UPDATE: March 19, 2021: BNY Mellon, the oldest bank in the U.S., has invested in a cryptocurrency startup, Fireblocks, a company that provides a secure storage and transfer platform for cryptocurrencies. The announcement comes nearly a month after BNY Mellon announced its plans to create a multi-asset digital platform and act as a custodian for its clients digital assets. 

"Fintechs and banks require not only a specialized custody and settlement infrastructure to ensure customers funds are safely managed, but a platform that enables new lines of digital offerings," Michael Shaulov, CEO of Fireblocks, said in the press release. 

Fireblocks raised $133 in Series C funding round led by Ribbit, Couate, Stripes, Silicon Valley Bank and BNY Mellon. The recent funding round takes the crypto startups total funds raised to $179 million. 

With over 200 financial institutions as customers, Fireblocks has transferred over $400 billion of digital assets since its inception in 2018. 

Dive Brief:

• Fireblocks and First Digital Asset Group are rolling out a secure wallet and infrastructure system for financial institutions to easily connect to the Facebook-backed Diem digital currency network, enabling clients to use the payment network for their customer enterprises, per the company's press release.
• Diem can be utilized for peer-to-peer as well as peer-to-merchant transactions. The partnership promises to lower overhead costs for financial service providers, merchants and customers.
• As Facebook prepares to launch Diem, Fireblocks and First are working together to provide licensed providers the ability to launch services that support Diem.

Dive Insight:

"The main advantage here is first, you have the distribution engine of Facebook to get into the hands of billions of users. That's more than any other system out there, including Paypal. The second thing is [Facebook] is really good at creating a fairly simple consumer experience for people. That promises to expose the technology to a whole new audience who might otherwise not have access or interest," Michael Saulov, CEO of Fireblocks said in the release.

Diem can work with financial service providers such as banks, exchanges, PSPs and eWallets. This compatibility enables companies and merchants around the world to have access to a wide array of clients – with considerably less overhead, thereby creating the potential to sell more inventory at less cost.

"If a [scarf merchant] in Morocco decides to open a digital wallet and start selling scarves on their website, they can just accept whatever payment they want from wherever in the world ... and those manufacturers can sell more products and distribute whatever they want. We're not even thinking about the revolution that it would create," Ran Goldi, CEO of First said in the release.

Any institution or fintech looking to utilize Diem will need to build and integrate the appropriate technology to accommodate the new payment system. Additionally, each organization will have to be qualified as Virtual Asset Service Providers (VASPs).

Fireblocks and First have been working together since before the inception of Diem, so it made sense for the two companies to cooperate on this venture. Their knowledge of one another's frameworks removed potential barriers and increased the ease with which Diem and its users can engage in the cutting-edge payments ecosystem.

First provides expertise in payments, liquidity and blockchain, while Fireblocks provides security technology, infrastructure and a MPC-based wallet.

As for the future, the partnership between Diem, Fireblocks and First promises to enhance current financial systems and increase its impact and relevance.

"A lot of people in the current system think that people who bring digital currencies are here to replace [them], but I think the technologies we're looking at are just a natural evolution of money," Goldi said.

"Gold is being stored in the Federal Reserve, money is being stored in safes, but [Fireblocks'] technology helps them store that in a cloud with one tenth of the cost … Our technology is here to help them get to more merchants. We're not here to replace anyone," he said.