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Three of the world's largest banks (Citigroup, BNY Mellon, and Wells Fargo) have joined a funding round for a U.S. cryptocurrency trading technology developer, a move currently underway on Wall Street to prepare for the growing adoption of digital assets. It highlighted the efforts being made.
The $105 million Series B funding, expected to be announced Tuesday, values the company, called Talos, at $1.25 billion. The round, led by technology investor General Atlantic, also includes previous Talos backers, including Fidelity Investments and venture capital investors Andreessen Horowitz and PayPal Ventures.
The deal comes as crypto prices are falling and many traditional financial giants await regulatory clarity to make important decisions regarding their digital asset strategies.
This comes as financial groups are working behind the scenes to find ways to make crypto trading safer for institutional investors, with traditional assets taking on digital form as tokens that reside on blockchain, the technology that underpins cryptocurrencies. It shows that he is looking for ways to prepare for the prospect of taking a job.
“We see cryptocurrencies as the tip of the spear,” said Mike Demissie, head of digital assets and advanced solutions at BNY Mellon. BNY Mellon has $45.5 trillion in assets under custody and management and $2.3 trillion in assets under management. “Other types of assets will also be tokenized and made available on this type of infrastructure.”
Talos occupies a less risqué corner of the cryptocurrency business, essentially building the computer plumbing for institutional investors responsible for making trades on the best terms for their customers. This product helps clients see prices from major exchanges and market makers in one place and provides instructions on every step of the trade, including complex algorithms.
“Our job is to make sure our customers are connected,” CEO Anton Katz said. He is a software engineer trained at the Massachusetts Institute of Technology and previously served as head of trading technology at hedge fund AQR Capital Management and with the Israeli National Shooting Team. “We are rails.”
Katz said he expects Talos to handle an even wider variety of digital assets in the coming years, as trading techniques developed in the crypto business find use in traditional finance.
“The experimentation that's happening with cryptocurrencies is causing other asset classes to consider what they can do better and what they can do differently,” he said. “Right now, the majority of our conversations with large institutions are literally about how this technology will impact their existing ecosystem.”
Aaron Goldman, managing director and co-head of financial services at General Atlantic, said the “casual” approach of the nascent crypto industry has been replaced by increased participation by institutional investors with fiduciary responsibilities. He said Talos is well-positioned for growth.
“We're moving away from the previous days where trades were executed by calling a friend and telling the client we'd trade with her because we knew she had the best price.” Goldman said.
He added, “The market structure is evolving now. You have to go to the market, look at different prices, and show people that you were able to execute in the most efficient and thoughtful way. Then, We can go back and audit and demonstrate that we had the best execution.”
