Bitcoin Suisse targets dual bank licences with fund raise

The blockchain-based financial sector is gradually evolving from wild child upstarts to mainstream. swissinfo.ch

Bitcoin Suisse is looking to attract nearly CHF50 million ($51.4 million) from investors to fund growth ambitions, which include offering banking services in Switzerland and Liechtenstein. The funding round will be a litmus test of investor risk appetite for blockchain-based finance during the coronavirus pandemic.

Some CHF20 million has already been collected in an initial funding round, led by Swiss banker Roger Studer and the Studer Family Office. Bitcoin Suisse, which is valued at CHF275 million, has now thrown the funding open to other investors until mid-June, offering up to 20% of group shares.

The company, founded in 2013 in Switzerland’s Crypto Valley, announced last year that it is seeking banking and securities dealer’s licences in Switzerland. It is now approaching investors for at least CHF46 million, to boost its capital base to CHF100 million, in order to pursue expansion plans.

It is telling investors that it could reach “unicorn” status (a valuation of CHF1 billion) by 2025. Included in its expansion wish list is a desire to convert its Liechtenstein operations into a fully operational bank. This would give it access to European Union banking clients.

The firm has earmarked further funds to beef up proprietary trading, its credit business and for future acquisitions. It plans to follow-up its investor funding round this year with a security token offering (STO) – selling digital representations of shares to the public – in 2021 and a stock exchange listing the year after.

“Exponential growth”

Bitcoin Suisse founder and chairman Niklas Nikolajsen said that his “life’s work” has “come a long way”. He added: “But looking forward, we could face limitations as to the speed of our growth.” The fresh injection of capital would help the company “continue our exponential growth, as well as expand with cross border licences.”

The funding round coincides with the pandemic that has plunged the financial, capital and cryptocurrency markets into turmoil. Many investors have taken a hit on their cash stockpiles and are wary of taking on more risk.

The trump card for Bitcoin Suisse is presenting an established business with 145 staff, around CHF1 billion of crypto assets in custody and products such a Swiss franc-backed “stablecoin” bond and a cryptocurrency retail payments project together with Worldline.

Last year revenues topped CHF20 million, but this is half the turnover recorded in 2017 at the peak of bitcoin’s value. The company said business had picked up since the last quarter of 2019, hitting record levels last month. Profits of around CHF2.4 million in 2019 were also well down on the past two years, eroded by a significant growth in staff, costs of applying for a Swiss banking licence and acquisitions.

Fund-raising

Despite the current economic turmoil, there are signs of investors putting their money into Swiss digital assets enterprises. Crypto Finance raised CHF14 million and financial services firm Taurus an “eight digit” sum in recent weeks.

Digital assets banks Sygnum and SEBA, who were awarded Swiss banking licences last year, were able to raise higher sums in the last couple of years. SEBA accumulated CHF100 million in 2018 while Sygnum has accrued CHF60 million, plus a further “substantial” sum injected by partners into a collaborative digital asset trading venture.

In November, SEBA said it wanted to raise at least CHF100 million in the first half of this year by issuing digital tokens to the public. Fund-raising plans have been put back to later in the year due to the volatile markets and dampening of investor risk appetite.

Sygnum is also seeking an unspecified amount of fresh funding from existing investors this year to pay for its own expansion plans.

Nikolajsen acknowledges that coronavirus has created market disruptions and uncertainty, but in a recent messageExternal link said he saw “more promise than peril, more opportunity than misfortune” for new technologies in the crisis.