In a year marked by turmoil in the crypto industry, Bitcoin emerged victorious, concluding the year with an impressive rally despite setbacks for prominent figures like Sam Bankman-Fried and Changpeng Zhao. Amidst this landscape, Swan, a leading financial firm in the Bitcoin space, made significant strides by expanding its services, securing $40 million for expansion efforts, and an additional $125 million for its venture and private equity investments in 2023.
Founding Principles and Resilience: Founded in 2019 by Cory Klippsten, Swan differentiated itself as an investment platform exclusively dedicated to Bitcoin. Klippsten, a vocal critic of crypto industry practices, particularly highlighted the pitfalls of platforms like FTX, advocating for a shift towards Bitcoin-focused strategies. Swan’s resilience in the face of industry failures fueled its expansion into institutional services, driven by a perceived need for trustworthy providers in the aftermath of capital destruction and widespread fraud.
Controversies and Adaptive Measures: Despite facing controversies, such as relying on Prime Trust for custody services, which filed for bankruptcy, and subsequent issues with Fortress, Swan adapted by partnering with BitGo to launch a joint venture trust company. This new entity aims to become the first Bitcoin-only trust in the U.S., with plans to launch by the third quarter of 2024. Klippsten acknowledged challenges with previous partners but maintained faith in the model of separating brokerage from custody.
Bitcoin-Backed Lending Differentiation: Swan’s entry into the crypto lending space sets it apart by learning from the failures of platforms like Celsius and Genesis. Klippsten emphasized two key differentiators: Swan will not rehypothecate customer assets, and it will exclusively offer Bitcoin-backed loans. Drawing parallels with a similar product from Silvergate, Swan’s lending product allows users to deposit Bitcoin as collateral and receive around 50% back in dollar-denominated loans at a low double-digit interest rate. The platform plans to launch this product in the coming weeks with $20 million ready for deployment.
Financial Milestones and Future Plans: In 2023, Swan raised approximately $165 million in equity funding, allocating $125 million for private equity and venture investments. Klippsten hinted at an additional $150 million fundraising goal for 2024 to fuel further expansion. Swan’s revenue streams are rapidly diversifying, with advisor services and asset management for institutional investors contributing to its impressive financial performance. As of November, Swan reported an annualized revenue of $125 million and anticipates crossing the $200 million mark in the first quarter of the upcoming year.
Swan’s journey in 2023 showcases resilience, adaptability, and a strategic focus on Bitcoin amid the crypto industry’s challenges. As it ventures into institutional services and Bitcoin-backed lending, Swan positions itself as a beacon of stability and innovation, contributing to the broader narrative of Bitcoin’s enduring strength in a volatile market.