Virtual currency investment firm Crypto Finance has closed a EUR13 million capital raise to fund an application for a Swiss banking license. Established in June this year, the company provides asset management, brokerage and storage facilities to the crypto-investing community.

It is one of a wave of startups looking to create an alternative financial system in Switzerland as the country’s traditional banks continue to shy away from the booming cryptocurrency market. Other institutions planning to lodge applications with Swiss licencing authority Finma include Lykke and MtPelerin, while yet others are exploring the banking-as-a-service model as a means of taking deposits and offering financial services.

The new breed of startups are clustered around Switzerland’s own Crypto Valley, located in Zug, a Government-backed zone intended to position he country as a global hub for blockchain and cryptographic development with the support of multiple blue chip partners, including UBS, Thomson Thomson Reuters, PwC, Consensys and Luxoft.

The EUR13 million round in Crypto Finance was raised from a group of Swiss angel investors, including former banker Rainer-Marc Frey and asset management whiz Dr. Philipp Cottier, who joins the Crypto Finance board. The company says the additional capital will be used to fund the arduous process of applying for a Swiss banking licence.

This will take some time, but “it is of critical importance to prepare this step early on, to be strategically positioned to offer a full range of financial services to crypto investors”, states Jan Brzezek, CEO of Crypto Finance AG.

Crypto Finance currently employs 26 staff and runs a “cash-flow positive” trading desk says Brzezek. Its first two funds will launch early January offshore, and in 1Q/2018, pending Finma approval, in Switzerland. The institutional crypto storage facility will be opened in April 2018.