Notabene, a provider of anti-money laundering (AML) services for cryptocurrency firms, has raised $10.2 million in a Series A funding round co-led by Jump Capital and F-Prime Capital. Peter Johnson, a partner at Jump Capital, will serve on Notabene’s board of directors.
Crypto exchanges Luno and Bitso, who are Notabene customers, also took part alongside Blockfi, Gemini Frontier Fund, Illuminate Financial, CMT Digital, Fenbushi Capital and ComplyAdvantage CEO Charlie Delingpole. Existing investors Castle Island Ventures and Green Visor Capital also participated.
Crypto compliance has become a sub-sector within the blockchain industry, driven by the likes of global AML watchdog the Financial Action Task Force (FATF). Notabene is one of a band of firms focused on helping cryptocurrency exchanges and trading desks become compliant with things like the Travel Rule, a customer-data sharing requirement bringing crypto in line with banks.
That said, Notabene CEO Pelle Braendgaard points out his firm’s mission is not to solve the Travel Rule. It’s really about a bigger picture, he said, which is enabling trusted transactions between people and businesses.
“Compliance is the first part, because regulators want to know you’re not interacting with some North Korean general,” said Braendgaard in an interview. “But for crypto to take off we need to use it for everyday transactions. Like if I’m ordering something off Amazon, I want to know that it’s Amazon I paid. So, the Travel Rule can be seen as a catalyst to bring this layer to crypto.”
As regulatory organizations like the FATF try to encompass crypto’s avant-garde realm of decentralized finance (DeFi) and non-fungible tokens (NFTs), service providers like Notabene — born out of the ConsenSys-backed identity startup uPort — were built with decentralized applications (dapps) in mind, said Braendgaard.
“How do we talk about identities in the context of a smart contract or a dapp or anything like that?” Braendgaard said. “Where the parties to a transaction may be intermediated through a smart contract, how do those parties know who they’re interacting with, and how can that be done in a privacy preserving way?”