$1 Billion Valuation for Institutional Crypto Trading Company Amber Group

June 24, 2021, 2:30 PM AEST - 3 months ago

Amber Group – a crypto startup focusing on institutional investors and their involvement in cryptocurrencies – has just raised US$1 billion in funding.

$100 Million Added to Amber Group’s Valuation

The investment round was led by Tiger Global – the hedge fund with the biggest Return On Investment (ROI) for its clients in 2020 – and the China Renaissance bank. Arena Holdings and DCM Ventures also took part in the fundraising round and together contributed $100 million to Amber Group’s valuation.

This contribution, worth a 10th of Amber’s total value, is roughly equal to its total capital one year ago, when it was valued at around $100 million. At the time, the group had just finished raising $28 million worth of capital.

The vast majority – between 70% and 80% – of the profit generated by Amber Holdings comes from the net interest margin, which is a measure of lending profitability.

Amber Strategy Seems to be Working Well

To put it briefly, once a customer deposits a sum with Amber Holdings, they are offered an interest rate on their liquidity. Amber then pools the liquidity from multiple customers and lends it out to even more customers at different rates – and, judging by the response from institutional investors, the strategy seems to be working pretty well.

A further 15% of Amber Group’s profits comes from transaction fees. According to CEO Michael Wu, the funding will mostly be put to use hiring new staff and investing in state-of-the-art security measures.

Wu added that although up until now Amber had been focusing mostly on institutional investors, crypto investment solutions for the average Joe were in the works – and the necessary regulatory practices were being looked into.

We don’t advocate heavy speculation or high use of leverage, rather we want our customers to be more long term, focus on risk management and get stable and attractive yield[s] … I think regulation is always a challenge for this industry because it’s a very global industry. It’s always about staying ahead, or at least staying aware of the different regulation. We always take a very conservative approach to that.

Michael Wu, Amber Group CEO

Although Bitcoin has gone through quite a rough patch since May, support from institutional investors hasn’t slowed down – contrasting a similar situation in 2017.

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