The crypto accounting and compliance platform Bitwave today announced that it has closed a $15 million Series A led by Hack VC and Blockchain Capital, with participation from other funds including SignalFire.
Bitwave co-founders Pat White and Amy Kalnoki told Fortune that the funding will help develop Bitwave Institutional, a new product targeted at enterprise customers with complex accounting needs, such as custodians and exchanges.
The funding round comes amid an industry-wide discussion over transparency, with many calling for companies to release proof of reserves, liabilities, and undergo complete third-party audits, which are all processes that Bitwave helps to facilitate.
“There’s not one single bullet that would have prevented FTX,” said White. “The problem was this holistic issue where they had really bad processes.”
With Bitwave, he argued that companies could develop that system of processes and controls. The company currently counts major crypto companies from OpenSea to Anchorage Digital as clients and hopes to develop Bitwave Institutional to be able to service a greater variety of firms.
Despite a pronounced funding downturn during the Crypto Winter, enterprise-focused companies like Bitwave have continued to raise money, such as Fordefi, which raised an $18 million seed round in November to launch an institutional DeFi wallet.
Kalnoki said this reflects a trend that Bitwave is seeing, with increased enterprise adoption of crypto and digital assets, even as volatility persists for retail investors.
“We focus on being that critical piece of infrastructure for businesses to be able to adopt digital assets,” she said.
White pointed to the recent recommendation by the Financial Accounting Standards Board that crypto assets be reported at fair value, which White said will allow chief financial officers to be more comfortable holding crypto like Bitcoin on their balance sheets.
Ed Roman, a managing director at Hack VC, said his firm is a client of Bitwave as well as an investor, which is one of the reasons it decided to lead the round. He told Fortune that the crash of FTX will lead to a migration from centralized exchanges to DeFi over time, and that Bitwave can help with DeFi accounting, which sets it apart from other platforms.
Spencer Bogart, a general partner at Blockchain Capital, predicted there will be 100 times more enterprises in crypto five years from now, with all of them needing a product like Bitwave to be able to operate.
He added that the overlap of people who understand taxes and accounting, enterprise software, and crypto is very small.
“Pat and Amy are probably two of the only people in the world that sit in the middle of that Venn diagram,” Bogart said.
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