Crypto Exchanges Unbound: Navigating Regulatory Challenges and Growth | KBW2023

[Music] hey everyone thank you for joining us uh my name is Ronnie I'm actually the moderator I said on the screen that Eric was but uh they rug pulled you um anyways uh nice to be here with you Eric um you are the president and COO of crypto.com right um you want to tell us a little bit about your experience at crypto.com how did you get into crypto what's your background of course thanks for having me first of all I'm super Str to be back in Korea for my second time at Korean blockchain week uh it's always great event so many people so many great speakers uh learned a lot from those um I joined cryptocom about six years ago uh now when we were just started we didn't have product yet and we're just building our cryptocom Visa account uh I was into the space more on a personal basis just by interest a few years before I think what got me in was really the Bitcoin white paper it's a classic uh I loved not only the technology that powered it but also the the game theory that make this stuff works you know how to keep the bad actors out and make it work at scale so that was really the entry point I went to meetups talked to people I was uh in my previous company a bit the you know the annoying Bitcoin guy you that talks about Bitcoin all the time same yeah it happened and then I joined crypto.com and you know the rest is history it's been a a amazing journey so far but still a lot to to be done and how would you say your experiences like you you worked at some pretty large companies and obviously crypto.com is one of the largest companies in the crypto space so how would you say your experience has prepared you for your position at crypto.

com so I I started a little bit in the traditional side of things in in the banking and Consulting world I think it really gave me uh the foundation uh around how the finance word Works what is regulation how to interact with government stakeholders with uh Regulators I think that Foundation was extremely helpful and I think Consulting gives you a bit of that problem solving mindset which I think you can bring to any industry the last 10 years I've been in Tech um so I started with PayPal in the fintech word and then move to e-commerce Tech and back to fintech if we can say with crypto.com I think I really enjoy Building Product for millions of users and having that direct interaction with consumer each time we'll release a feature even when we had like 10,000 people 100,000 users on on on the platform know getting that feedback learning from it interacting with customers I think I really enjoy that and that's why I continue my career in Tech and you know getting to scale is is just amazing how much value you can bring to people amazing so yeah it all kind of converged here right a little bit of Consulting a little bit of regulatory work a little bit of fintech and it all came together to become what is crypto.com which is uh really cool one of my favorite brands in the space personally um so this is not your first time in Korea right obviously you were here last year um had uh pretty big announcement you guys acquired a license to operate in South Korea which was uh really important news at the time so it's been about a year now can you tell us a little bit about the development since then how everything's been going in Korea for you guys so last year we we acquired two licenses first one that allows us to crypto Services the vasp registration and then one license for payment uh the EA registration since the last 12 months I think a few things happened in our industry um and we've been working relentlessly to restore trust and confidence not only in Korea but across the globe uh that has been a big Focus for us um to make make sure we can build on on the right foundation going forward but that those market conditions that have been challenging um did not deter us to make progress here in Korea and we've been partnering especially on the web three side with a lot of gaming content producing company entertainment companies that have amazing IP and we're helping them bring them to web stre and bring them to the word to our 80 million user base yeah amazing yeah you guys uh if I'm not mistaken have a partnership with Samsung right uh obviously the the largest brand in Korea so like uh you doing some real stuff in the community here uh and like how do you how do you read the the the trends of the community how how do you feel like uh like South Korea is perceiving crypto.com thus far South Korea is a very sophisticated Market they have extremely Tech heavy uh consumers and crypto is already quite entrenched and known um we've had extremely positive reception with a lot of Brands here I think Samsung is is a great example it's a very established Brands and decided to work with us to provide seamless experience on their new phone the the zold for the cryptocom app was a very strong signal that you know we're a brand that we can associate ourselves in Korea and in the rest of the word we also work with a very interesting Production Studio like a story uh so I don't know if you you guys watch uh Netflix and uh this very famous show extraordinary attorney wo was globally popular so we work with the team created a collection some went back to charity as well it was great collaboration we also work with Studio Dragon very popular here a Storyteller and work with a few collections with them on our nft Marketplace that was sold out so it's great great collaboration there's a lot more to to do in Korea so much content um but there's also a lot of talent and that was just here a month ago we did the first public private hackathon uh Web stre Festival with the