Banking giant Wells Fargo is backing blockchain forensics firm Elliptic.
Announced Thursday, the fresh $5 million from Wells Fargo Strategic Capital (WFSC) brings Elliptic’s Series B up to a total of $28 million. The investment is partly geared toward a recently launched product that helps crypto exchanges win banking relationships, Elliptic said.
The product, Elliptic Discovery, provides a bill of health for over 200 crypto exchanges worldwide, covering everything from how they conduct know-your-customer (KYC) checks to whether they’re regulated in the first place.
“Previously, a bank just didn’t know much about the exchange that was wanting to open an account with them,” Elliptic co-founder Tom Robinson told CoinDesk. “This will give them insights into how risky or otherwise a given crypto exchange is.”
Almost all big banks have avoided crypto businesses because the perceived risk of dealing with potentially unsavory transactions was thought to outweigh the benefits. The job has been left to a handful of smaller financial institutions, including the U.S.-based Silvergate and Signature banks.
Helping banks hook up with exchanges is a use case that’s probably underappreciated, said Robinson. “Elliptic Discovery really does help a bank to engage more closely with crypto exchanges,” he said.
Crypto sleuthing firms like Elliptic and similarly bank-backed Chainalysis are thought to have a bright future, with law enforcement agencies doubling down on crypto and industry regulations becoming clearer.
Wells Fargo is not the only bank to have taken an interest in Elliptic, but it is the first one from the U.S.
Last September, Japanese banking group SBI Holdings invested $10 million to help drive Elliptic’s Asian expansion plans. Other investors include Santander InnoVentures, SignalFire, AlbionVC and Octopus Ventures.
“We are excited to invest in Elliptic and to help them execute the next phase of their business plan,” said Basil Darwish, managing director for strategic investments at Wells Fargo, in a statement.