Paxos Acquires Fordefi to Enhance Custody Services and Meet Institutional Demand

TLDR

• Paxos acquired the crypto wallet startup Fordefi for over $100 million.
• Fordefi’s multi-party computation (MPC) wallet architecture will be integrated into Paxos’ infrastructure.
• Fordefi specializes in wallet infrastructure for institutional clients and has nearly 300 institutional clients.
• Paxos had previously invested in Fordefi, participating in a $10 million funding round last year.
• Fordefi will continue operating independently while Paxos integrates its technology into the platform.

Paxos has acquired Fordefi, a crypto wallet startup, to strengthen its custody services. The move targets the growing institutional demand for on-chain asset issuance and stablecoin payments. Sources report that the deal was valued at over $100 million.

Paxos Aims to Bolster Custody Services

Paxos, known for being the firm behind PayPal’s stablecoin, is expanding its custody capabilities. The acquisition of Fordefi will enhance its offerings, positioning the company to serve growing institutional demand. Paxos aims to meet the needs of clients issuing stablecoins and creating crypto payment systems.

The integration will bring Fordefi’s multi-party computation (MPC) wallet infrastructure under Paxos. This technology splits transaction approvals across multiple parties, reducing the risk of private key compromises. Paxos CEO Charles Cascarilla said, “Enterprises want a regulated partner they can trust with complex wallet and custody needs.”

The acquisition supports Paxos’ strategy to cater to financial institutions adopting digital assets. By acquiring Fordefi, Paxos plans to offer more flexible infrastructure for clients building on-chain applications. Paxos has already served companies like PayPal and Mastercard as a regulated custodian.

Fordefi’s Wallet Technology Expands Paxos’ Offerings

Fordefi, founded in 2021, specializes in wallet infrastructure for institutional clients. Its MPC-based architecture is designed to offer high security for digital asset management. With this acquisition, Paxos will expand its wallet solutions and further cater to institutional clients.

Paxos had already invested in Fordefi, participating in a $10 million funding round last year. The startup currently serves nearly 300 institutional clients, further boosting Paxos’ potential reach. Fordefi’s wallet solution provides important decentralized finance (DeFi) integrations that complement Paxos’ broader custody strategy.

Despite the acquisition, Fordefi will operate independently for now. Its team and platform will remain active during the integration process. This arrangement ensures a smooth transition as Paxos begins to integrate the technology.

Institutional Demand Drives Acquisitions in Crypto Custody

The acquisition of Fordefi is part of a broader trend in the crypto industry. Crypto wallet providers are increasingly becoming targets for acquisition by larger financial firms. This move highlights the growing importance of custody services in the digital asset space.

Paxos’ acquisition aims to address the rising demand for secure and regulated infrastructure for digital assets. By integrating Fordefi’s technology, Paxos strengthens its ability to provide secure custody solutions. This deal reflects the growing institutional interest in on-chain asset issuance and digital payments.

As Paxos moves to integrate Fordefi, the companies are focused on providing the tools needed for institutions to securely manage digital assets. With Fordefi’s wallet architecture now under Paxos, the company aims to remain a key player in the growing institutional crypto market.

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