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FTX US has steepened its relationship with Embed Financial via an acquisition deal to help the exchange offer traditional securities.
The US arm of crypto exchange FTX appears set to acquire equities clearing startup Embed Financial, according to reports. With this acquisition, FTX US seeks to enhance and facilitate its newly-launched stocks trading offering.
Speaking on the initiative between the exchange and Embed Financial, FTX US president Brett Harrison was upbeat. According to him, Embed and FTX US’ collaboration could provide clients with a slew of combined disparate trading possibilities. These include stocks, options, and crypto white-label services to broker-dealers.
Furthermore, Harrison also stated that these businesses could take several forms, including trading and investing apps. The FTX US president specified that these businesses could also be neo-banks or other fintechs looking to add such services as add-ons. However, Harrison declined to state what form of financing the deal would take. Current options include cash, equity, tokens, or a mixture of all three options.
Embed founder and CEO Michael Giles also confirmed the acquisition plans. Speaking on the deal, he said:
“… Embed’s latest securities technology is the ideal complimentary to FTX’s leading crypto solutions. This combination enables the combined group to bring an industry-leading securities and crypto solution to market, which was previously sorely lacking, for the benefit of FTX US customers and exciting new B2B clients.”
However, just like with Harrison, Giles declined to comment on the deal’s valuation, size, and funding structure. Also, both execs did not comment on the deal’s expected timeline.
Nonetheless, the FTX US-Embed Financial deal is subject to approval from the Financial Industry Regulatory Authority (FINRA). Also, pursuant to the deal, the entire 32-man staff force of Embed will stay on through the acquisition. In addition, Giles will continue to serve in his capacity as CEO of Embed, which will operate independently.
Previous FTX US – Embed Financial Working Relationship
Although the terms of the deal were not disclosed, Embed has generated approximately $40 million in total funding to date. In addition, according to Dealroom estimates, the company’s valuation may be up to $120 million.
This is not the first working relationship between Embed and FTX US. In May, when the US-based division of the crypto exchange launched its stocks trading offer, it also announced Embed as a prime collaborator. At the time, Harrison said:
“FTX Stocks has partnered with Embed Clearing LLC, a new FINRA, DTC, NSCC and Nasdaq member clearing firm that specializes in providing whitelabel brokerage services to broker-dealers and registered investment advisors businesses.”
The equities clearing startup was tapped to provide custody, execution as well as clearing services for FTX US securities.
FTX US’ stock products feature is the company’s latest attempt to provide its clientele with a holistic, one-stop-shop trading experience. However, this feature is only temporarily available to select customers in private beta mode. The crypto exchange intends to effect the public release to the larger part of the US populace later this summer.