Crypto start-up MoonPay hits $3.4 billion valuation as bitcoin fever reaches new heights

Cryptocurrency startups have risen record funding this year.

It's no wonder, then, that some of the major players in the space, from the Winklevoss twins' virtual currency exchange, Gemini, to Ethereum co-founder Joseph Lubin's blockchain startup, ConsenSys, have announced new massive financing deals in the last week.

The relatively new MoonPay is taking crypto mania in venture capital to new heights. The three-year-old fintech firm said Monday it raised $ 555 million in its first round of funding. The investment, led by Tiger Global and Coatue, values ​​the company at $ 3.4 billion.

Founded in 2018, the Miami-based MoonPay software allows users to buy and sell cryptocurrencies using conventional payment methods such as credit cards, bank transfers, or mobile wallets such as Apple Pay and Google Pay.

It also sells its technology to other companies, including the crypto website Bitcoin.com and non-fungible token (NFT) OpenSea, a model that CEO Ivan Soto-Wright calls "crypto-as-a-service."

Soto-Wright said the firm aims to make cryptocurrencies accessible to the masses in the same way as video conferencing tools like Zoom made it easy to make calls over the Internet.

"With blockchain and cryptocurrencies, I think right now we are still in the dial-up days," he told CNBC in an interview.

"Eventually we will get to this point where moving any amount of value anywhere in the world is easy and costs are as close to zero as possible."

With prices of bitcoin and other cryptocurrencies that have hit all-time highs lately, venture capital investment in the startups powering the market is booming. Investors look for the next Coinbase after the cryptocurrency exchange giant blockbuster list in April.

MoonPay's argument for investors is that it offers a "gateway" to digital assets. For now, that includes bitcoin, ether and other digital tokens like NFT. But Soto-Wright's vision is to expand the platform to include everything from digital fashion to tokenized stocks.

"People call us similar to PayPal, but for crypto, "he said.

The company has strong controls and controls to address money laundering, Soto-Wright said. Regulators have become increasingly cautious about illicit activity in the market.

MoonPay says it has been profitable since launching its platform in 2019. The firm is on track to hit $ 150 million in annual revenue this year after transaction volumes skyrocketed 35 times since 2020. Its service is now used by more than 7 million customers.

Still, the company faces stiff competition, especially from financial technology pioneers like PayPal, which released its own crypto features last year.

Soto-Wright said he's not worried about competition. He described PayPal as a "walled garden" that does not give users control over their assets. "We believe that the future of cryptocurrencies is for customers to take possession of their private keys," passwords that grant people access to their funds, he said.

However, cryptocurrencies are notoriously volatile and that has impacted even the most well-known players in the space. Coinbase, for example, lost sales estimates in the third quarter after a drop in monthly users.

Bitcoin hit an all-time high of nearly $ 69,000 earlier this month, but has since dropped about 17%. Ether, meanwhile, is down 13% from its all-time high.

Soto-Wright said MoonPay is primed for a possible downturn in the crypto markets, adding that the company is "agnostic" about the assets it backs.

"In the same way that telecommunications were disrupted by voice over IP (internet protocol), we believe that over time financial services and all these different applications will be disrupted by the blockchain," he said.

"Obviously there will be volatility as the market is trying to figure out which assets, which blockchains will eventually be adopted."