Paxos, the veteran stablecoin and blockchain infrastructure company, is leaning more into DeFi. On Tuesday, the company announced that it had acquired Fordefi, a New York-based startup that helps customers store their digital assets. The acquisition cost more than $100 million, according to a Paxos spokesperson, who declined to elaborate on the terms of the deal.
Paxos helps companies like payments giant PayPal and neobank Nubank offer crypto trading to their customers. It is also a major player in stablecoins, or cryptocurrencies linked to underlying assets like the US dollar. Paxos issues, for example, the PayPal stablecoin, whose market capitalization exceeds $3.6 billion.
Its acquisition of Fordefi, which specializes in crypto wallets designed for DeFi, indicates that Paxos customers are clamoring to expand into an area of crypto that big companies once considered untouchable.
“We have customers who want to be able to access DeFi and have the right capacity to do so,” said Charles Cascarilla, co-founder and CEO of Paxos. Fortune.
A bet on DeFi
DeFi has long been considered a risky part of the crypto ecosystem. Users can earn high returns on, for example, decentralized lending networks, but these same protocols are also prone to hacks and exploits.
However, over the past year, large companies have started to take an interest in the ecosystem. In September, US crypto exchange Coinbase launched a feature allowing its customers to borrow money from DeFi lending network Morpho. And banks have begun tokenizing, or integrating with blockchains, money market funds, which investors see as a stepping stone toward greater institutional participation in decentralized finance.
“We definitely hear it all the time,” Cascarilla said, referring to Paxos customers who want more access to the DeFi ecosystem. He refused to say which ones.
Founded in 2021, Fordefi has about 40 employees and serves about 300 customers, Cascarilla said. The wallet startup was valued at $83 million in its last fundraising round, according to Pitchbook data. Fordefi will continue to operate independently for now, but Paxos plans to integrate the startup’s technology into its own infrastructure.
Fordefi is Paxos’ second acquisition in the past year. In February, the blockchain infrastructure company closed a deal for Membrane Finance, a stablecoin issuer in Finland. The acquisition enabled Paxos, which has a trust charter in New York, to comply with MiCA, the European Union’s crypto regulatory regime.
