Crypto’s nightmarish 2022 exposed the weak underbelly of many supposed blue chips in the sector. As the industry seeks to rebuild, firms focused on core infrastructure and analytics will lead the way.
Reported by Nina Bambysheva, Michael del Castillo, Steven Ehrlich, Maria Gracia Santillana Linares and Javier Paz
By almost any measure, 2022 was among the most tumultuous periods in the history of crypto and blockchain.
The year was headlined by a $1.4 trillion decline in market value for cryptocurrencies and November’s spectacular, fraud-fueled collapse of FTX. It also saw some of its other large players such as crypto lender Genesis, pseudo-crypto bank BlockFi and multi-billion hedge fund Three Arrows Capital go under. Nine crypto and blockchain companies (including, yes, FTX) made the 2022 Fintech 50, but the number of listees this year fell to just five, none of which focus on trading as their primary business.
Clearly, speculation and leverage are leaving the market, as U.S. regulators and legislators are planning to clamp down on the sector harder than ever.
The five firms that made the 2023 list include web3 developer platform Alchemy, blockchain forensics blue-chip Chainalysis, crypto custody tech provider Fireblocks, blockchain infrastructure provider Paxos and tax software company TaxBit. They demonstrate that there is still a strong demand–including from governments–for infrastructure, crypto analytics, and service providers in the industry.
All but one made the list in previous years, which shows the power of incumbency among those who get an early lead. In fact, these firms have raised a combined $3.1 billion in venture funds. Alchemy powers more than $150 billion in annualized crypto transactions; Chainalysis, which started back in 2014, has become the go-to forensics engine for crypto investigations by both government and the private sector; and Fireblocks evolved from providing crypto custody technology to offering a full service platform that powers some 130 million crypto wallets.
Tellingly, this year’s newcomer, TaxBit, based in Draper, UT, has already become a key partner for the IRS, which uses its product suite to ensure compliance (and spot noncompliance) with evolving guidance on the taxation of crypto. The firm, which was last valued at $1.3 billion, has also partnered with TurboTax to help users easily add crypto gains and losses to their tax returns.
Scroll down to learn more about the most innovative companies in crypto:
Alchemy
A data infrastructure startup that powers many of today’s largest blockchain-based games, financial applications and NFT platforms, Alchemy is often referred to as the Amazon Web Services of crypto. In 2022, it landed payments giant Stripe, fashion retailer Gucci and broadcast outlet Fox as new customers.
Headquarters: San Francisco, California.
Funding: $529 million from Andreessen Horowitz, Lightspeed Venture Partners, Coatue and others.
Latest valuation: $10.2 billion.
Bona fides: Processes more than $150 billion in annualized crypto transactions, up from $105 billion in February 2022.
Cofounders: CEO Nikil Viswanathan, 35, and CTO Joseph Lau, 33; the pair previously cofounded social meetup app Down to Lunch.
Chainalysis
The crypto forensics firm leverages blockchain data to trace transactions and identify scams, hacks and fraud involving digital assets. Its clients include financial institutions like BNY Mellon and Barclays and government agencies like the Internal Revenue Service’s Criminal Investigation division. In June 2022, Chainalysis launched a rapid-response service for organizations that have been targeted by a cyber-attack or unauthorized network intrusion that involves a cryptocurrency theft or demand.
Headquarters: New York, New York.
Funding: $535 million from GIC, Paradigm, Accel and others.
Latest valuation: $8.6 billion.
Bona fides: Increased its active customer base from 900 at the end of 2021 to 1,082 (spanning over 70 countries) at the end of 2022.
Cofounders: CEO Michael Gronager, 52, a PhD in quantum mechanics who cofounded cryptocurrency exchange Kraken before leaving in 2015 to launch Chainalysis; chief strategy officer Jonathan Levin, 33.
Fireblocks
The provider of crypto custody technology for institutions and web3 businesses is expanding beyond its initial focus to partner with banks such as ANZ and NAB out of Australia to launch tokenized dollars. Those tokenized dollars have powered $1 billion worth of internal bank transactions so far. The company is also moving past its core constituency of banks such as BNY Mellon to partner with Web3 firms like Tom Brady’s NFT startup Autograph. Already, 30% of its new clients come from this new target market, which helped the firm triple its revenue from $50 million in 2021 to $150 million in 2022.
Headquarters: New York, New York.
Funding: $1.23 billion from Spark Capital, Cyberstarts, Coatue and others.
Latest valuation: $8 billion.
Bona fides: 130 million crypto wallets are supported through its infrastructure.
Cofounders: CEO Michael Shaulov, 40, who previously founded cyber security startup Lacoon Mobile Security; CTO Pavel Berengoltz, 46; CPO Idan Ofrat, 41
Paxos
The 11-year-old company provides crypto trading technology for PayPal, Venmo, Interactive Brokers, Mastercard and other big names. In February 2023, U.S. regulators ordered Paxos to stop issuing Binance’s BUSD stable coin, clipping the wings of Paxos’ large stablecoin business. But according to Paxos’ CEO, the firm was profitable on a GAAP basis in 2022 and will be so again in 2023.
Headquarters: New York, New York.
Funding: $540 million (of which $300 million came in 2021) from Oak HC/FT, Founders Fund, Declaration Partners and others.
Latest valuation: $2.4 billion.
Bona fides: The firm hit 10 million active wallets funded in 2023, up from just one million at the end of 2021.
Cofounders: CEO Charles Cascarilla, 46, cofounded asset management firm Cedar Hill Capital Partners before starting Paxos; Paxos Asia CEO Rich Teo, 43.
TaxBit
The crypto audit partner for the Internal Revenue Service, TaxBit is essential to the collection agency’s efforts to catch tax evaders and ensure compliance with the industry’s evolving guidance. On the corporate side, the firm has 45 clients, including PayPal and Kraken, and has filed over 50 million 1099 forms on behalf of these enterprises to their customers. It also partnered with TurboTax to help users easily add crypto gains and losses to their tax returns. In January 2023, the company acquired crypto accounting platform Tactic, which it will use to help paying customers such as Google, Ralph Lauren and Fox News keep track of digital assets on their balance sheets.
Headquarters: Draper, Utah.
Funding: $235 million from Insight Partners, IVP, Haun Ventures and others.
Latest valuation: $1.3 billion.
Bona fides: Crypto partner for the IRS.
Cofounders: CEO Austin Woodward, 33; his brother Justin Woodward, 31, a tax attorney.
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