Galaxy Digital just cut a $20 million check for a fintech startup that wants nothing to do with the word “blockchain” in its sales pitch, even though blockchain sits at the core of what it does.
Fence, the company behind the raise, builds software to automate the messy back-office work of structured credit deals. We are talking about the $6 trillion asset-backed finance market, a corner of Wall Street where loan pools get tracked in Excel files, collateral gets verified through email chains, and cash moves only after someone manually checks a PDF. The startup uses smart contracts and tokenization under the hood to fix that, but CEO Juan Montero made it clear to CoinDesk that he is not selling a “blockchain company” to his clients.
“We don’t want to be seen as a blockchain company. We’re building the infrastructure for the capital markets,” Montero said. “Others digitize the paperwork. Fence rebuilt the plumbing.”
The round was led by Mike Novogratz’s Galaxy Digital and included Parafi Capital and Crane Ventures. For Galaxy, this continues a pattern of backing institutional-grade infrastructure plays rather than consumer crypto products. The firm had a minor security incident earlier this month when hackers breached a testnet environment, though no client funds were affected.
The Spreadsheet Problem in a $6 Trillion Market
Asset-backed finance covers everything from auto loans to trade receivables to equipment leasing. When a bank bundles these assets into financing vehicles and sells stakes to institutional investors, the operational layer behind those deals is shockingly primitive. Multiple firms handle different pieces: one tracks the underlying loans, another verifies collateral, a third processes payments. Information flows through spreadsheets, periodic reports, and manual reconciliation.
For investors, this creates visibility problems. If you own a piece of a loan facility, you might wait days or weeks for updated performance data. The lag is not just inconvenient; it represents real risk. If underlying loans start defaulting, investors may not know until a scheduled report arrives.
Fence’s pitch is consolidation. The company pulls loan data through APIs, runs automated checks, and uses smart contracts to release cash when deal terms are met. Lenders can monitor loan performance and cash flows continuously instead of waiting for periodic updates.
The efficiency gains appear meaningful. In deals with BBVA, one of Spain’s largest banks overseeing $800 billion in assets, Fence reported lower funding costs for borrowers and reduced operational work. The platform tracked large volumes of loans on an ongoing basis rather than through batch reports.
Fence says it now oversees about $1.5 billion in assets across its platform and can onboard new deals in weeks compared to months under traditional processes. The client list includes BlackRock and Fortress, names that carry weight in any institutional pitch.
Smart Contracts Without the Crypto Sales Pitch
The company’s approach inverts the typical blockchain startup playbook. Most tokenization ventures lead with the technology: digital ownership, on-chain settlement, programmable assets. Fence buries all of that beneath a conventional software interface.
In a typical facility, lenders may wait days for loan data to be checked, reports to be sent, and payments to clear. Fence automates those steps. The system pulls information through integrations, validates it programmatically, and uses smart contracts to execute payments when conditions are satisfied.
Tokenization enters the picture selectively. Fence can tokenize lender positions in financing vehicles and, in some cases, the underlying loans or invoices themselves. That capability allows investors to transfer positions, borrow against them, or receive payments automatically if ownership changes. But Montero emphasized that tokenization only gets deployed where it adds clear value, not as a feature to check a box.
This is a notable distinction from the broader tokenization conversation happening across capital markets. Many projects position digital assets as the primary innovation, expecting traditional finance to adapt around them. Fence positions digital assets as invisible plumbing that traditional finance never has to think about. The client interacts with software that happens to run on blockchain rails rather than with blockchain itself.
The strategy has precedent. When SWIFT modernized interbank messaging decades ago, banks did not need to understand the protocol layer. They needed reliable settlement. Fence appears to be betting that institutional credit works the same way: managers care about speed, cost, and accuracy, not the underlying architecture.
BlackRock’s Quiet Interest in Back-Office Infrastructure
BlackRock’s involvement as a Fence client creates doubt about the asset manager’s broader infrastructure strategy. The firm has been vocal about tokenization at the product level, launching its BUIDL fund on Ethereum and more recently a staked Ethereum ETF that debuted with $15.5 million in first-day volume.
But back-office infrastructure is a different bet. BlackRock manages trillions in assets across complex strategies. If blockchain-based systems can reduce operational friction in credit facilities, even marginally, the cumulative savings scale rapidly. A few basis points of cost reduction across hundreds of billions in structured products translates into real money.
The firm has not disclosed the scope of its work with Fence or which specific products run on the platform. Still, having BlackRock on the client list is validation that matters for a startup trying to expand in the U.S. market. Institutional buyers are notoriously skeptical of new vendors, especially in compliance-heavy areas like structured finance. A reference from the world’s largest asset manager changes conversations.
