Canadian-founded, Miami-headquartered Rails has raised $14 million USD (about $19.1 million CAD) through the sale of token warrants and launched its hybrid cryptocurrency trading platform in the United States (US).
“You have to find a good middle ground between good regulation and fostering innovation. And I think we’ve lost that balance.”
Satraj Bambra, Rails
In an interview with BetaKit, Rails co-founder and CEO Satraj Bambra said the startup wants to bridge the gap between centralized crypto exchanges and decentralized platforms and give traders “the best of both worlds.”
Rails aims to allow users to trade and retain control and custody of their digital assets while also providing performance typically reserved for centralized exchanges.
The startup’s latest financing closed in April. It was led by Slow Ventures with support from fellow existing backers CMCC Global, Quantstamp, and Toronto’s Round13 Capital (including the Round13 Digital Asset Fund). Major crypto exchange Kraken also participated. This brings Rails’ total funding to approximately $20 million USD, which includes $6.2 million from early 2024.
Rails was launched in 2023 by a team with experience building and investing in tech and crypto companies. The startup’s founders include Canadian husband-and-wife duo Satraj Bambra and CTO Megha Bambra, president and COO Rick Marini (who worked with Megha Bambra at Grindr), and general counsel and CFO Brent Vegliacich.
Satraj Bambra and Megha Bambra previously built and sold multiple Toronto tech companies together, including crypto wallet BlockEQ, which was acquired by Coinsquare in 2018, and mobile development agency B House, which was purchased by TWG in 2016.
The Rails CEO continues to serve as managing partner and chief investment officer at Round13 Digital Asset Fund, an investor in Rails. Satraj Bambra oversees the firm’s digital asset investments but said he has recused himself from any decisions related to Rails to avoid any conflicts of interest.
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Satraj Bambra said Rails plans to use its latest capital to deepen its platform liquidity, scale up its team, and launch more products later this year.
Rails has a strong presence in Toronto, where many of its software engineers work, and today, approximately three-quarters of its 14-person team is Canadian. However, the company’s leadership ultimately decided to base the business in the US.
Satraj Bambra said this decision was thanks in part to Miami’s emergence as a crypto hub and the “crypto-friendly regulation” being set up in the US under President Donald Trump.
According to Rails, crypto exchanges have struggled to balance performance and security, with centralized platforms offering fast, high-frequency, large-scale trading, but at the expense of security by forcing users to relinquish control over their assets. At the same time, Rails asserted that decentralized exchanges prioritize security but often provide lower execution speeds.
Rails aims to “deliver the performance of a centralized platform without sacrificing the principles of crypto—self-custody, transparency, and security.”
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“As someone who’s watched this industry wrestle with performance versus self-custody for years, Rails is the first exchange I’ve seen where neither security nor speed is compromised,” Slow Ventures general partner Sam Lessin said in a statement.
Going forward, Rails plans to grow on both sides of the border, tapping into Toronto’s tech talent pool to expand its software engineering team while also taking advantage of shifting attitudes in the US towards crypto by catering to the country and becoming regulated there.
Satraj Bambra argued that some of the best crypto has come from Canada, including Ethereum and Cosmos. He still contended that the country has not been as welcoming to new industries as other nations. He claimed that he and his businesses, like others in the sector, have been de-banked many times simply for working in crypto. This has sent a negative signal to many entrepreneurs in the sector, he said.
While Rails has not abandoned Canada altogether, Satraj Bambra indicated that the country’s approach to crypto and regulating the space played a role in the company’s decision to establish its headquarters in Miami. “You go where you’re welcome,” he added.
“Regulations are a choke point for innovation, and you have to find a good middle ground between good regulation and fostering innovation,” the CEO said. “And I think we’ve lost that balance.”
Feature image courtesy Unsplash. Photo by Art Rachen.