If there is one crypto field in which Europe has no shortage of representatives, it's that of platforms. In France alone, which holds the continental record, there are a good 50 of them, including nearly 30 registered with the Autorité des marchés financiers (AMF). "This is far too many compared to the size of the market," says one entrepreneur in the sector.

Faced with falling prices for over a year, most European platforms, and especially in France, have recorded a significant drop in their activity 📉. They are counting their pennies (well, what's left of them) and some are considering the worst, while for the most part they have not even three years of existence.

"Many applications will end up on the floor, it's just a matter of time," anticipates Réda Berrehili (*), the boss of Klub, a private investment platform. "Most of them have designed their business model during the bull market of 2020-2021 with revenues conditioned on volume. When the market turns, there is no more volume, and therefore no revenue," he says.

The other big problem is that many of these European startups look alike 😅.

They offer more or less the same service: buying and selling cryptos, and not much more. Sometimes they also offer return solutions (staking or lending), but the differentiation is not important enough.

"We all have our little differences, but we're often targeting the same customers, and there's a logjam of offerings," concedes François-Julien Alcaraz, co-founder of the investment app CryptoSimple.

The French start-up recently announced a fundraising of one million euros, but several experts of the sector do not hesitate to evoke a "fragile" financial situation. François-Julien Alcaraz admits that the situation is not easy, but believes that he is not the only one in this case. "80% of the companies are currently in difficulty", declares the owner of the start-up from Marseille.

The next few months will be key for CryptoSimple, which is thinking of targeting a more professional clientele.

Among the companies in difficulty, the names of Mon Livret C and Yuzu are also regularly mentioned by good investors.

The former was forced to pivot its business to become an intermediary for distributors (FinTech, asset managers, etc.) when it initially targeted individuals. "The question of our survival was on the table for a while, but we are doing better since we have evolved our positioning," says its CEO Mathieu Charret.

My Livret C currently has less than 100 clients, admittedly "very wealthy", but the company launched in June 2022 is not yet profitable.

As for Yuzu, which was launched in October 2022 and has less than 1,000 individual users, everything rests on the shoulders of its founder Clément Coeurdeuil.

The initial team has already been reduced from 10 to 5 people, one partner has left and the application now intends to offer advice on "investing at the right time". With what visibility over the next few months? "It depends on me, I have enough personal funds to feed the company until the end of 2024", assures Clément Coeurdeuil.

In particular, these startups suffer from launching in the midst of a market downturn. Still, newcomers are not the only ones to stick their tongues out 😰.

"Many companies are in the hot seat," says a lawyer who has had access to the accounts of some of them. "Many of them publicly give the impression that they are doing well, when this is not the case at all. Several French PSANs who have funds blocked in FTX and other companies have still not informed their clients," he says.

Would many NSPs be unable to meet their clients' demands if they wanted to withdraw all their funds? "Definitely," says this source.

Bitstack and Swissborg, the oasis in the middle of the desert

In the middle of the desert, however, several players like Bitstack 🇫🇷 seem to stand out.

The start-up, which has adopted a 100% Bitcoin positioning, allows people to invest in bitcoin via recurring scheduled purchases or by rounding up all movements that pass through the customers' bank account.

Bitstack, which deals with the storage of bitcoins, claims a monthly user growth of 20% for the past three months. It has 30,000 customers after just a short year in business. "According to the market noises I have, I think we are the only ones to have so much traction," testifies its co-founder Alexandre Roubaud.

"Globally, all the companies that have launched in the last three years and whose offer has not yet met their public are likely to disappear, unless they have the cash to hold on, but it is very complicated to raise funds at the moment," he says.

Except when you have a strong reputation or can present a radiant business to investors... Bitstack has just announced a €2 million fundraising round in which the prestigious Californian startup gas pedal Y Combinator participated 😎

"Investors appreciate this type of business because it ensures a certain predictability of income, whereas a traditional broker is exposed to a sharp drop in activity during a market downturn," analyzes Julien Henrot-Dias, CEO of the Deskoin platform (12,000 customers and also in the forefront of recurring crypto purchases).

Its competitor StackinSat, also positioned on the 100% Bitcoin, but reserved for a more expert clientele (and therefore smaller too), is struggling a bit on its side to raise money. It is looking for between 5 and 10 million euros and should turn to its community of users because of the reluctance of venture capital funds.

StackinSat hopes to replicate the success of Swissborg, which raised $23 million in early April from 16,660 people (in exchange for 9.53% of its capital).

"This operation is a success and many would like to emulate it, but not everyone is called Swissborg and can rely on such a strong community," says a good connoisseur of the sector. The latter claims to have 720,000 users, including 400,000 with euros or cryptos in their account.

"The market is titanic, we have linear growth, so I'm very confident in the future," assures Jonathan Herscovici, co-founder of StackinSat.

