JPM JP Morgan Chase and Co

By Paul Vigna 

The flavor of the month in startup fundraising is the "initial coin offering," a seemingly unregulated method of capital raising that has allowed tiny, unknown companies to raise tens or even hundreds of millions of dollars.

Not everybody's going down this road, however. Digital Asset Holdings LLC, a New York-based startup building new technology products for financial-services firms, decided to raise money the old-fashioned way. The firm, run by former J.P. Morgan Chase & Co. trading executive Blythe Masters, announced Monday that it had raised $40 million in a Series B financing led by Jefferson River Capital, a firm started by Blackstone Inc.'s president and chief operating officer, Tony James.

Digital Asset, which specializes in products based on open-ledger "blockchain" systems, also said it had hired as its new chief information officer Clyde Rodriguez, formerly an executive at Two Sigma Investments.

With the new financing, Digital Asset has raised $110 million, one of the highest totals in the blockchain sector. The distributed ledger of blockchain became well known as the system underpinning the virtual currency bitcoin. Since then, it has been adopted or explored for a wide variety of applications by large companies like J.P. Morgan and International Business Machines Corp.

"We have the opportunity to continue to grow, and want to have to capital to fund doing that," said Ms. Masters.

She said she wasn't tempted to do an initial coin offering: "At this stage, we raised everything we wanted to."

Digital Asset didn't disclose a valuation of the deal, saying only that it will help build out the company that has grown to 130 employees from about 20 in January 2016.

The firm is working with the Australian Securities Exchange, which is experimenting with a blockchain-based system that would replace its existing infrastructure for post-trade processes. The ASX is expected to make a decision in December on how or whether to move forward with the project.

Digital Asset is also working the U.S.-based Depository Trust & Clearing Co. to build a new system for repurchase-agreement, or repo, transactions.

Write to Paul Vigna at paul.vigna@wsj.com

(END) Dow Jones Newswires

October 16, 2017 12:13 ET (16:13 GMT)

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