Led by Mike Novogratz’s Galaxy Digital (GLXY), a $20 million investment round aims to revolutionize the $6 trillion asset-backed finance market using blockchain technology behind the scenes. The funding, also contributed to by Parafi Capital and Crane Ventures, is directed towards Fence, a startup developing software solutions for managing the operational aspects of structured credit deals. Typically fragmented across various firms and reliant on spreadsheets, PDFs, and emails, these processes often hinder transaction speed and transparency for investors.
Fence’s strategy involves replacing outdated systems with real-time data updates. Juan Montero, co-founder and CEO, emphasized in a CoinDesk interview that lenders will be able to monitor loan performance and cash flows continuously rather than depending on sporadic reports. The company has demonstrated cost savings for large asset managers, such as BBVA which oversees $800 billion in assets, by reducing funding costs for borrowers and operational burdens while efficiently tracking numerous loans.
Fence leverages blockchain more as a backend infrastructure component rather than a front-end application. The firm doesn’t advocate for banks and asset managers to use tokens or crypto wallets; instead, it utilizes smart contracts behind the scenes to manage cash flows, collateral, and deal regulations. According to Montero, typical facilities face delays in loan data verification, report issuance, and payment clearance that can last days. Fence expedites these processes through APIs, software checks, and smart contracts that automatically release funds upon meeting specific terms.
In certain scenarios, Fence tokenizes lender positions within financing vehicles or directly with underlying loans or invoices to facilitate position transfers, borrowing against them, or automatic payments upon ownership changes. Montero clarified that tokenization is employed only when it provides added value. “We don’t want to be seen as a blockchain company. We’re building the infrastructure for the capital markets,” Montero remarked. “Others digitize the paperwork. Fence rebuilt the plumbing.”
Currently, Fence manages approximately $1.5 billion in assets through its platform, collaborating with firms like BlackRock and Fortress. The system enables rapid onboarding of new deals within weeks, contrasting sharply with the months required by conventional methods. Montero stated that the investment will support U.S. expansion and product development, aiming to transform credit market operations fundamentally by enhancing data speed and reducing manual procedures.