Ripple-backed bitcoin and cryptocurrency exchange Bitso has announced a $62 million investment round led by venture capital firms Kaszek Ventures and QED Investors.
The Mexico-based exchange, which recently passed 1 million users, is looking to expand across Latin America with a focus on Brazil, where it launched earlier this year.
Unlike many cryptocurrency exchanges that have doubled-down on bitcoin services this year amid its growing reputation as digital gold, Bitso is looking to develop its cryptocurrency-based remittance business in one of the world’s largest cross-border money markets.
“We’re looking to provide access to financial products in a similar way to a bank,” Bitso chief executive and co-founder Daniel Vogel said, speaking over the phone.
“The level of access to traditional financial services in these regions is low and the prospect of using cryptocurrency and stable coins for cross border remittances attracted Kaszek and QED.”
As much as 70% of Latin America’s population are thought to lack access to a bank account, research has shown.
“Crypto has more opportunity in regions like Latin America than the U.S. where the banking infrastructure is more sophisticated,” said Nicolas Szekasy, co-founder and managing partner of Brazil-based Kaszek Ventures, speaking over the phone. “We’ve been looking into the space for years and we have strong conviction that Bitso is the way to go.”
The investment represents the first foray into cryptocurrency for both QED Investors and Kaszek Ventures.
“QED has long kept a pulse on the crypto market and Bitso in particular,” said Nigel Morris, co-founder and managing partner at QED Investors, in a statement. “The power crypto has to disrupt and innovate traditional financial services is inexorable and we look forward to using our operating knowledge and expertise to help Bitso achieve exactly that.”
Vogel, who said Bitso is looking to double its 1 million users in Brazil, stressed the importance of Bitso’s diverse staff, adding “local knowledge helps when building a business and customer base.”
Bitso has become the biggest cryptocurrency exchange in Argentina since launching there in February, an achievement Vogel puts down to the company’s focus on regulatory compliance.
“One of the reasons we were able to take over Argentina so quickly is because we’re one of the only exchanges there that’s regulated,” Vogel said. “We’re very strongly focused on regulation as a company, we think it’s a great way to provide trust with our customers.”
In October 2019, Ripple, the company behind the third biggest cryptocurrency by value XRP, led an investment round in Bitso that included major U.S.-based crypto exchange and wallet provider Coinbase, Jump Capital as well as existing investors such as Digital Currency Group and Pantera Capital.