Institutional interest in cryptocurrency experienced exponential growth in 2021, and companies like FalconX, a cryptocurrency exchange solely focused on providing financial services to institutions have front-row seats to the action.
The company has seen its net revenue grow 30x year-over-year, directly linked to the increased demand for crypto from institutional investors. FalconX is considered one of the most valuable institutional cryptocurrency companies, and its August 2021 $210M Series C put it at a $3.75 billion valuation.
The Series C was led by Altimeter Capital, B Capital Group, Sapphire Ventures and Tiger Global with participation from Amex Ventures and Mirae Asset. This follows a $50 million Series B in March 2021, and an investment from Amex ventures in December 2020.
FalconX is unique in that it’s specifically built for institutional investors, rather than retail investors, a category targeted by popular exchanges like Coinbase or Gemini (who also have institutional arms.)
“When FalconX started, the market was largely retail, our thesis was that if cryptocurrency went mainstream, the vast majority of the volume would be institutional,” says Aya Kantorovich, FalconX Head of Institutional Coverage. “As you see in any other mature asset class, so far, that thesis has been correct, as institutions have grown to represent the majority of the volume in the cryptocurrency market – we expect that trend to continue.”
Many institutional investors are suddenly sprinting into crypto in search of outsized returns, portfolio diversification, and as an inflationary hedge.
By being the largest institutional-only cryptocurrency financial services company, Kantorovich believes, FalconX is positioned to refine the institutional client experience with a high degree of granularity, exploring its product lines with both breadth and depth, and prioritize being the best for this specific client persona.
FalconX uses machine learning to give institutions a single counterparty with access to global cryptocurrency liquidity with 99.9%+ uptime. It offers a web interface, APIs, and 24/7/365 white-glove trading desk, and a credit business to enable institutions to access short-term financing for trades.
Aya Kantorovich, FalconX Head of Institutional Coverage joins CoinCentral to discuss the institutional cryptocurrency investment landscape and FalconX’s plans for the future.
What does the Head of Institutional Coverage role entail?
As the Head of Institutional Coverage, my focus spans working with our clients on different market strategies, building the best experience across product lines, and making sure we have our pulse on our existing and future clients wants and needs.
Today, this expands across the globe with client personas ranging from the world’s largest financial institutions, hedge funds, asset managers, venture capital firms, payment providers and investment applications.
FalconX is purpose-built for the world’s leading institutional cryptocurrency market participants. We’re committed to providing institutions with a single counterparty with access to global cryptocurrency liquidity with 99.9%+ uptime through its web interface, APIs, and 24/7/365 white glove trading desk, and my work touches all aspects of our product and clients every day.
Congratulations on the big round! What are the next steps for FalconX?
FalconX will use this new investment to expand product lines, explore strategic acquisitions and hire exceptional talent across the globe. We are excited to keep building across our technical infrastructure and grow our teams of people worldwide, playing an essential and active role to enable institutions in the industry’s evolution.
FalconX plans to officially announce several new product offerings in the coming months, each of which are currently live, growing quickly, and profitable.
How do you see institutional interest in cryptocurrency growing in the future?
Traditional institutions started to really get involved in cryptocurrency investments in late 2020. While initially starting with Bitcoin, we have seen these institutions continue to expand first to Ethereum and later to other protocols such as Solana and Terra. What this means is that while they might have joined based on the inflation hedge narrative, they are expanding after seeing the real adoption and use cases of other blockchains to change the way assets and value is exchanged and settled.
As the world and markets continue to tokenize, the infrastructure created from crypto can reimagine how institutions engage and deliver financial services.
FalconX is uniquely positioned to give institutions the ability to participate in this ecosystem. We’ve seen demand and interest from a broad set of institutions, including the world’s largest financial institutions, hedge funds, asset managers, venture capital firms, and payment providers. Right now in our client base, we’re seeing a roughly 50/50 split between crypto native and traditional financial institutions.
Thank You, Aya Kantorovich!