• Wed. Feb 21st, 2024

The Future of Crypto After the Storm: The FinTech 50 2023

The Future of Crypto After the Storm: The FinTech 50 2023

Crypto’s nightmarish 2022 exposed the fragile underbelly of many blue chips in the sector. As the industry tries to reinvent itself, firms focused on basic infrastructure and analytics will lead the way.

Nina Bambisheva, Michael del Castillo, Steven Ehrlich, Maria Gracia Santillana Linares and Javier Paz reported


BBy almost any measure, 2022 was one of the most turbulent periods in crypto and blockchain history.

The major news of the year was the fall of $1.4 trillion in the market value of cryptocurrencies and the collapse of the fraudulent FTX in November. It also undercut some of its other big players, such as prime broker Genesis Global Trading, pseudo-crypto bank BlockFi and multi-billion hedge fund Three Arrows Capital. Nine crypto and blockchain companies (yes, including FTX) made the 2022 FinTech 50, but this year the list is down to just five, none of which focus on trading as their primary business.

Clearly, as US regulators and lawmakers plan to clamp down on the sector harder than ever, speculation and profits are leaving the market.

Web3 developer platform Alchemy, blockchain forensics blue-chip Chinalysis, crypto custodian FireBlocks, blockchain infrastructure provider Paxos and tax software company Taxbit are among the five firms that made the 2023 list. They demonstrate that there is still strong demand, including from governments, for infrastructure, cryptoanalytics and service providers in the industry.

All but one made the list in previous years, showing the power of early lead grabbers. In fact, these firms have collectively raised $3.1 billion in venture funds. Alchemy powers over $150 billion in annual crypto transactions; Launched in 2014, Chainalysis has become the go-to forensics engine for government and private sector crypto investigations. FireBlocks has evolved from being a crypto custodian to offering a full service platform powering over 130 million crypto wallets.

This year’s newcomer Taxbit, based in Draper, UT, has already become a key partner with the IRS, using its product suite to ensure compliance (and detect non-compliance) with crypto’s evolving guidelines on taxation. Finally the $1.3 billion firm has partnered with TurboTax to help users easily add crypto gains and losses to their tax returns.

Scroll down to learn more about the most innovative companies in crypto:


Alchemy

A data infrastructure startup powering today’s largest blockchain-based games, financial applications, and NFT platforms, Alchemy is often called the Amazon Web Services of crypto. In 2022, it landed payments giant Stripe, fashion retailer Gucci and broadcast outlet Fox as new customers.

Headquarters: San Francisco, California.

Funding: and $529 million from Andreessen Horowitz, Lightspeed Venture Partners and Coatue.

Latest Assessment: $10.2 billion.

Good beliefs: Over $150 billion in annual crypto transactions, up from $105 billion in February 2022.

Co-Founders: CEO Nikhil Viswanathan, 35, previously founded social meetup app Down to Lunch; CTO Joseph Lau, 33.



Chinalysis

A crypto forensics firm leverages blockchain data to trace transactions and identify fraud, hacks, and fraud involving digital assets. Its clients include financial institutions such as BNY Mellon and Barclays and government agencies such as the Criminal Investigation Division of the Internal Revenue Service. In June 2022, Chainalysis launched a rapid response service for organizations targeted by cyber attacks or unauthorized network intrusions involving cryptocurrency theft or demand.

Headquarters: New York, New York.

Funding: $535 million from GIC, Paradigm, Accel and others.

Latest Assessment: $8.6 billion.

Good beliefs: It has increased its active customer base from 900 by the end of 2021 to 1,082 by the end of 2022 (spanning 70 countries).

Co-Founders: CEO Michael Gronagar, 52, PhD in quantum mechanics, cofounded cryptocurrency exchange Kraken before starting Chainalysis in 2015; Chief Strategy Officer Jonathan Levine, 33.


Fireblocks

The institutionally focused crypto custodian is expanding beyond its initial focus of holding crypto on behalf of clients to partner with banks such as ANZ and NAB from Australia to launch tokenized dollars. Those tokenized dollars have so far driven $1 billion worth of internal bank transactions. The company is bypassing its core constituency of banks like BNY Mellon to partner with Web3 firms like Tom Brady’s NFT startup Autograph. Already, 30% of its new clients come from this new target market, which has helped the company grow its revenue from $50 million in 2021 to $150 million in 2022.

Headquarters: New York, New York.

Funding: $1.23 billion from Spark Capital, Cyberstarts and Coatue.

Latest Assessment: $8 billion.

Good beliefs: Over 130 million crypto wallets are supported through its infrastructure.

Co-Founders: CEO Michael Shaulov, 40, and CTO Aidan Ofrat, 41, who previously founded cybersecurity startup Lacoon Mobile Security.



Paxos

The 11-year-old company provides crypto trading technology for PayPal, Venmo, Interactive Brokers, MasterCard and other big names. In February 2023, US regulators ordered Paxos to stop issuing the Binance BUSD stablecoin, clipping the wings of Paxos’ large stablecoin business. But according to Paxos’ CEO, the firm was profitable on a GAAP basis in 2022 and will be again in 2023.

Headquarters: New York, New York.

Funding: $540 million (including $300 million in 2021) from Oak HC/FT, Founders Fund, Declaration Partners and others.

Latest Assessment: $2.4 billion.

Good beliefs: The company aims to reach 10 million active wallets by 2023, up from just over a million at the end of 2021.

Co-Founders: CEO Charles Cascarilla, 46, co-founded asset management firm Cedar Hill Capital Partners before starting Paxos; Paxos Asia CEO Rich Teo, 43.


Taxbit

TaxBit, the crypto audit partner for the Internal Revenue Service, is essential to the collection agency’s efforts to catch tax evaders and ensure compliance with the industry’s evolving guidelines. On the corporate side, the company has 45 clients, including PayPal and Kraken, and has filed more than 50 million 1099 forms for their customers on behalf of these enterprises. It has partnered with TurboTax to help users easily add crypto gains and losses to their tax returns. In January 2023, the company acquired Tactic, a crypto accounting platform that helps paying customers like Google, Ralph Lauren, and Fox News keep track of digital assets on their balance sheets.

Headquarters: Draper, Utah.

Funding: $235 million from Insight Partners, IVP, Haun Ventures and others.

Latest Assessment: $1.3 billion.

Good beliefs: Crypto partner for the IRS.

Co-Founders: CEO Austin Woodward, 33; His brother Justin Woodward, 31, is a tax attorney.

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