Crypto wallet app Eco has raised another $60 million, bringing its total funding to $95 million.
BlockFi, which has a similar business model, has recently been targeted by regulators in four states over alleged unregistered securities offerings.
Eco, a consumer-focused fintech app that uses stablecoin lending to provide bonuses to users, continues to gain momentum despite potential regulatory hurdles on the horizon for its business model. Today, Eco announced it has raised another $60 million in funding for its “smart money” service, bringing its total funding to $95 million to date.
The new $60 million round was led by Activant Capital and L Catterton. While this latest round included existing investors like Andreessen Horowitz’s crypto fund, it also brings in “dozens” of new investors including Lightspeed Venture Partners, LionTree Partners, and Valor Equity Partners, per a press release.
Eco’s latest round follows a $26 million funding round led by Andreessen in March. That March round also featured a number of celebrity and athlete investors, including Sean “Diddy” Combs, Tiffany Haddish, Kevin Durant’s Thirty Five Ventures, Carmelo Anthony’s Melo7, Larry Fitzgerald, and DJ and NFT entrepreneur 3LAU.
Eco is a finance app that lets users deposit funds and earn much larger interest returns than a standard bank savings account: a base rate of 2.5% that can spike to 5% from referring friends. It also provides cash rewards for purchases at partner retailers. When users deposit dollars, Eco converts it to the USDC stablecoin and lends it out to other crypto companies, generating yield to pay out to users as rewards.
In a May interview with Decrypt, Eco CEO Andy Bromberg explained how the platform works, but also how the firm specifically avoids the crypto angle in marketing materials.
“We actually almost never say ‘crypto,’ as best we can,” he said, adding that framing Eco as an alternative to traditional banks has been a more effective angle. “We found that the counter-positioning is actually the easiest way to explain what it is. By saying we’re not a bank—which, we are not a bank—it makes it clear that there’s kind of something that we are trying to replace, a function in a user’s life that we’re trying to replace. And same with the credit card, checking account, anything.”
But Eco’s big rewards come with a caveat: deposits are not FDIC-insured, unlike in traditional bank accounts. That hasn’t slowed demand: the firm said that it has more than 180,000 people on its waitlist, and Bromberg told Decrypt this week that it is “steadily onboarding users one-on-one” to the platform with an eye to ramp up that process thanks to this latest funding round.
Eco’s latest fundraise comes amidst a flurry of regulatory notices about BlockFi, a leading crypto savings and loan app that lets users earn rewards on their cryptocurrency and stablecoin holdings. BlockFi has been targeted by four states over the last week—Vermont, Texas, Alabama, and New Jersey—that allege that the service is violating securities laws with its crypto savings accounts.
Although Eco takes a slightly different approach to its rewards platform, its back end works the same way as BlockFi: loaning out crypto to other companies and protocols to get high yield for customers. As such, Bromberg says Eco is monitoring the BlockFi situation.
“We’re closely watching those developments—our focus remains on ensuring that Eco is operating compliantly and working with partners doing the same,” he told Decrypt. “We continue to be comfortable offering our services and don’t anticipate any changes.”