city of soul and and mayor H um to bring together new talent to build on top of the blockchain and in particular the Kronos blockchain uh which is a top 10 blockchain today of course yeah Kronos is really exciting right now uh I think uh there was just uh an article published just a couple hours ago about uh a new1 million accelerator fund right which is uh really exciting um and I think you guys have one of the hottest games in the industry right now uh loaded lions and uh can you tell us a little bit about uh how that all came to be and what the activities going on over there sure I think for us we crypto.com we feel we have a responsibility to help the industry grow and not only by building that bridge between traditional Fiat money and digital assets you know we are known to be that place where people can bring money in and out enter the space keep their money safely um but also by building directly natively on the blockchain over the last four or five years we've contributed to a lot of projects source code Engineers to build that infrastructure um we also develop sdks API so developers can build very easily on top of blockchain so that's really an important aspect of what we do but not only building infrastructure but also building some experiments on top of it to Showcase that things can be done and over the last year or so we develop our own IP and pfp collection loaded lions and just a week ago we launch a first game with utility for those pfps and and land that that were distributed earlier this year and we were Amazed by the the early success of the the project very strong support to thanks to our community uh just in two days it became the top five game globally across all protocol and so the the game is called main city and people can build their own mansion and businesses and grow uh and get Assets in game and then take full ownership of those assets which is really the empowering uh you know players in the game and that's the value that web3 brings you have control over your assets your data your identity and whatever effort you put you get the fruits of that contribution and and you can take it out of the game use it elsewhere and grow it so that's really you know empowering uh users and a core to what web3 has to offer I was getting some stats from the team I think since we launched about 50,000 hours played in the game since last week uh there's 70 million items in game that were acquired by users it's just it's just incredible uh and we'll see how we can scale it and take it from there it's just an experiment but it's uh it's growing quite nicely that's super exciting so much activity in such a short period of time and um I mean South Korea like people that I'm talking to this week it seems like there's a lot of uh interest in gaming here a lot of developers focusing on gaming so uh really exciting to to have you here to talk about that and in South Korea and uh to see that you know you Kronos is uh is starting to thrive and uh loaded Lions is starting to make a name for itself as uh one of thep games to watch in the industry um I want to move on to bit more of a serious topic um actually our topic which is about regulation so uh I think crypto.

com is probably one of the global leaders uh when it comes to regulatory things getting licenses uh I didn't count it I don't know I didn't do it tally but I think you guys must have like ton of licenses all over maybe even the most amount of licenses uh of all crypto exchanges in the world um can you tell me a little bit about like your role uh in shaping regulation and crypto um sort of like I guess through the lens of crypto.com but then from more of a like an objective perspective uh let's start specifically like in the Asian region would love to understand like how you perceive all that I think all businesses that are trying to build um especially those interfaces between traditional assets and digital assets are looking for clarity across the world in each market they they try to bring value to uh on the regulatory framework and of course that has been quite varied across the world and over time Asia I think we had quite a lot of interesting markets like Singapore that was one of the pioneer with South Korea in providing a clear framework um so as a business you know what to expect you can apply you can get a license and then you can offer services in a way that has some oversight from The Regulators and gives some peace of mind uh to Consumers so you had some of these Pioneer markets that started with a early framework dedicated to crypto so what we call fit for purpose which I think is what we prefer uh because it's more adapted to the the technology that we are providing um some markets did not yet offer it or waited until last year and started to offer new Frameworks now uh and Regulators shaping this new environment and some are using existing Frameworks um more payment rails type of framework in the US you can use mtls for example today so depending on the the market uh that you're playing is you'll have some fit for purpose regulation sometimes started three four years ago sometimes just launched last year or this year even uh and then other markets that are still looking to make new regulation and are leveraging existing Frameworks in all cases I mean we work very closely with all the regulators were um registered or licensed in all the tier one markets whether it's us it's Canada it's Europe and within Europe today you still have to go market by market it's France it's um Italy it's Spain it's Netherland um and in Asia of Singapore of course um South Korea Australia and a few more markets constant engagement especially since uh last year because Regulators really wanted to strengthen