Blockchain Startup Kinto Plans 'First KYC'd' Ethereum Layer-2 Network After Raising $5M

Ethereum layer 2 Kinto network features native know-your-customer (KYC) checks and investor accreditation mechanism to help onboard regulated financial institutions.

AccessTimeIconNov 15, 2023 at 12:00 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Ethereum-focused blockchain project Kinto disclosed it has raised $5 million in fundraising rounds this year to develop a layer-2 network that's fully compliant with anti-money-laundering laws, aiming to connect financial institutions and real-world assets with decentralized finance (DeFi) rails.

The project is built using the OP Stack, which is a set of software tools created by the developer OP Labs that companies can use to easily spin up their own customized layer-2 networks. The technology derives from Optimism, the second-biggest layer-2 network atop Ethereum. Coinbase, the big U.S. crypto exchange, famously relied on OP Stack to build its own layer-2 blockchain, Base.

Kinto secured $1.5 million in a pre-seed investment earlier this year from Kyber Capital Crypto, according to a press release on Tuesday. It received another $3.5 million recently in a round led by Kyber Capital Crypto, Spartan Group and Parafi. SkyBridge Capital, Kraynos, Soft Holdings, Deep Ventures, Modular, Tane and Robot Ventures also participated in the round.

The Kinto network features native know-your-customer (KYC) checks – a type of anti-money-laundering prevention – and investor accreditation mechanism to help onboard regulated financial institutions – solving a major headache for them if they want to access blockchain-based protocols, Kinto co-founder Alan Keegan said in an interview with CoinDesk.

According to the press release, Kinto becomes the "first KYC'd layer 2 (L2) blockchain capable of supporting both modern financial institutions and decentralized protocols."

Kinto litepaper (Kinto)
Kinto litepaper (Kinto)

Only KYC'd entities can transact on the network, so this way Kinto can eliminate anonymous exploits and scams that proliferate on DeFi platforms, Keegan added. The network also offers insurance and developer incentives to build applications from transaction fees.

"We believe that a fully KYC'd layer 2 on top of Ethereum is an inevitability, and we have extremely strong conviction that Kinto is the right team to execute this vision," Alex Klokus, co-founder and managing partner at Kyber Capital Crypto, said in a statement.

Kinto plans to open the onboarding and KYC process later this month.

Edited by Bradley Keoun.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Krisztian  Sandor

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.