Paxos, the veteran stablecoin and blockchain infrastructure firm, is leaning further 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 was for more than $100 million, according to a Paxos spokesperson, who declined to specify deal terms.
Paxos helps companies like the payments giant PayPal and the neobank Nubank offer crypto trading to their customers. It’s also a major player in stablecoins, or cryptocurrencies pegged to underlying assets like the U.S. dollar. Paxos issues, for example, PayPal’s stablecoin, which has a market capitalization of more than $3.6 billion.
Its acquisition of Fordefi, which specializes in crypto wallets designed for DeFi, signals that Paxos’ customers are clamoring to expand into a realm of crypto that large companies once deemed untouchable.
“We have customers that want to be able to access DeFi and have the right capacity to do that,” Charles Cascarilla, cofounder and CEO of Paxos, told Fortune.
A bet on DeFi
DeFi has long been considered a risky part of the crypto ecosystem. Users can receive high yield on, for example, decentralized lending networks, but those same protocols are also prone to hacks and exploits.
Still, over the past year, large corporations have begun to dip their toes into the ecosystem. In September, the U.S. crypto exchange Coinbase launched a feature to let its customers borrow money from the DeFi lending network Morpho. And banks have started to tokenize, or put in blockchain wrappers, money-market funds, which investors see as a stepping stone to larger institutional participation in decentralized finance.
“We certainly hear it all the time,” said Cascarilla, in reference to Paxos customers who want more access to the DeFi ecosystem. He declined to say which ones.
Founded in 2021, Fordefi has about 40 employees and serves around 300 clients, said Cascarilla. The wallet startup was valued at $83 million as of its last fundraising round, according to data from Pitchbook. Fordefi will continue to operate independently for now, but Paxos plans integrate the startup’s technology into its own infrastructure.
Fordefi is Paxos’s 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 made Paxos, which has a trust charter in New York, compliant with MiCA, the European Union’s crypto regulation regime.
