An Ottawa fintech firm that’s aiming to become Canada’s first qualified custodian for cryptocurrency assets says it plans to go public this fall.
Brane Capital announced Monday it expects to gain a listing on the TSX Venture Exchange in late September via a reverse takeover of Timeless Capital Corp., a capital pool company.
CEO Adam Miron, who co-founded cannabis giant Hexo before joining Brane as chairman of its board of directors in 2019, told OBJ the “time is right” to take the company public as it pursues its goal of becoming a qualified custodian.
The four-year-old startup has developed patented technology to protect and store cryptocurrency assets such as bitcoin in a bid to keep them secure from hackers and other bad actors. It offers software that allows foundations and certain other entities to manage their own assets and is now seeking regulatory approval to store digital currency on behalf of investors.
Currently, the only qualified custodian for digital tokens in Canada is Gemini, a New York-based cryptocurrency exchange. Miron says relying on a U.S. entity to store such investments is a security risk that needs to be addressed as soon as possible.
“It is a massive gap in our entire banking infrastructure,” he says.
Eyeing $10M in revenues
Miron says Brane is pursuing “multiple different paths” to gaining regulatory approval as a custodian and expects to achieve that objective by the time it makes its debut on the TSX-V this fall.
“That is our plan, and that’s what we’re working towards,” he says.
Brane currently works with about half a dozen customers, who pay the company service fees to help manage their assets. Miron says the firm expects to generate $10 million in revenues next year.
But he believes those numbers could grow exponentially once Brane establishes a beachhead south of the border.
Earlier this spring, the company applied for a public trust company charter in South Dakota, which would allow it to become a custodian of digital assets for financial institutions, asset managers and other institutional clients across the U.S.
Miron says a handful of large players such as Anchorage, BitGo, Coinbase and Gemini now dominate the industry down south and cater mainly to large, established customers.
“We feel that there is an underserved component of the U.S. market right now,” he says, adding the firm hopes to gain its charter early next year.
"We’re feeling more confident than ever about what we’ve built and the way we built it."
After that, Miron sees more territory that’s ripe for the picking across the Atlantic. He says Brane is looking to grab a foothold in Europe by 2023, likely in Germany via an acquisition.
Estimating the current potential market for crypto custodial services in the tens of billions of dollars, Miron says Brane is aiming to have a billion dollars worth of assets under management by the end of 2022. As it ramps up to go public and enter the U.S., the company expects to triple its headcount from 10 to 30 before this year is out.
“We’re feeling more confident than ever about what we’ve built and the way we built it,” Miron says.
Brane’s ambitious plans will require a hefty influx of capital. To that end, the firm recently secured millions of dollars in additional funding – including a $3-million investment from Vancouver-based blockchain developer DMG Blockchain Solutions this month and another $3 million from a group of local investors earlier this spring.
Among the firm’s 150 shareholders is Dave Revell, the former global chief information officer for CIBC. Revell is one of a number of prominent business figures and former politicians who occupy key positions on Brane’s board and in its executive ranks.
Ex-Ontario premier Dalton McGuinty and veteran Ottawa business lawyer Brian McIntomny are among the other directors, while Jerome Dwight, the former CEO of Bank of New York Mellon Canada who later served as RBC’s global market head, joined the company as president in March.
Now, Brane is taking another big step forward with a public offering. Miron, who has previous experience leading a company into the public markets with Hexo, says the move will give the growing company the financial wherewithal to further accelerate its scaleup efforts.
“We are looking to aggressively grow,” he says. “There’s this huge opportunity today, and we want to seize it.”