There is no question that the popularity of cryptocurrencies amongst investors continues its rise. Challenges facing cryptocurrencies continue as well. Just last month #DisruptionBanking covered a story about Binance, arguably the world’s biggest bitcoin exchange and altcoin crypto exchange by volume. The story didn’t compliment Binance, and highlighted problems that still surround crypto exchanges:
Until the pandemic broke out, apart from a little bitcoin logo on the T-shirts of football teams like Watford and Wolverhampton Wanderers, there wasn’t too much to see. The next thing was a huge bitcoin campaign launched at London underground stations and bus stops for Luno, which promptly came down in May of this year. The cat was out of the bag, though, and even Rishi Sunak jumped onto the bandwagon with his own version of a Central Bank Digital Currency (CBDC), or the ‘Britcoin’.
2021 has definitely been the year that has seen cryptocurrencies go mainstream. Sky News reported only in June how well over 2 million people in the UK now hold ‘crypto assets’:
Members of the Bitcoin & Crypto – United Kingdom group on Facebook are a small proportion of these people, but the discussions are not limited to discussions about the latest twist in bitcoins’ price. ADA, XRP, ETH, Solana and many other altcoins are discussed in the group, as well as the various crypto exchanges available to buy / sell / hodl them on.
British and proud
Many of these users were buying and selling their crypto through Binance. Until May 19th, that is, when Binance servers experienced outages. By the end of June, the FCA issued a warning about Binance, driving users to find alternative methods of managing their crypto assets. Complications with paying out of Binance, or indeed trying to recover lost investments from the site, have driven users away from the site, at least in the UK. Fortunately, there are other alternatives on the market.
One such alternative is Coinpass, whose Co-Founder and CEO, Jeff Hancock, spoke with #DisruptionBanking about why he has focused his efforts on making the crypto exchange UK-based with a real UK feel about it, amongst other things.
Crypto exchanges in the news
At the start of our conversation, Jeff shared one of his most important insights: “Give a listener some crypto, they have some crypto. Teach a listener to get involved, research, learn, invest and profit, they’ll have crypto wealth forever.”
On the same day that Binance experienced outages on its’ servers, BlockFi, a leading U.S. cryptocurrency exchange, was also in the news:
Many crypto exchanges use ‘free bitcoin’ promotions to drive traffic to their site. This type of approach can often be considered ‘irresponsible’ by regulators. And, probably one of the reasons that Jeff is keen on helping individual investors ‘listen’ and not just palm off a few dollars’ worth of bitcoin on them.
Jeff started investing in bitcoin in 2017. Like many of our readers who have been involved in the crypto-frenzy since early on, he had difficulties taking a large position into bitcoin using GBP and no FX risk: “You had to use either USD or EUR for orders of any substantial size, and no one in the UK was offering a premium service platform for UK residents to get in and out of crypto quickly from their banking account.”
Jeff was working at Softbank at the time and told us a little more about his experience there: “While consulting for Softbank in tech and cybersecurity for their UK and global teams, I was surrounded by loads of entrepreneurial minded people who only thought big. At the time I said to my friends that we should build our own crypto platform, and coinpass.com was born.”
Much like the rest of the world, Covid took Jeff by surprise too.
“March 2020 was an interesting and scary time for the entire industry. We’d just had a huge growth spurt 6 months earlier which led us to win Best UK Crypto Exchange 2020 from the CITYAM group. I was visiting family in Europe when the world suddenly stopped.
“Everywhere was locking down, the S&P500 had sunk 11% in a day, and crypto prices were tumbling. However, our sign-up rate was increasing, our selling volume rocketed and bullish buyers ‘buying the dip’ couldn’t deposit their funds fast enough. Instead of contracting into survival mode, we had no choice but to expand the team in support, marketing, development and operations.”
Digital currencies’ reputation through 2021
Coinpass weren’t the only ones who watched their traffic increase in 2020. Leading online stock-picking software firm TradingView, were also experiencing increased traffic from crypto-enthusiasts:
TradingView’s timeline of bitcoin was a much vaunted affair, and Jeff was equally impressed with the growth of information available to individual investors: “It’s a great thread, and a great use of tech.”
“In a world surrounded by noise, fake news, lack of verification and sources, TradingView has impressed with their pricing and news service, as well as on-chain and orderbook trading data. One thing it shows, is that bitcoin cannot be killed, by anyone. Whether its bitcoin ‘crashing’ for the 300th time, China banning bitcoin for the 27th time, platforms and ‘the worlds largest exchange’ collapsing more than once. Bitcoin is still here.”