a bit consumer protection and protect also the market and its Integrity uh so there's been a lot of Engagement bilateral from from cryptocom directly to Regulators as well as through industry Association that we contribute to to provide feedback on consultation papers and uh make sure we strengthen in the right way uh we enable the objectives of regulators and stakeholders but we let the business grow and innovate because we're still early stage in that uh Journey really exciting uh um you know one topic that I've been uh talking to a lot of people about this week has been um Hong Kong uh and I know that um you you uh were around Hong Kong a little bit uh I know that there's some activity what how do you see uh this new development it seems like there's a lot of projects that are either uh you know deciding to build out in Hong Kong from inception or uh make their way back to Hong Kong so seems like uh like like the Hong Kong government is really incentivizing projects right now to to come back and uh and to open up the crypto landscape again there why do you think that's happening and uh and do you think that's a real Trend that's long-term sustainable or is that just like a buzzy thing for the moment Hong Kong is a very important financial center and um in the early days of the cryptocurrency industry there was a lot of companies out there um it was a big big Hub you know during little bit preo and during covid I think um the excitement was reduced and there was less interest in the space but over the last six months I think we've seen extremely positive sign from The Regulators from the government trying to bring business back especially on the web stre sector and one way to do that is to provide a regulatory framework that people can apply and can safely participate in and that's what the Regulators has done in Hong Kong and we've been in you know engaging with the regulator on that topic and uh we continue to do so I think it's great to see a financial center like Hong Kong embracing the technology uh and providing better Clarity um and incentive for people to participate and and join the industry we have a lot of uh great teams in Hong Kong and you know it's still an important place for us and uh just educate me in the crowd for a bit is is Hong Kong one of those places that uh has uh are they are they going based off existing uh regulations or is it is it being reshaped as we speak currently is a dynamic it's a new framework uh specific for cryptocurrency of course it it's inspired uh by traditional Frameworks but it's it's a fit for purpose which is always something that we prefer because there's some nuances in the technology that defers it from from traditional assets and we want that to be T taken into consideration especially around custody around movement of assets uh monitoring of assets is a lot more complex and there's some limitation also we have a bit more transparency on the blockchain but it's also a bit newer so not all the tools are there so it's important for Regulators to understand the maturity of the industry and provide a framework that allows it to grow and and become stronger over time nice um I want to ask you a bit about uh crypto.com uh growth strategy you guys I think have more than 80 million users these days um only seven years that's pretty extreme growth uh and I think that requires a really coordinated strong effort uh by some very talented individuals so can you give us some insights into how you guys managed to put that all together I think it start first with having a a Clear Vision what you want to achieve so for us the goal is to bring cryptocurrency to every wallet which means mainstreaming the technology introducing it to a lot of people globally three four billion users uh that's our goal today and we have Clarity of purpose and vision on this front then you need to build amazing products that people want to try and they already having different habits and and tools so you need to find great product great incentives for people to change their behavior and start you know exper experimenting with that new technology and our first product was the crypto.com Visa account that enables people to spend their crypto 80 million Merchants wherever Visa is accepted and that was a great product to bring people into the industry they're familiar with the car business and they're like okay let me try this product has it looks amazing that's great uh incentives let me try it out oh I'm starting to get rewards in crypto what is this and learning more Bitcoin ethereum and getting into the space so to get people in that was and mainstreaming the space that was a very exciting entry product which we scaled um sty in Singapore that was our first Market uh grew into Asia launched across Europe UK launched in the US in Canada in Australia and in Brazil and today it's the biggest crypto card program in the world and it puts a lot a lot of efforts to build scale maintain the C program at scale like this but we feel it helps the industry move forward then we continued people had a way to spend their crypto but they wanted to get in so we build this connectivity with all the banking rails across the world for people to go in and out freely that was a tremendous effort because banking relationship is still tough for the industry players and getting all this in place and making sure it's stable for our customers and they feel safe I think it required a lot of people involvement and and building those relationship over time but it pays off because it gives you that uh Global access that no one else can provide today and then you have to continue to innovate um this year even if it's still the bare Market we launch new product that we feel are