FinTech gets backing from BDC Capital as Bank of Canada signals openness to stablecoins.
Toronto-based payments startup Cybrid has raised a $10 million Series A round to bring its stablecoin payments infrastructure to more enterprise customers, including Canadian financial institutions.
Several Canadian technology companies are trying to bring a stablecoin backed by the Canadian dollar to market.
Growth venture fund BDC Capital led the initial investment round, which closed six weeks ago. Pan-Canadian investments included Golden Ventures in Toronto, and Luge Capital and Panache Ventures in Montreal, building on a C$3.8 million seed round in 2022.
Founded in 2021, Cybrid sells payment infrastructure that allows businesses to integrate and support stablecoins and cross-border transactions. As of this week it is payment service provider registered with the Bank of Canada.
CEO Avinash Chidambaram and CTO Brent Carrara previously co-founded startup Ario, which was acquired by fintech company Driven (formerly Thinking Capital). Chidambaram has worked at companies such as Interac and Nortel, and also worked on BlackBerry Payments and ID.
Stablecoins are digital assets typically pegged to fiat-backed currencies such as the US dollar. Stablecoin transaction volume has tripled compared to Visa over the past year to reach $46 trillion, according to venture capital firm Andreessen Horowitz.
In an interview with BetaKit, Chidambaram said the company's growth has increased fivefold in the last year, in line with the industry's adoption rate. Chidambaram said customers are realizing how stablecoin transactions are useful for cross-border supply and trade as transfers are processed on the blockchain without fees.
“We want this to thrive in Canada,” Chidambaram said. “Just as many Canadian companies buy goods and services internationally.”
Several Canadian technology companies are trying to bring a Canadian dollar-backed stablecoin to market, including Stablecorp and National Bank-backed Tetra Trust Group. At the same time, technology leaders such as Coinbase Canada CEO Lucas Matheson are pushing for Canada to develop a regulatory framework for this payment method.
CONNECTED: Parent company Tetra Trust enlists the help of banks and FinTechs to launch a Canadian stablecoin
In September, Ron Morrow of the Bank of Canada said the central bank should “weigh the merits» federal regulation of stablecoins as payment method grows in popularity. There is no law regulating the use of stablecoins in Canada, but several sources told BetaKit that they expect “language” around stablecoins in the future federal budget.
Chidambaram added that the US Genius Act, which regulates stablecoins in the US, helped “unlock” Cybrid's growth. “It’s important that we look at this and adopt it in Canada,” he said.
Although the volume of stablecoin transactions has increased, some experts warn of the economic consequences of consumers storing money in stablecoin wallets rather than in banks. According to the Bank of Developing Countries Standard CharterFor this reason, a potential amount of US$1 trillion could come out of emerging market banks over the next few years.
Banks in Canada, according to Chidambaram, are joining in exploring support for stablecoins. While he wouldn't name Cybrid's largest clients, he said they include large financial institutions in Canada and the United States.
The company employs 25 people and plans to create support and operations teams. Cybrid plans to expand its support in Europe as it sees demand for cross-border remittances.
Image courtesy of Cybrid.
