Merge, a Web3 payments infrastructure provider startup, today announced that it has raised $9.5 million in seed funding to develop its banking and payments platform to “merge” cryptocurrency and traditional financial services.

The round was led by Octopus Ventures and included big-name crypto investors such as Coinbase Ventures, Hashed, Alameda Research and Ethereal Ventures.

The service Merge provides is a way for companies to hold and transfer funds and easily convert them to and from cryptocurrencies as well as manage compliance. All of this happens within what the company says is a simple-to-integrate application programming interface and seamless interface.

With the growth of Web3, otherwise known as the decentralized web, more opportunities for decentralized finance, which relies heavily on token economies, have emerged. Although it’s easy to exchange these tokens for one another using different decentralized Web3 apps, reliable onramps and offramps between Web3 and banks are still difficult to come by.

Of critical importance for businesses and banks engaged with Web3 and DeFi is that transactions with tokens can incur regulatory interests such as anti-money-laundering laws, Know Your Customer, taxation compliance and more.

“As the crypto economy moves further into the mainstream, it’s increasingly clear that the current financial infrastructure isn’t fit to serve the rapid expansion of crypto-native businesses and many providers aren’t specialized enough to gauge risk,” said Zihao Xu, an investor at Octopus Ventures.

Merge makes all of these payment challenges more accessible to banking partners with its API. Through the API, Web3 companies receive solutions to instantly create bank accounts, send payments and convert payments between money and crypto tokens. The solutions also include licensing and compliance monitoring as well.

“Merge’s vision is to build the infrastructure necessary to allow crypto businesses to operate without fear of shutdown by regulators or third-party risk teams,” Xu added.

The company raised this funding amid a recent cryptocurrency market downturn as currencies such as bitcoin dropped below $30,000 in early May, the lowest since July 2021. During the same time, the stablecoin TerraUSD lost its parity with the U.S. dollar and its related cryptocurrency Luna lost 99% of its value in a massive market crash, creating even more market volatility.

In spite of the unfavorable market conditions, venture capital has continued to pour into Web3, including Andreessen Horowitz’s raise of $4.5 billion for its fourth crypto fund last week.

“We see it as a temporary blip,” Merge co-founder Kebbie Sebastian told CoinDesk. “The fundamental potential of cryptocurrency remains the same despite market volatility.”

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