helpful for customers um in those market conditions how to hedge my myself when the market goes short um if the price go down you know can I protect myself so we launch up down in the US we're the first to bring a regulated cftc um derivative product to retail in the US and very strong traction we're trying to scale this globally we launch usal staking great to get yields uh when markets are a bit volatile at least you get some certainty and you can grow your asset without taking trading risk also growing very rapidly and we're continuing to scale this so that's on the product front Clear Vision amazing products and then you need to get your name out there and it's it's not that easy to create a brand it takes decades but we really started to accelerate in 2021 and you probably have seen some of the brand sponsorship and partnership that we done just a couple a few few of those I think the the major one like Formula 1 UFC and the renaming of the Staple Center into crypto Karina were very iconic I do feel they helped the industry overall and of course helped crypto.com as well we looked for partner that had high standard that that shared value in terms of innovation technology relentlessness you know braveness to go into that space to be a Pioneer um so we looked for alignment reputation of Partners and how it could help us mainstream the the company and the sector overall and the last two years we've been working very hard to activate those Partnerships in different uh you know at events outside on social channels to really make them live and make them relevant for the fans of those BRS and and and sports and that's where you get the real value um tremendous effort from the team that really helped us get the name out there today when we do you know brand awareness studies in the world we often are the top one Brands thanks to that and it's very hard to to get that in a short period of time and so really Coos to the team that has built that over the years combined with you know great products and Clear Vision so it all it all culminates and comes together right it's like this this balance of like you know as as an entity you only have so much energy you can you can focus on you know you have to Silo them into particular things right you have to decide all right we're going to give this much effort to regulation and this much effort to product Innovation and this much effort to marketing so it's like uh balancing all that is is a real challenge right and like uh is that something that you know you guys internally are like thinking about often and sort of changing or like did you guys pick you you had your vision in the beginning and and you've stuck with it or are you guys Dynamic with that are you guys like u based off markting conditions based of regulatory environment are you guys constantly uh tweaking your approach one thing that hasn't changed is our foundation of compliance and security that's how we build the business and you know back in the days when you know it was even hard to get a meeting with Visa you know in 2016 but to launch our first product we had had to do a big four audit on our AML K process and implement the recommendation of the audit before we could even get the product to market usually you have a year to remediate all this stuff so we had to level up our standard and make sure the foundation of the business was extremely high sometime even higher than banking standard for us to be able to build and bring these products and grow the sector so that Foundation has not changed and you can see uh in our engagement res Regulators the licenses that we have and how we operate those licenses because getting a license is one thing being able to pass the audit the inspections that comes afterwards living it through you know the reporting requirement Etc is the hard part and we've been having those licenses for quite a while a few years already so we're able to you know follow through which is quite important and I think you look at what happened in 2022 the importance of that Foundation security and compliance is even more relevant today and having a place that people can can trust because people are doing things in the right way is even more important today so there's no change in strategy on this front this Foundation is there to stay and that's where we invested and it it will bring tremendous value to the business but it's tough because doing the right thing is costly running large compliance program getting licensing operating licenses is very expensive it also hurts your conversion fno you know it's easier to acquire users without kyc than going through kyc right absolutely that's it's it's AIC tanic Factor so you have to make that conscious decision as a business that you're building something for the next several decades and you want to do it the right way from the onset and of course that has the cost that you need to be willing to take yeah you guys definitely been playing the long game I mean uh not to name names but there have been some other rival exchanges that uh blew up pretty quickly and then actually blew up right like uh they they took some some shortcuts and uh they they got into the fast lane and uh you see what happens but uh I think especially when it comes to your money your personal finances uh you want to associate with brands that you can trust brands that have values they uphold uh and if that means that uh all right they're not going to be the most exciting brand for a bit and they're going to be a little boring so be it um you would I I think if you're a responsible individual who really cares about uh not losing your money you would think to yourself okay I would I would want to give it to the most boring entity