The big guys grit their teeth and rely on their experience

On the side of the "big" players, the situation is not much simpler. But structures like Coinhouse are well capitalized. The latter raised 40 million euros in the spring of 2022. This allowed it to absorb the FTX-Genesis shock, despite the freezing of nearly $ 15 million of its assets in these structures.

"Even if I don't wish it, I think that a lot of start-ups will disappear and that there will be only a handful of players left at the end", says its CEO Nicolas Louvet (read his interview published earlier this year).

Including Coinhouse? "Our seniority (2014, editor's note) and our historical link with Ledger offer us a strong reputation to which we must add the seriousness of our work," he judges.

"The key to our success is also the personalized support of our individual and corporate customers. It is very rare to offer advisors (available on the phone, ed. note) in the crypto sector," insists the French boss.

According to our information, Coinhouse, which has just over 100 employees, has nevertheless reduced its payroll in recent months by letting go of several employees.

For the boss of a start-up in difficulty, "everyone has reduced the size of the teams, the economic situation is very bad, it is now a question of surviving and hoping that the good times will come again".

All eyes are thus focused on the hypothetical Bull Market recovery that some hope for the end of 2023, a few months before the "halving", an event that occurs every four years and during which the monetary issue of bitcoin is divided by two, contributing to the scarcity of supply and therefore to the rise in price 💡.

Except that there is no assurance that the scenario will happen again... "It makes no sense to bet only on the Bull Market for a startup to work," persists a consultant. "This shows that some crypto entrepreneurs have launched themselves with a total lack of knowledge of the market," he insists.

At this point, experience can help. Paymium, another big historical player (2011), assures to be in a good position to survive this "crypto winter".

"We have already been through several crises and market collapses, this is nothing new for us," says CEO Pierre Noizat (read his interview). "We are ready to take this kind of shock. While most companies in the sector have been impacted and have reduced their workforce, we have continued to invest," he insists.

The double Kiss Cool effect of the "crypto nation

In addition to market conditions, some players point to the indirect consequences of France's forward-thinking crypto regulation to explain their woes.

Its regulatory framework (one of the first in the world) has led to the creation of a large number of companies, more than anywhere else in Europe, which has created a local traffic jam. Not to mention the fact that major international players, such as Binance and Cryptocom, have also chosen France to set up shop on the continent. "The French ecosystem is highly structured and probably the one with the most experience in Europe," explains Ambroise Helaine, in charge of the Italian application Young Platform.

As a result, competition is particularly intense. There are three solutions for start-ups in difficulty: find new financing (except that venture capital is at a standstill), pivot by changing their model or... consider a buyout.

A bank and Kraken very interested in a PSAN

"Today there are a lot of apps and platforms that are developing their tech and hoping to resell themselves through their licenses and PSAN," says Edouard Daunizeau, CEO of SavingBlocks, a London-based crypto advisor bot. "One of the strong probabilities is that medium-sized players will buy up smaller companies in their death throes," adds a lawyer.

According to our information, a traditional banking player is currently combing through the files of at least 5 PSAN-registered companies with the Autorité des marchés financiers (AMF). We'll talk more about this in The Big Whale very soon 👀.

Sign that things could happen on the market, still according to our information, the American platform of exchange Kraken, which is one of the world leaders of the sector, sounded out French actors with the aim of a repurchase. "They want to position themselves on the French market", says a boss who refused an offer from the giant.

Currently, Kraken is accessible to Europeans, but the company is formally prohibited from marketing to them (with advertising, for example). Above all, the platform will no longer be able to target the European market without PSAN from 2025, when MiCA, the European regulation that will regulate the crypto sector, comes into force.

"Obtaining the PSAN has been tightened up in recent months, so it's much easier to acquire a small player who already holds it," says a start-up boss who confirms Kraken's interest 👀.

Be careful however: buying a PSAN would not allow Kraken to automatically benefit from it. The company would have to go before the AMF to have the new structure validated. It would thus follow the example of the American Voyager which had absorbed LGO in October 2020.

"A buyout does not interrupt the activity, so it is very interesting for the buyer", reminds William O'Rorke, associate lawyer at ORWL, a firm specialized in disruptive technologies. "Whether the AMF takes 2 weeks or 4 months to process the application, it is not a problem if there is a continuity of the activity", he insists.

From then on, it's a game of liar's poker to set the price 💶. One of Kraken's targets says it has received an offer of about 50 euros per customer who has provided their personal information (KYC). This may not sound like much, but companies looking to sell themselves are not in a strong position.

If a company wants to sell itself to a player seeking PSAN registration, it will have to act quickly anyway. Every month that goes by lowers the value of this regulatory asset because it will have to be replaced by mid-2026 at the latest by a PSAN registration (which is much more difficult and expensive to obtain).

"This is precisely why I don't think that PSAN registration is such a valuable asset for a start-up wishing to sell itself," says Nicolas Louvet of Coinhouse.

In any case, for a large majority of PSANs, time is of the essence.

* Réda Berrehili is an individual minority shareholder of The Big Whale