Cryptocurrency startup Paxos, formerly bitcoin exchange itBit, raises $65M Series B to expand blockchain-based services and operate the exchange
Anna Irrera / Reuters :
Context & Ripple Effects
In early 2018, Paxos is still best known as bitcoin exchange itBit, but this $65M Series B marks its pivot from running a retail-facing exchange to building blockchain-based settlement services — a bet that crypto's value to mainstream finance would be plumbing, not trading screens. The round lands two months after blockchain payments startup Bitpay raised a $40M Series B, part of the same wave of capital flowing into crypto infrastructure rather than consumer apps.
That bet paid out on the timeline the corpus shows: by late 2020 Paxos was powering crypto trading for PayPal and had raised a Series C, and within five months of that it closed a Series D at a $2.4B valuation led by Oak HC/FT.
First-order effects
- The $65M funds two tracks simultaneously: expanding the blockchain-services business and operating the itBit exchange, letting Paxos serve institutions while keeping its original trading venue alive.
- Paxos exits 2018 with a war chest sized for regulatory-heavy infrastructure work — the path that later produced its PayPal settlement role and, per the relationships on file, a $48.5M regulatory settlement before its federal charter push.
Second-order effects
- Fintechs gain a white-label crypto backend: once Paxos proves settlement-as-a-service works, partners like PayPal and Revolut (which signed on in 2020) can offer crypto without building custody or clearing themselves — shifting competition among exchanges toward who owns the regulated rails.
- Rival crypto firms face pressure to match Paxos's regulatory posture, since institutional clients increasingly route through whichever provider holds trust charters and clean supervisory records.
Third-order effects
- If the pattern holds, crypto companies converge on bank-style regulation: Paxos applied for a US national trust bank in 2025 alongside Circle and Ripple, and the SEC has since approved its registration as a clearing agency — moving it from New York state supervision toward federal oversight under the OCC.
- Stablecoin and settlement infrastructure consolidates into a small set of federally supervised operators, making the 2018 decision to build services rather than just an exchange the template for how crypto startups become financial market utilities.
The trend: Crypto startups are evolving from exchanges into federally regulated settlement infrastructure, with Paxos's funding arc from Series B to clearing-agency status tracing the industry's migration from trading venues to regulated plumbing.