Archax, the UK FCA-regulated digital asset exchange, brokerage and custodian, has closed a Series A funding round of $28.5 million, with investors including abrdn as lead strategic investor, alongside Bitrock Capital, Blockchain Coinvestors, CE Innovation Capital, Keiretsu Capital, Lingfeng Capital, Mathrix AG, SGH Capital, The Tezos Foundation and others.
Archax is the UK’s first digital securities exchange, brokerage and custodian licensed by the FCA. Targeted at institutions, Archax aims to offer a bridge between the blockchain world and the existing investment space, by allowing institutional investors to custody and trade digital assets and cryptocurrencies alongside traditional securities.
The exchange is on track to formally launch in 1Q 2023, says Simon Barnby, Chief Marketing Officer. “Our custody services are already live and running, the exchange platform is live, and we’re now onboarding the first issuances in preparation for trading, so everything’s running to plan,” he says.
In addition to offering spot trading in cryptocurrencies Bitcoin and Ethereum, Archax plans to list a range of tokenised assets. “One area that we’re working on with abdrn, which is really exciting, is tokenising and creating digital representations of their funds,” says Barnby. “We’re also working on a range of regulated crypto exchange traded products (ETPs), which will act as a proxy for Bitcoin, Ethereum & so on. They will allow institutions to trade regulated instruments that settle in Crest and have ISIN codes, but which actually represent the underlying crypto assets.”
Barnby stresses that as an FCA-regulated entity, Archax’s focus is the institutional market, and the exchange’s membership will reflect that. “We’re currently going through the onboarding process with broker members, but we’re also targeting family offices, hedge funds, private banks and wealth managers,” he says. “We can also face off to individuals, as long as they can be considered professional investors. And we’re obviously talking to the big investment banks and financial markets firms, as well as prop trading firms and market makers, who will be providing liquidity on our crypto market.”
Technology for the regulated market is provided by Aquis Technologies, whose Aquis Matching Engine (AME) and Aquis Market Surveillance (AMS) systems will run in the Equinix LD4 datacentre and underpin the exchange. Archax has built and designed its own crypto matching engine, says Barnby, adding, “we’ve also built our own front end, which people can use to access the market. And we provide API access too. In time, we’ll integrate to other trading platforms.”
Russel Barlow, Global Head of Alternatives at abrdn, commented: “The digital assets ecosystem continues to grow at pace, and Archax’s success in this latest funding round underlines the appetite there is among investors to partner with organisations at the forefront of that shift. As momentum builds, Archax, and abrdn, are well placed to take advantage and meet growing client interest in digital assets that can be accessed through digital exchanges.”
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