Olga Feldmeier sat down at the Crypto Valley Conference 2023 with four other digital asset exchange leaders in space. Here’s what they discussed.
Should exchanges do-it-all or should they specialise?
Well, I believe the notion of exchange can be somewhat misleading, don't you think?
You see, when we consider technology platforms, it becomes evident that the term "exchange" only scratches the surface.
Within these platforms, there exists a retail business that goes beyond simple trading. It functions as an investment platform, catering to various types of individuals who come to buy and trade.
However, our role extends further. We are a platform business that specializes in providing white label technology for investment in digital assets to fintech companies and banks.
We seamlessly integrate with traditional or fintech companies, empowering their customers to invest in digital assets.
We go beyond solely serving the resource-rich banks, who can afford hefty investments of up to 100 million for product shelf extensions. Instead, we also extend our services to fintech firms, brokers, and neo trading platforms.
What sets us apart is our ability to deliver this service in a cost-effective manner. It doesn't burden our clients with additional costs, and we can integrate within two weeks, allowing their customers to trade effortlessly.
How do we gain back trust in a changing industry?
First of all, let me preface this by saying that, in our case, we did both something totally crazy and got lucky with our timing. We decided to become a NASDAQ-listed company in 2021.
Let me tell you why. There are many grey exchanges out there, by which I mean those that are registered offshore or do not fully comply with the extensive AML and KYC regulation that legitimate exchanges are bound by. In many cases, it’s not possible to find out who runs them, yet people pump millions of dollars into them without a moment’s thought. No one even seems worried that they can just disappear tomorrow.
We decided that this cannot be how our future looks. So, we kicked things off. We’d been regulated in both Switzerland and Liechtenstein for years and we were the first exchange on the ground here. We had the first mover advantage and we had the reputation. Then we asked ourselves, how can we improve trust even more?
We took the huge decision to put ourselves through the grueling process of becoming a NASDAQ listed company. We submitted ourselves to the strict guidelines and rulebook of NASDAQ. That means quarterly reports, audited financial statements, an independent board, transparency and non-market abuse regulation. It’s the most strenuous thing a company can do and a rarity in the world of crypto.
Let me tell you, NASDAQ don’t mess around. These rules and regulations are there for a reason and they won’t let anyone cut any corners. It cost a lot of money and took a lot of work. But we decided to do it to show the market how crypto exchanges can and should be done. We did it the most difficult way possible, but we finally pulled it off in February 2022.
Then, half a year later, FTX happened. Boom! It was a pivotal moment for us to show the industry that not all crypto is grey and not everybody is playing with customers’ money. There are in fact companies that go the extra mile to give both investors and customers full transparency, trust and security. And that’s exactly what we do at SMART VALOR.
What is the main revenue driver for exchanges?
Revenue streams for exchanges are not as simple as they may seem and, of course, vary from exchange to exchange.
Speaking of my own platform, SMART VALOR, we have the retail business that caters mainly to customers in Switzerland and Germany. The nuts and bolts of this retail business are trading and fees. Unfortunately, and perhaps not surprisingly given the market conditions, trading volumes and revenues are down. It’s not going to be an amazing year in that respect, I’m afraid.
But on the other hand, we also have a B2B business with banks and there are some really interesting applications popping up at the moment. Let’s give an example.
Have you ever wondered where the biggest Bitcoin ATM network in the world is located? Most people would probably guess America. But that’s not right.
The answer? It’s right here in Switzerland, where you can buy Bitcoin at national railway ticket machines.
You can buy Bitcoin right along with the tickets for your daily commute or a weekend trip. It even prints out a paper wallet for you! It’s the everyday integration of cryptocurrencies and this was brought to you by SMART VALOR, together with our partners. We ‘power’ this ATM network. How amazing is that?
So, what am I saying about exchange revenues when I tell you this? I’m saying that B2B will lead the way. There are 10,000 financial and fintech institutions in Europe alone. Imagine if even 10 percent of those adopt digital assets in one way or another in the next two to three years. We’re already talking about thousands of new customers onboarded into the industry and that’s far from trivial.
I think this is the way for our industry to grow and, for that reason, it’s a strategy we’re focusing on.
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