TradingView aren’t the only ones growing their crypto credentials, central banks have been looking at digital currencies for most of 2021 as well. We asked Jeff whether the discussions that individual countries are having related to CBDCs is helping to improve the ‘reputation’ of bitcoin:
“Some of our younger users are just buying crypto weekly, whereas some of our older clients that have both personal and business accounts think it’s a very important topic.
“Here at Coinpass, we see CBDCs as a stepping stone to solving the problem with fiat currency and add a secure layer of transparency to peoples’ personal finance. Being able to prove our net worth digitally and securely could be a new dawn for finance, and an end to money laundering.”
Whether crypto’s reputation has been helped due to discussions around CBDCs is still up for debate, central banks didn’t seem to approve of El Salvador’s bitcoin adoption. We asked Jeff if he felt the outlook had improved for digital currencies:
“The longer the market continues to grow, the harder it is to ignore bitcoin. People are smart. If they continue to see constant negative news from the banks, government and regulators, about bitcoin as a currency, a payment tool, a digital store of wealth, it means crypto has their attention.
“When the ‘big boys’ focus on something, they’re clearly trying to make it better and trying to protect people. Couple that with poor savings performance and banks’ instability in the bonds and equities markets, more people than ever are dipping their toe into crypto.”
Choose your crypto exchange wisely
Only a few years ago media outlets were spreading stories about how ‘You are more likely to get divorced than change your bank’. Today it’s all about the clicks needed to open an account on your App, coupled with a little UX/UI, of course.
Not everyone is a Reddit trader though, are they?
As fractional shares grow in popularity through challenger bank Apps like Revolut, you can watch as a completely new generation of investors learn how to trade. Once they’ve worked out how to buy their first $10 worth of bitcoin, they’ll be eyeing up accounts with leading crypto exchanges like Coinbase, Binance or Kraken. Or will they?
Where banks like HSBC have tried to be the ‘World’s local bank’, today this approach to marketing doesn’t seem to work anymore. Crypto exchanges are quite different. With a bank, you kind of know that your money is there, in your country and possibly at your nearest ATM. With a crypto exchange, your ‘money’ is virtual, therefore it implies you have to show even more trust in the ‘custodial’ services the crypto exchange uses, although it can still end up at the same ATM. Being from Malta or the Cayman Islands doesn’t fill the day-to-day investor with much confidence anymore, ATM or no ATM. Wirecard already showed that to many investors, and they were German.
Jeff tells us that “We feel our home country of the UK will be one of our strongest regulation cards for the future.”
Arguably, Jeff might be right. Working with a UK crypto exchange is probably better than working with a crypto exchange from Panama (we hope that crypto-enthusiasts in Panama won’t feel singled out or discriminated by this suggestion, Panama is merely being used as an example). Is it enough though? At least it will help you sleep a little better at night.
The virtual world of the crypto exchange
As new users enter the market, you need to be online following the latest trends ALL the time. Including TikTok, as Jeff explained. It takes commitment to build a crypto exchange, but it’s more than that as Jeff explains: “You don’t need to know how your car’s gearbox works, just that it works and takes you where you want to go.”
Ideally you want a minimum 7 year guarantee though, don’t you? With crypto it can be the same, Jeff explains how #hodlers are in for the long term and they need everything to be fully transparent as well as have a great user experience. And, finally, have a charismatic investor-friendly ambassador, to make sure the message really gets out there, and that the users feel engaged.
At Coinpass, just like the founders of Unicorns like Wise (formerly known as TransferWise), Jeff likes to get involved with what’s happening: “I have a portion of my time per week where I look through our support ticket queues for insights, our Facebook community for feedback and even speak to our users one-on-one to get unfiltered feedback.”
“This is the best form of feedback available when you’re ‘innovating’ and not just copying others on the market.” Jeff continues.
“Our focus on customer experience, protection, regulation and speed appeals to the majority of our users. Many of whom have been let down by other exchanges, or who value the support and care they receive for a few basis points difference on the fees.” Jeff concludes.
Coinpass have recently been added and fully recognized as an FCA registered crypto-asset business. Jeff shared the recent story highlighting their achievement, and highlighting their commitment to be transparent and fully compliant.
Jeff will be speaking at the Crypto AM awards, only weeks away, on September 29 – 30 in London:
Will the way that Coinpass has embraced being ‘British’ work for them in the long run? Will more crypto exchanges adopt a similar ‘safer’ strategy to reassure their users? Keep reading #DisruptionBanking for the latest stories in Investment Banking and the Crypto investing community.
Author: Andy Samu