Blockchain fintech firm XREX has completed a $ 17 million Pre-A investment round led by a consortium of global investors, underscoring the increased institutional demand for crypto-centric startups.
The consortium was led by CDIB Capital Group, a publicly traded company in Taiwan, and includes investors from major banks and venture capital firms in North America, Europe and Asia.
Several other publicly traded companies also participated in the investment round, including SBI Investment, a subsidiary of SBI Holdings, ThreeD Capital, E. Sun Venture Capital and Systex Corporation. Black Marble, New Economy Ventures, Metaplanet Holdings, the Seraph Group and the National Development Fund of the Taiwanese government also took part in the round.
XREX said the funds will be used to expand its fiat currency portfolio, acquire licenses, and form new partnerships with financial institutions and digital wallet providers. The company’s reported mission is to leverage blockchain technology to solve dollar liquidity bottlenecks in emerging markets.
Although the US dollar’s position as a global reserve currency is under threat from massive Federal Reserve interventions and de-dollarization efforts in China and Russia, the greenback is still the most widely used currency in the world. As the Bank for International Settlements explains in its 2020 US Dollar Financing Report, the greenback accounts for well over 80% of the volume of foreign exchange transactions. It also accounts for more than 60% of the official foreign exchange reserves.
The Covid-19 pandemic put additional strains on US dollar liquidity, especially in emerging markets that are heavily dependent on the greenback. These liquidity issues impacted global trade and commerce long before the pandemic. Case in point, a 2019 Asian Development Bank trade finance survey found that nearly 30% of respondents cited dollar liquidity as the main obstacle.
Wayne Huang, Co-Founder and CEO of XREX, said, “We understand very well the problems faced by many cross-border traders who do not have secure access to US dollar liquidity.” In response, his firm is working with regulators and financial institutions to develop tools to help traders and small businesses in emerging markets reduce foreign exchange losses and gain more reliable access to US dollars.
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