Tokenization platform Huma Finance merges with Circle-backed liquidity platform Arf

Huma Finance, a tokenization platform for real-world assets, has merged with Arf, a liquidity and settlement platform focused on cross-border payments, to improve the adoption of tokenized assets.

“The merger combines two of the most prominent blockchain use cases – tokenizing real-world assets and cross-border payments – into a single full-stack platform,” Huma Finance co-founder and co-CEO Erbil Karaman told The Block .

As part of the deal, Huma and Arf will become part of the newly formed 00 Holdings Inc., the holding entity, Karaman said. But both companies will continue to operate separately under their existing names and brands, he added.

Karaman declined to share terms of the deal, but said the new entity is in the process of closing a “major” post-merger financing round.

The Huma-Arf merger comes as the tokenization vertical grows. Several traditional financial giants, including BlackRock, JPMorgan, Citi and Franklin Templeton, have embraced the tokenization of real-world assets. Tokenization or on-chain financing is believed to make real assets more accessible, streamline processes, reduce costs and increase transparency in financial markets.

Merger Huma and Arf

Huma launched its tokenization platform last year, focused on cross-border payments, green finance, supply chain finance and microfinance. The platform is currently live on Polygon and Celo. It is expected to be launched on Stellar’s new smart contract platform Soroban in the coming months, Karaman said.

Arf, on the other hand, was founded in 2019 and provides liquidity and settlement services to licensed financial institutions that make cross-border payments. Arf says it is regulated in Switzerland, ensuring compliance with anti-money laundering and anti-terrorist financing regulations.

Huma and Arf have been partners since the beginning of last year. “Arf integrates blockchain technology through the Huma and Circle platforms to provide instant liquidity to financial institutions to make cross-border payments without the need for pre-funding and expand access to real-time global money transfers to more businesses and consumers,” said Ali Erhat. Nalbant, co-founder and CEO of Arf, told The Block.

Arf recently surpassed $1 billion in on-chain liquidity volume. The merged entity now expects to reach $3 billion in volume by the end of the year, based on a pipeline of $500 million in monthly liquidity demand from partners around the world, Nalbant said.

Huma and Arf are not yet profitable. Both companies’ revenues grew 35x last year and they expect the new entity to break even by the end of this year, Nalbant added.

Huma and Arf investors will become shareholders of a new entity

Huma and Arf are both backed by notable investors. Early last year, Huma raised $8.3 million from venture capital firms including ParaFi Capital, Circle Ventures and Robot Ventures. Arf raised $13 million from investors including Circle Ventures, United Overseas Bank Venture Management and Stellar Development Foundation.

As part of the merger, venture capital investors from both companies will become shareholders of the holding company 00 Holdings, Karaman said.

Huma and Arf started discussing the merger last year and signed the papers in November. Shareholders have approved the deal and the legal process is expected to be completed later this month, Karaman said.

There are currently 10 people working for US-based Huma and 30 people for Swiss-based Arf, and these employees will continue to work under existing entities while working more closely every day, Karaman said.

Derek Colla of Cooley LLP, Huma’s general counsel, Cooley’s mergers and acquisitions team and Switzerland-based Domenig & Partner advised the merger deal, Karaman added.