Wells Fargo, an American bank, has joined a Series B funding round of UK startup Elliptic, which provides tools for analysing cryptocurrency transactions. With Fargo’s additional $5 million, the total amount raised during the round reached over $28 million.
Founded in 2013, Elliptic teamed up with researchers at MIT’s IBM-funded AI Lab to produce the world’s largest set of labeled Bitcoin transaction data last Summer. In another instance, the company’s technology was able to uncover a terrorist group that was using Bitcoin.
According to a press release shared with Decrypt, the funds will be used to expand Elliptic’s operations in Asia as well as fuel the development of Discovery, a risk management product that is supposed to help financial institutions detect and mitigate risks associated with cryptocurrencies.
“If they see payments going between their customers and one of a long list of crypto entities, they can understand more about who that entity is and whether it’s something they should be concerned about,” Elliptic co-founder and CEO James Smith told CNBC in an interview.
“Discovery aims to offer detailed transaction profiles of over two hundred global crypto exchanges, which enables financial institutions to better manage risk and meet stringent regulatory requirements,” the press release stated.
Smith said that more and more financial institutions realize that even if they don’t touch crypto themselves, they are adjacent to it. “They are exposed to crypto risk and have a responsibility to understand what the risk is and how to manage it,” he added.
He noted that Wells Fargo joining Elliptic’s funding shows that banks are “interested in how we can help them understand and manage risk that relates to crypto.”
Regulators around the world continue to roll out increasingly strict compliance requirements. One of the latest examples are the new anti-money laundering rules in the European Union—AMLD5, the Fifth Anti-Money Laundering Directive— that came into effect on January 17 and could shake the local cryptocurrency sphere.