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Wells Fargo Invests $5M In Cryptocurrency Startup That Connects Banks With Exchanges

Neer Varshney

The venture arm of Wells Fargo & Company (NYSE: WFC) has invested $5 million in a cryptocurrency startup Elliptic.

What Happened

This is the latest in the Series B round of funding for Elliptic, which saw $23 million pouring in earlier in funding led by Japanese banking giant SBI Holdings Inc. (OTC: SBHGF).

In a statement on Thursday, Elliptic said it would use the funding to expand its wing in Asia and progress on its product called "Elliptic Discovery."

Elliptic Discovery is a risk management solution for banks that lets them assess the risks associated with their customers trading in cryptocurrencies.

"We are pleased to participate in Elliptic's Series B financing round and to support their mission of developing innovative risk management solutions," Wells Fargo Strategic Capital managing director, Basil Darwish, said in a statement.

Why It Matters

Traditional financial institutions have been looking at regulatory complaint ways to incorporate trading of cryptocurrencies in their businesses.

Many of the institutions that earlier shied away from cryptocurrencies, either due to regulatory hurdles or due to the financial risks involved, are now looking towards adoption as Facebook Inc.'s (NASDAQ: FB) Libra cryptocurrency project started a storm last year that saw many central banks work on their own centralized version of digital currencies.

A number of cryptocurrency exchanges have also upped their efforts in being regulatory compliant as authorities show willingness to let the virtual currencies function within the realm of law. Elliptic, in particular, aims to connect banks with such businesses.

"Previously, a bank just didn't know much about the exchange that was wanting to open an account with them," Elliptic co-founder Tom Robinson told CoinDesk. "This will give them insights into how risky or otherwise a given crypto exchange is."

Price Action

Wells Fargo's shares traded 0.19% higher at $48.21 in the after-hours session on Thursday. The shares closed the regular session 0.69% higher at $48.12.

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