Goldman Sachs Leads Investment in Crypto Firm Coin Metrics

Coin Metrics, a cryptocurrency and blockchain data provider to institutional clients, raised $15 million through investors led by Goldman Sachs Group Inc.

The firm, founded in 2017, plans to use the proceeds to grow in Europe and Asia, create new products and expand current offerings, Tim Rice, a co-founder and the firm’s chief executive officer, said in an interview. He declined to give a valuation for the company based on the latest investment.

Mathew McDermott, global head of digital assets for Goldman Sachs’s global markets division, will take a seat on the board of directors, Rice said.

Investors have been pumping money into cryptocurrency projects such as Paxos Trust Co., Digital Asset Holdings LLC and Chainalysis Inc. as currencies such as Bitcoin and Ether surged to records in recent months. As of April 27, 156 startups focusing on digital technology had raised $3.1 billion, compared with 341 deals that drew $2.3 billion in funding for all of 2020, according to CB Insights.

But the way large institutions such as asset managers and Wall Street banks are approaching crypto is different from the last bull market in 2017, according to Rice.

“This time around you have people looking for a holistic data solution,” he said. “They need to have solid data to get into the asset class.”

Coin Metrics also counts Fidelity Investments as an investor and client, Rice said. “We’ve definitely seen the institutions behave very seriously, they’re now signing contracts with us,” Rice said.

Most banks have stayed on the sidelines until now. But that’s been changing as they become more comfortable with how crypto works and as their clients push for access to the $2.2 trillion market.

“Customer demand is starting to pull them in,” Rice said.

Coin Metrics has been educating its customers about how blockchain-based transactions compare with traditional payment networks such as those run by the Depository Trust & Clearing Corp. and the Society for Worldwide Interbank Financial Telecommunication, or Swift. Instead of a day or two for an equity transaction to clear and settle, for example, blockchains such as Bitcoin can accomplish that in an hour or so. Understanding the associated risks is another important topic, Rice said.

“These are the kinds of things we’re exposing and helping them work on,” he said.

Having a marquee name such as Goldman Sachs as an investor and client is not just big for Coin Metrics, but for the industry as a whole, he said. “We think this is a huge day for us,” Rice said. “A huge credentialization.”

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