Crypto middleware firm raises $3.2m to streamline settlements

BridgePort, a crypto off-exchange settlement platform, has raised US$3.2 million in seed funding.

The funding round was led by Further Ventures, with contributions from Virtu, XBTO, Blockchain Founders Fund, Fun Fair Ventures, and Humla Ventures.

The company offers a middleware solution that connects exchanges, custodians, and trading firms.

This aims to streamline capital allocation and post-trade processes while addressing prefunding requirements, credit risks, and settlement inefficiencies through real-time messaging and collateral management.

BridgePort’s system runs on Amazon Web Services (AWS) and integrates with partners using REST APIs, FIX protocol, and custom connections.

The company plans to enhance its collateral and credit features in upcoming updates.

🔗 Source: BridgePort

🧠 Food for thought

1️⃣ Crypto market failures drive institutional demand for off-exchange settlement

The rise of off-exchange settlement (OES) solutions like BridgePort directly responds to the significant security failures that have plagued centralized crypto exchanges in recent years.

In the first half of 2024 alone, centralized exchanges DMM Bitcoin and Wazirx lost over half a billion dollars, highlighting the ongoing counterparty risks in crypto trading1.

The collapse of FTX in 2022 was a particular catalyst, highlighting the dangers of keeping funds on exchanges and prompting institutional investors to seek better security measures2.

This pattern aligns with traditional finance history, where the 1974 Herstatt Bank failure led to new payment versus payment methods in foreign exchange markets to eliminate principal risk3.

BridgePort’s $3.2M funding reflects this market shift, as institutions increasingly demand infrastructure that reduces their exposure to exchanges while maintaining trading capabilities.

The middleware approach addresses a critical vulnerability in crypto markets by allowing trading without the need for funds to be held directly on exchanges, significantly reducing the risk of loss from exchange bankruptcies or hacks.