A U.K.-regulated cryptocurrency exchange and custodian, specializing in tokenized assets, has made a strategic acquisition of a U.S. broker-dealer as it seeks to break into the rapidly expanding institutional market in the United States amid favorable regulatory shifts.
The company is acquiring Globacap Private Markets Inc, a FINRA- and SEC-regulated broker-dealer and alternative trading system (ATS), which will be rebranded as Archax Markets US.
This newly formed entity will provide a base for operations in America, targeting institutional and professional investors, as confirmed by two executives from Archax.
The sector of asset tokenization is experiencing significant growth as banks, asset managers, and digital asset firms globally are increasingly adopting blockchain technology to facilitate the movement of traditional financial instruments. This adoption aims to enhance operational efficiency and enable constant settlements.
In recent weeks, Fidelity Investments, a notable asset manager, has made moves to introduce a tokenized money market fund and is reportedly in the process of developing a stablecoin.
Meanwhile, the CME Group has initiated tokenization trials with Google Cloud, intending to roll out new services next year, and the parent company of the New York Stock Exchange has teamed up with Circle to investigate offerings centered around the USDC stablecoin and the tokenized fund USYC.
Archax focuses on the issuance, custody, and trading of tokenized real-world assets (RWAs), which encompass money market funds, corporate bonds, carbon credits, and uranium. Recently, their tokenized Treasury fund created on the XRP Ledger in collaboration with asset manager Abrdn attracted $45 million in deposits, positioning it among the top 10 products by assets under management, according to data from rwa.xyz.
For the past few years, Archax has been contemplating a move into the U.S. market but held back due to regulatory ambiguity. In a recent interview, CEO Graham Rodford noted that the current administration appears to be more supportive of cryptocurrency, leading to increased interest from the U.S., which they cannot effectively serve from the UK alone, making their U.S. expansion a strategic necessity.
Additionally, Archax plans to broaden its portfolio to include tokenized U.S. equities and bonds, leveraging existing partnerships across multiple blockchains such as Ethereum, Polygon, Solana, Hedera Hashgraph, and XRP Ledger.
This entry into the U.S. market follows their acquisition of a Spanish brokerage firm aimed at expanding services within the European Union, contingent on regulatory approvals.