Figure raises $60M in bid to build a ‘differentiated’ crypto exchange

Blockchain-focused Figure Technologies has secured $60 million in a bid to build a decentralized competitor to the largest centralized crypto exchanges.

The company also looks to offer an alternative to stablecoins.

Called Figure Markets, the new exchange seeks to use the Provenance blockchain — which Figure helped develop — to be a marketplace for a range of securities, including equities, fixed income, alternatives and crypto assets.

Jump Crypto, Pantera Capital and Lightspeed Faction led the $60 million Series A funding round.

Figure CEO Mike Cagney acknowledged that many exchanges have launched without much success in usurping the two titans in the segment.

“Coinbase and Binance have dominated, so we take that with pragmatism as we’re coming into this,” Cagney told Blockworks. “But I think we’re in a situation to do something really differentiated.”

Figure Markets is set to use multi-party computation (MPC) wallets to combat single-point-of-failure risks that exist on centralized exchanges — a more poignant concern after the collapse of FTX in November 2022.

The wallet’s private keys are distributed across a decentralized network and require multi-party approval — eliminating the need for a central custodian or clearing agent, Cagney noted.

“The company’s innovative use of MPC technology addresses critical pain points in the current market structure which contributes to creating a more efficient and secure future for digital assets,” Pantera Capital founder Dan Morehead said in a statement.

Figure is also working toward having a registered security alternative to stablecoins that would pay a yield, Cagney said.

The startup is looking to create fixed income securities, or “certificates,” that would be transferred through peer-to-peer transactions on the Provenance Blockchain, according to a draft registration statement filed with the Securities and Exchange Commission in October.

“We’ve been working with the regulators on this and hope that we’re close to being able to launch something that I think provides a significant advantage over USDC,” Cagney said. “That’s sort of icing on the cake in terms of propelling this and building differentiation.”

Lightspeed Faction — a joint venture between Faction with Lightspeed Venture Partners unveiled in 2022 — raised $285 million for its first venture fund last year to invest in early-stage crypto projects at the infrastructure and protocol level.

Real-world assets moving onto the blockchain marks “the beginning of a seismic shift in financial markets,” Faction co-founder Banafsheh Fathieh said in a Monday statement.

The idea of tokenizing such assets — from real estate to debt securities — has picked up steam in recent months, with large financial institutions such as JPMorgan and Citi have done asset tokenization proofs of concept.

Fathieh added: “We believe Figure is at the forefront of this innovation and are thrilled to support them as they build towards the next logical iteration of financial services.”

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.