Passbase Secures $10M Funding for Crypto ID Verification

Passbase Secures $10 Million in Series A Funding for Crypto Compliance

Passbase, a digital identity startup specializing in SDKs for remote identity verification, has announced a $10 million Series A funding round. This investment will be used to enhance its focus on compliance within the cryptocurrency sector.

Funding Details and Previous Rounds

Costanoa Ventures led the funding round, with participation from Lakestar, Eniac Ventures, Cowboy Ventures, and Seedcamp.

Prior to this, Passbase completed an unannounced $3.5 million seed round. This nearly doubled the $3.6 million in seed funding secured in 2019, bringing the startup’s total funding to approximately $17.7 million.

A Focus on Cryptocurrency Compliance

The digital identity verification market is highly competitive. However, Passbase emphasizes its early involvement with cryptocurrency as a key differentiator. The company initially developed a cryptocurrency wallet before shifting its focus to identity authentication.

“Our core concentration is on crypto,” states the startup, identifying its typical client as a “rapidly expanding, digitally-native financial services provider, particularly those involved in fiat-to-crypto onramps.”

Passbase’s Developer Product and Features

Passbase offers a subscription-based developer product that provides tools for creating verification processes and back-office compliance solutions. These solutions address regulatory requirements like AML (anti-money laundering), KYC (Know Your Customer), and age verification.

The product boasts quick integration – as little as 30 minutes – and supports over 6,000 ID types from 190 countries and across 15 languages.

Currently, Passbase serves around 180 customers utilizing its developer product.

Revenue Growth and Expanding Applications

The company reports an 8x increase in revenue over the past year.

While the cryptocurrency market represents the largest opportunity for Passbase’s regulatory technology, the company is also monitoring developments in online age verification. This area is gaining increased regulatory attention due to concerns regarding child safety.

“Age verification is a secondary priority, but we are exploring applications in online gaming, digital cannabis, e-cigarette sales, and alcohol sales,” the company explained. “We continue to monitor regulations like COPPA and the Preventing Online Sales of E-Cigarettes to Children Act.”

New No-Code Policy System and Future Plans

The Series A funding will facilitate the launch of a new no-code policy system. This system will enable customers to design customized onboarding flows tailored to specific regions and regulatory requirements.

Passbase intends to focus on supporting companies as they scale and expand into new markets, providing them with the necessary compliance support.

“This system will address the need for companies to understand and implement compliance measures in different markets, both through policy templates and workflows within our verification product,” Passbase clarified.

Vision for a Decentralized Identity Network

Passbase envisions becoming a central component of a digital identity network based on a shareable KYC token and verifiable credential model. This approach aims to establish “a privacy-preserving identity ecosystem,” aligning with the decentralized identity model often associated with “web3”.

Competitive Landscape

Passbase acknowledges the presence of well-funded competitors in the identity verification space, including Jumio, Onfido, Persona, and Veriff.

The recent entry of Stripe into the ID check market this summer also presents a new competitive challenge.

Addressing the Competition

Stripe’s move poses a significant challenge to startups aiming to become the “Stripe for identity verification” – a goal Passbase itself articulated in 2019.

However, Passbase is responding by concentrating on the specialized needs of cryptocurrency compliance. The company believes there is a distinct market for tools specifically designed for this purpose.

“Our team originates from the web3 and crypto space, with experience at Coinanse. We possess a deeper understanding of web3 requirements than any other player in the IDV space,” the company asserts. “Existing competitors were present when we sought solutions, and we deliberately chose not to utilize them.”

“Our seed funding enabled us to become a competitive solution in IDV, with improvements like flexible pricing, a user-friendly verification flow, deeper customization options, and comprehensive documentation for rapid integration. The Series A funding will propel us towards an accessible global compliance solution and the decentralized identity model that web3 is built upon.”