ConsenSys Raises $65 Million to Bring DeFi to Traditional Finance

The fund raise, the first major external raise for ConsenSys, is a sign of increasing interest in DeFi protocols, which typically run on the Ethereum blockchain.

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key takeaways

  • ConsenSys will use the funds to “accelerate the convergence” of decentralized finance (DeFi) protocols and traditional financial systems
  • The Brooklyn-based ConsenSys is best known as a business incubator for Ethereum-based projects

The Ethereum software company ConsenSys has raised $65 million from JPMorgan Chase, UBS and Mastercard, as well as China’s Greater Bay Area Homeland Development Fund.

The company will use the funds to “accelerate the convergence” of decentralized finance (DeFi) protocols and traditional financial systems, it said in a statement shared with Blockworks Tuesday. The fund raise, the first major external raise for ConsenSys, is a sign of increasing interest in DeFi protocols, which typically run on the Ethereum blockchain. 

The Brooklyn-based ConsenSys is best known as a business incubator for Ethereum-based projects. Last year it went through a restructuring in which it separated its core software business, now called ConsenSys, from its investment arm, incubator and portfolio, now called ConsenSys Mesh.

Early this year ConsenSys partnered with China’s Blockchain-based Service Network (BSN), a government-backed operating system meant to make blockchain technology more accessible to enterprises and government organizations. It’s backed by the State Information Center of China, a think tank under the National Development and Reform Commission, one of the highest economic planning agencies.

ConsenSys also provides technology and expertise to institutions like the Central Bank of Thailand and France’s Société Générale for their central bank digital currency experiments, which has been a hot topic among different governments since China got serious about its digital yuan two years ago and began testing it on different platforms and in different regions over the past few months. 

Central bank digital currencies have also been a focus for payments behemoths, including Mastercard, who have been preparing for a new world that transacts in both digital dollars, for example, as well as stablecoins. While Mastercard doesn’t currently have plans to allow network support of ether, the native asset of the Ethereum blockchain, its investment in ConsenSys is part of its “range of initiatives and investments in the space”, which include adding other digital assets onto its network later this year, the company said in a statement today.

The fund raise is also a sign of renewed interest by legacy financial institutions in the blockchain technology that powers cryptocurrencies, rather than the cryptocurrencies themselves.

JPMorgan, while its CEO has outwardly denounced bitcoin, has endorsed blockchain technology for years. The bank launched Quorum, its enterprise blockchain platform, in 2016 (the height of popularity in enterprise blockchain technology). It sold it to ConsenSys in August, and received a strategic investment from the bank as part of the deal.

FTX owner Alameda Research, Protocol Labs, Fenbushi, the Maker Foundation, The LAO, Liberty City Ventures and Quotidian Ventures also participated in the investment.

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