Santander InnoVentures and SBI Group as an Elliptic investor.
Having received new funding from one of the world’s largest banks, Elliptic intends to push a new risk management product solution, called Elliptic Discovery, specifically aimed at financial institutions.
The key goal of Elliptic Discovery is to provide banks with vital information concerning the transactions of customers in cryptocurrencies and to assess if there are risks of money laundering. In other words, the new management product aims to provide banks with insights to recognize any flow of funds into and out of crypto-assets and to better determine the risk they pose. The tool presents detailed transaction profiles of more than two hundred global crypto exchanges, thus helping banks to manage risks and meet regulatory requirements.
James Smith, CEO of Elliptic, stated: “The partnership with our bank investors will greater enhance our capacity to better understand and closely work together with financial institutions around the globe to give them with greater visibility into the crypto-asset ecosystem.”
James further said: “Instead of leaving financial institutions in the dark regarding transactions in the emerging crypto asset class, Elliptic aims to work with financial institutions while making visibility into any crypto-asset transaction activity and enabling these institutions to manage risk accordingly.”
Many Banks Are Gaining Interest
James admitted that a giant bank like Wells Fargo investing in their company is a clear indication that banks are getting “interested in how we can assist them in understanding and managing risks that associated with crypto.”
James said: “More and many financial institutions realize that even if they don’t touch crypto-assets themselves, they are adjacent to crypto. They are exposed to crypto risk and have an obligation to understand the risk and how to manage it.”
Many banks have been hesitant to deal with cryptocurrencies in the past because of their high price volatility and cases of them being used in fraud and money laundering. However, James is optimistic that things will soon begin to change. James said: “It is no longer okay for a bank to bury their head in the sand and pretend that crypto doesn’t exist. Crypto is here to stay, and whether they want to participate in it or not, some of their customers will be.”
James revealed that Elliptic managed to convince Wells Fargo to invest in the company after developing a “relationship” with the U.S giant bank.
Besides investing in the Elliptic Discovery product, the company intends to use the funds to accelerate its expansion to various markets with a focus on Asia. Countries like Singapore and Japan have shown significant growth with regards to cryptocurrencies.
Elliptic has developed a reputation for itself in the blockchain ecosystem for its analysis tools that the company provides for several leading cryptocurrency exchanges like Circle and Binance to assist them in combating cases of crypto fraud and money laundering.
The Elliptic Discovery product was introduced in December 2019. The new funding will enable the firm to invest in the product and make it better.