SoftBank backed DriveWealth is acquiring a new crypto startup to step up competition for Coinbase

Fintech company, DriveWealth has announced its plan to acquire a crypto startup – Crypto Systems – in a recent fundraising to take on Coinbase’s unsustainable fees.

The SoftBank-backed firm, which is currently valued at $2.85 billion, helps other fintech firms like Revolut offer stocks. In addition to acquiring the new crypto startup, DriveWealth will launch two subsidiaries to handle and execute trades, according to CEO Bob Cortright. However, this wouldn't be the company's first time integrating cryptocurrencies into its platform.

“It’s unsustainable, I mean, customers trading on Coinbase, trading across this transaction spread, it’s too much,” Cortright said. “As regulatory environments tighten around crypto and customers get more focused on spreads and efficiency, we can’t continue in a world where you can change 200 basis points on a transaction.”

Although DriveWealth offers similar services like rivals, Coinbase and Robinhood, the firm is known for carrying out its operations behind the scenes. Its platform allows partners like Revolut and Cash App to offer their fractional trading. The New Jersey-based firm says it has more than 100 partners globally with about 15 million investors.

In December 2014, DriveWealth reportedly integrated bitcoin startup BitPay – the world’s largest bitcoin payment processor at the time – which made DriveWealth become the first financial services company to allow users to fund their account with bitcoin.

DriveWealth was founded in 2012 by Cortright and has since remained a background player and a beneficiary of the retail-trading boom. The firm reportedly jumped from a $200 million valuation in 2020 to $2.85 billion as of August 2021. It is backed by investors, including SoftBank's Vision Fund, Insight Partners, and Point72 Ventures.           

According to Cortright, the firm will begin offering bitcoin and Ethereum trading by April or May. He said he hopes to bring more transparency to digital-assets markets by including an end-to-end crypto-trading system into its operations.

"In the crypto space right now, it's still the Wild West, processes are all over the place,” Cortright said. “There’s very little price discovery and there’s little consistency with spreads. We want to change that.”

About DriveWealth

DriveWealth is a mobile and global carrying broker-dealer for retail investors. It also offers a selection of Exchange Traded Funds (ETFs) and US-listed stocks to individual investors on its mobile investing platform. The fintech firm offers free educational content to help new investors understand finance and investing basics. It is a member of FINRA/SIPC, which protects customers’ securities.