Blockchain-based remittance service Abra closed on $12 million in new funding today. The “heavily oversubscribed” round, according to the company, includes investors Arbor Ventures, RRE Ventures and First Round Capital.
The Abra app, which the company expects to launch soon in selected markets, enables users to send funds “within minutes” between smartphones in any currency without transfer fees.
Users deposit funds via a linked bank account or through Abra’s network of “Tellers.” Tellers are super-users who charge a fee to receive a user’s cash deposit and credit the user’s Abra account with the digital funds. Tellers can also reverse the process, selling paper currency to users in return for Abra’s digital cash.
The app, according to TechCrunch, converts funds to bitcoin upon deposit but shows the balance to the user in fiat currency. The bitcoin is stored on the user’s device, thus avoiding the need to comply with money transmission regulations. Use of the service, however, does not require any specialized knowledge of bitcoin or the blockchain.
Abra claims that its service does not require the use of a third-party, such as a bank, or the provision of personal information, such as a Social Security number. It also claims that its service involves no foreign exchange risk.
Stand-in iOS and Android versions of the Abra app are available for download but do not yet function.
Tellers have pre-registered in more than 80 countries, according to Abra, and the company continues to accept new applications at goabra.com.
“Arbor sees huge potential for the Abra business model globally, but especially in China and Southeast Asia, which are traditionally large cash economies but leapfrogging into mobile payments and bypassing traditional banking and card infrastructure at an accelerating rate. Making cash mobile will unlock a lot of opportunities in these markets and across the region,” said Wei Hopeman of Arbor Ventures, one of the investors.
Abra uses self-settling short contracts built on the blockchain to protect prices for users, according to Bill Barhydt, CEO of Abra. Counter-parties, drawn from across the bitcoin economy, go long on the hedge to share the risk.
Abra charges a 0.25 percent fee to users for Teller transactions and also imposes a fee on the counter-parties to the short contracts.
Abra won the LAUNCH Festival in March as Best Overall Company.
Abra has now raised $14 million in total funding in service of its stated aim to “disrupt the global money transfer market.”