Fortress, another Fence client, brings a different angle. The investment firm has deep experience in credit and real estate, managing complex portfolios that require exactly the kind of loan tracking and cash flow management Fence automates. If the platform works at Fortress scale, it presumably handles the operational complexity that mid-market managers would face.
Why Now for Structured Credit Automation?
Timing matters. The structured credit market expanded rapidly after 2020 as private credit boomed and banks looked for ways to move risk off balance sheets. That growth strained existing operational infrastructure. More deals meant more manual work, more coordination across counterparties, more opportunities for errors and delays.
At the same time, institutional attitudes toward blockchain quietly shifted. The early days of tokenization featured ambitious claims about revolutionizing finance that rarely materialized. Many projects promised instant settlement and global liquidity without solving the mundane problems that actually slow deals down: data reconciliation, compliance verification, cash movement.
Fence represents a second wave that focuses on those mundane problems. The company is not promising to replace securities law or disintermediate brokers. It is promising to make existing processes faster and cheaper. That more modest pitch resonates with buyers who sat through too many blockchain presentations full of revolutionary rhetoric and empty implementations.
The $20 million raise, while not enormous by venture capital standards, gives Fence capital to expand in the U.S. market at a time when American institutional buyers are actively seeking operational improvements. Higher interest rates over the past few years made credit products more attractive, drawing more capital into strategies that require exactly the infrastructure Fence provides.
Risks and Unresolved Questions
The rosy picture comes with caveats. Fence operates in a market dominated by entrenched vendors and established processes. Even if the technology works, switching costs matter. Asset managers have existing relationships with service providers, legal documentation built around current workflows, and internal systems integrated with legacy platforms.
Convincing clients to rip out that infrastructure requires demonstrating not just improvement but improvement large enough to justify the transition pain. The BBVA results sound promising, but one client is not a trend. Scaling from $1.5 billion in assets under oversight to tens or hundreds of billions requires proving the system handles edge cases, integrates with diverse client environments, and maintains reliability under stress.
There is also competitive pressure to consider. Major financial infrastructure providers, from established custody banks to fintech competitors, have noticed the same inefficiencies Fence targets. Some are building their own solutions. Others may acquire emerging players rather than compete head-to-head. A $20 million raise gives Fence runway, but not enough to fend off well-capitalized incumbents if they decide the market justifies serious investment.
Regulatory questions linger too. Tokenized positions in credit facilities occupy a gray area in securities law. Fence says it only tokenizes where the approach adds value, which suggests case-by-case legal analysis rather than a blanket compliance framework. As the company expands in the U.S., navigating SEC and CFTC oversight will demand resources and careful structuring.
The derivatives angle matters here as well. If tokenized lender positions can be transferred or used as collateral for borrowing, they start to look like tradable instruments. That raises disclosure, registration, and reporting questions that Fence will need to address as it scales.
The Bigger Picture for Institutional Crypto
Fence’s raise fits into a broader pattern playing out across institutional crypto adoption. The flashy narratives about retail investors and meme coins grab headlines, but a quieter institutional buildout has been underway for years. It shows up in custody solutions, compliance tools, trading infrastructure, and now operational platforms for traditional finance.
Galaxy Digital’s involvement underscores this. The firm has evolved from a crypto investment vehicle into a multi-line financial services provider serving institutions. Backing Fence aligns with that strategy. The investment is not a bet on token prices or DeFi yields. It is a bet that institutional credit markets will increasingly run on blockchain infrastructure, even if the end users never know it.
Montero’s insistence that Fence is not a blockchain company, despite literally using blockchain and smart contracts, might sound like marketing spin. But it reflects a genuine strategic choice. The company is betting that institutions want outcomes (faster data, lower costs, less manual work) rather than technology for its own sake. If that bet pays off, Fence becomes plumbing that major asset managers rely on without ever thinking about the blockchain beneath it.
Whether that positioning attracts or repels crypto-native capital remains an open question. Investors who believe blockchain’s value comes from transparency and decentralization might find Fence’s black-box approach unsatisfying. But Galaxy and Parafi clearly see upside in a company that solves real problems for traditional finance buyers, regardless of ideological purity.
The funding closes a loop that started with Bitcoin’s creation: digital scarcity led to speculative trading, which led to institutional interest, which led to infrastructure buildout, which now leads to blockchain technology being absorbed into mainstream financial plumbing. Whether that counts as victory or co-option depends on what you thought the point was.
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