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With institutional investors prepared to inject billions into the DeFi world, the absence of a regulated entity to bring custom-made products to these individuals is a very big impediment.
Alloy, a Decentralized Finance (DeFi) platform has pulled the sum of $3 million in a pre-seed round from top investors led by Headline Ventures. The highlight of the round was that Guillaume Pousaz, the founder of Checkout.com also backed the startup, as it seeks to engraft itself as a major DeFi hub for institutional investors.
There is a lot of potential in decentralized finance, and a unique opportunity for both retail and institutional investors alike. While retail investors are generally being serviced by a wide range of DeFi platform, the case is different for corporate investors who are often forced to take the sidelines due to regulatory demands.
Alloy hopes to solve this problem by presenting regulated products that institutional investors around the world can be very comfortable with. In order to meet its regulatory obligations, Alloy is partnering with a regulated crypto asset custodian.
“So most of the challenge is regulatory and on the client-side of things where the more sophisticated investors want a legal framework that allows them to deploy capital into DeFi but still have custody and KYC AML checks handled,” said Alloy founder Paul Faecks, affirming that Alloy is one of the first companies in the European Union (EU) to offer regulated DeFi strategies.
Achieving its goal to become fully regulatory compliant will be made possible with the aid of the funding as it will use the funds to pursue licensing with the German financial regulator, BaFin. Additionally, the startup said it will use the acquired capital to further develop the technology behind its platform in a bid to make it suitable for all of its clients.
Alloy and the Generated Interest from Backers
The interest in Alloy, which made Guillaume Pousaz, the Founder of Sorare Nicolas Julia and Seedcamp invest in the startup is centered on several factors, especially in its target market.
With institutional investors prepared to inject billions into the DeFi world, the absence of a regulated entity to bring custom-made products to these individuals is a very big impediment. Should Alloy successfully tackle this challenge, it may well be on track to dominate an industry segment first in the EU, and around the world at large.
Faecks said the startup which is built on the Ethereum protocol and billed to launch toward the end of the year has secured about 5 institutional investors and clients that are ready to pounce on its products.
Alloy comes off as one of the startups that have benefitted from investors’ interest in protocols championing mainstream adoption of crypto innovations. Merge, a Web3.0 payments infrastructure service provider raised the sum of $9.5 million in seed funding from investors as reported by Coinspeaker.