Today Figure unveiled Figure Markets as a spin off crypto and securities exchange with $60 million in funding. Jump Crypto, Pantera Capital and Lightspeed Faction led the Series A. Other investors include Distributed Global, Ribbit Capital and CMT Digital.
Figure is best known for founding the Provenance blockchain and extending more than $6 billion in home equity loans. Co-founder Mike Cagney was also the co-founder of SoFi.
As we highlighted last week, Figure Markets plans the exchange to use decentralized custody using multi-party computation (MPC) wallets. Hence, several people need to authorize asset movements.
The Provenance-blockchain-based exchange will initially support crypto trading – we assume only Bitcoin and Ether. However, it plans to trade securities, bonds and funds.
The U.S.-based marketplace launches next month, with an offshore exchange sometime in the second quarter.
“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,” said Dan Morehead, Founder and Managing Partner of Pantera Capital.
The aim of Figure Markets is to enable collateral mobility. It will support collateralization of one type of asset with a different type, as well as netting, margining and crypto lending.
In a Linkedin post, CEO Mike Cagney wrote, “Many users will be able to invest in a product like Figure Market’s REIT and use that to collateralize a trade in BTC.”
He reiterated that he is exploring making creditors of the bankrupt exchange FTX shareholders in Figure Markets.
Figure is a regulated ATS for securities
In many ways, Figure Markets isn’t new and is years in the making. What is new is the support for crypto trading, the coherent push to create liquidity with market makers, and the MPC wallet. Plus, there’s a gap in the market for crypto lending due to the collapse of so many players in 2022.
Almost three years ago we wrote about Figure Securities landing SEC approval to operate an Alternative Trading System (ATS) called Figure Marketplace. Figure developed a cap table management system for private companies, Adnales, and the ATS enabled secondary trading of their stock and other assets.
If the crypto exchange only trades Bitcoin and Ether, those aspects are relatively unregulated. However, one of Figure’s subsidiaries has money transmitter licenses.
