Sweden-based blockchain startup Cryex is pushing back against reports it is seeking capital to stay afloat, instead pinning its lack of outward momentum and low earnings on a slow regulatory environment.

Rising to prominence in May 2015 with $10m in funding, Cryex was among the first startups to explore blockchain technology in post-trade, a proposition that attracted investors including White Star Capital and Northzone Ventures. In the time since, post-trade has become one of the hottest use cases for blockchain, with Goldman Sachs projecting it could save the industry billions annually in the derivatives and equities markets alone.

Cryex, though, hasn’t benefited from the trend in its bid to launch a central counterparty clearing (CCP) organization based on blockchain technology. Reports, however, differ on the exact reasons for the company’s struggles.

Sweden-based tech news source Breakit, for example, reported late last month that from September 2014 to December 2015, the company spent 43m SEK (or bout $5.9m) while earning just 9.5m SEK (or $1.1m) in revenue. The news source also highlighted the exodus of the company’s original leadership, with co-founders Scott Miller, Christian Merheim and Klas Hessleman all departing over the last year.

While this would seem to paint a bleak picture of the company’s progress, Cryex CEO Lotta Eek said in interview that such reports were misleading, and that the company is close to securing a license to launch its solution from the Swedish Finansinspektionen (SFSA), the country’s financial supervisory authority.

Eek told CoinDesk:

“We went full speed ahead and tried, even though we knew that a reality check may show we wouldn’t get the license with cryptocurrency. We ran into that reality, and still hold onto it very strongly.”

Eek described the attempt to become a CCP as ambitious given that just 16 such entities are now allowed to offer services in the European Union, according to the European Securities and Markets Authority (ESMA). Further, she said the cost of such an effort shouldn’t be compared to other startups.

“The average cost for a project like this, the closest you can get is what Nasdaq has done launching a marketplace and clearinghouse,” she said.

Eek said that Cryex submitted its licensing application in April 2015, and that the 10-person company is now seeking to raise a Series B funding round (Breakit indicated it will raise $15m and a bridge loan) that would help it continue to finance its solution.

Pivot to FX

As for how this path forward would look, it would more immediately find Cryex prioritizing its non-blockchain services, according to Eek.

Eek suggested that, by design, the company has two versions of its platform, one that is more actionable as it does not rely on blockchain.

“Our marketplace has two parts. One is for FX, the other is for FX and crypto. Same thing for the clearing, we do have two parallel environments. One for FX projects and one for crypto in relation to FX,” Eek said.

More broadly, Eek said that the firm has perhaps been held back by its use of a token-based blockchain system at a time when many banks are still unsure of whether they can handle so-called digital assets, or unique pieces of code that run on a distributed ledger.

Eek said that Cryex had considered offering a more “ledger-based solution”, in which information is shared but no tokens are exchanged, and she lauded startups in this part of the space including SETL and Chainalysis as examples of how post-trade could be made more efficient.

Still, she said the company sees these solutions as short-sighted given the potential value digitized assets could bring to capital markets.

“We also still have an interest in the cryptocurrency space, which as I understand it, is quite odd. We strongly believe the advantages of cryptocurrencies in value transfer are self-evident,” she said. “When that will happen, we don’t know, but we will follow.”

Path ahead

As for when the company would launch blockchain services, Eek was optimistic that Cryex could have its filing approved by mid-September of this year.

Still, Eek said that Cryex could be competitive even with its FX services, due to the comprehensive bid and ask information it will show in its order-driven market.

“That’s the first core value proposition. There’s really only one player in the market that will do this,” Eek said, adding:

“Cryex has been a huge project. Our clearing organization is more than equivalent of current places out there.”

From there, Eek said Cryex plans to move into OTC derivatives as its proof-of-concept for a cryptocurrency settlement system would await regulatory approval.

Images via Cryex