Despite recent swings in cryptocurrency values, many institutional investors appear undeterred. The growth of Babel Finance, which offers a suite of institution-facing crypto financial products, could be an indicator of how banks, investment funds, and other traditional investors are embracing the emerging digital asset class.
Founded in 2018, Hong Kong-based Babel is newly valued at $2 billion in its $80 million Series B funding round, the company told TechCrunch. The fresh capital infusion is mainly backed by Jeneration Capital, 10T Holdings, and its existing shareholders Dragonfly Capital and BAI Capital. Other investors include Circle Ventures and several family offices in the Asia-Pacific region. The firm has raised a total of $120 million in equity financing to date.
Babel has evolved from a crypto lending business targeting miners and others into a comprehensive crypto asset manager for institutional investors. It’s now serving a group of 500-plus organizations and high net-worth individuals with services including crypto lending and borrowing as well as portfolio management.
Demand from this group “is strong as they seek more sophisticated financial instruments to manage their investments in cryptocurrencies,” said Del Wang, co-founder and CEO of Babel.
The crypto market is notoriously volatile, so it puts extra pressure on asset managers like Babel to maintain a healthy balance sheet. Babel’s source of funds comes from its own capital and “global institutional funding sources,” the founder said.
The recent collapse of Luna and stablecoin UST had “no impact” on Babel’s business because the firm “has no exposure” to the coins and limits its business to bitcoins, ethers, and certain stablecoins. The startup claimed that it had an outstanding loan balance of over $3 billion and an average monthly trading volume of $800 million in derivatives at the end of 2021. It had structured and traded more than $20 billion in options products.
Like other deep-pocketed crypto firms, Babel is now making its own venture capital bets on emerging startups. Since 2020, it has invested in over ten companies that focus on crypto finance, brokerage and trading, and decentralized finance (DeFi), though it didn’t name which.
Babel holds licenses in Luxembourg, Hong Kong and the UK for “relevant businesses” and is working with regulators in Singapore, the US, Australia, Dubai and Hong Kong to acquire more permits. It’s one of the many crypto firms to have recently opened an office in Singapore, which is competing with Hong Kong to be the crypto nexus of Asia.
“Singapore is drawing major industry players from the world. Singapore’s dependable legal system, prestigious wealth management industry, and pioneering approach to crypto regulation make it an excellent launchpad for a business headquarters to serve global clients,” said Wang.