that's just going to follow the rules right yeah I want to make returns and I want to get access to the co you know the quickest coins and whatever but uh I think like uh like it would be important also that you you know that uh you're associating yourself with uh with an exchange that really vets the partners and the products that they on board and uh you know the the the the options that they list for their customers so that's those are things that um you really need to be careful about uh and I think it's you know it's the way I perceive it um you mentioned up downs before which I found uh to be a really fascinating breakthrough that I don't think was talked about enough in the media um we all know how hard it is to deal with the US federal government uh in terms of getting any sort of guidance on regulations right uh and you guys managed to become the first exchange to do uh something really amazing if it was it was options or it was options right not derivatives so uh can you give us a a bit of of insight into like how you know what that process was like did you have to deal state by state or did you just deal directly with the federal and like uh how did that all come together I think you don't have to be boring to do things the right way and Hope hopefully uh you know we've bring some excitement to the industry I didn't mean to not your brand you're not boring right you guys definitely s some controversy you look at the the traditional sector I mean when you want to portray trust and and security you have those you know ads and you know we your blue as well blue color and everything you know is great it's important to convey that but we're also a Pioneer and this is a fast evolving industry we want to bring contribution to it we want to launch things that are Innovative we want to do things differently to you know Elevate the space but it's you know there are con constraints on what we can do for sure if you want to do things the right way I mean in the US we've been having over the years very strong relationship in particular with the cftc uh which is the The Regulators for derivatives in the US uh We've um have acquired about two years ago a historical platform that worked with the cftc for 20 years and a very strong relationship a company called nidex now called crypto.

com North America derivatives um so we had already some existing relationship and track record and then we try to bring it in a way that is a little bit more mainstream easier for retail to access but still being clear on the risk that you take when you go in provide all the right information uh so people can actually make good use uh of the positive and negative of the products so bringing that Clarity and engaging regularly with the regulator on what we're going to do how it's going to work I think is super uh important also as some of our um Team uh from our legal team some senior folks join working groups from the cftc which is one of the first to have crypto players joining some of these work working groups I think that helps so we can provide input and feedback and we try to do it constructively there's already working Frameworks in the US in the derivatives there's way to enhance them there's way to work with them so we want to do it you know together with the regulator and bring Innovation together with the regulator it's not that easy to do in a lot markets but I think we've managed to to do it in the US and uh will'll continue to bring more exciting products uh around that framework and that brings a lot of value for for consumers especially in tough market conditions amazing so it's you know it's about transparency and positive engagement and uh let's let's be partners let's let's work together on this to serve the greater good to serve Humanity to serve the citizens and whatnot uh and I think that's a it's a very valuable approach uh we are technically out of time but I want to ask you one last question um can you tell us like what is the most exciting thing you're looking forward to from crypto.com for the rest of 2023 there's so many exciting things coming up and some I cannot mention unfortunately but this year we're still you know we're still in the bare Market um we want to double down on derivatives options for for our customers because it gives them the ability to hedge whatever happens in the the market it's only in the US for now we want to make that more Global we want to bring more assets more products so we're going to spend some time on that and it's super exciting of course staking is super big for us we're seeing tremendous traction it's lot of Great Value uh for for us uh to provide that to customers we're seeing the traction again scaling it main city I have to mention it it's amazing game I encourage everybody to go and try it but more broadly pushing web stre use cases today we look we have about 500 million users in the industry globally you know what can we do to bring it to 1 billion having some great um yield products and and derivative trading products is going to be part of it but you also want some of those new Webster use cases to get to scale gaming social networks we want to be an accelerator um we want to bring life to that uh use case and even if it's a big gaming studio that launched something we have been developing the Frameworks the tools for them to do so we have experimented with our own exper experiments on gaming so we want to be the Catalyst for the next 500 Millions users that will come to the industry thank you so much Eric uh really appreciate your time crowd thank you for listening to us um that's our time and uh we'll be around so uh thank you take care thank you very much [Applause] thank you ladies and gentlemen once again Mr