Regional Crypto Adoption: M2 on Establishing the New Home of Crypto - TOKEN2049 Dubai 2024

what's up what's up hello hello day two token 2049 I feel like day one everyone is amped ready to go everyone had a great time last night day two we're like hanging in there yeah it's wearing one El isn't it we're in the final stretch everybody's working hard uh Stefan it's so great to have the opportunity to chat with you uh today congrats on all the recent success uh with M2 you guys are a new entrant on the scene tell us about this new exchange You're Building yeah look we as you said we are relatively young exchange we've started about 6 months ago um with our launch uh we are a regulated exchange based and headquartered in Abu Dhabi in the adgm where we have uh MTF a trading license or exchange license plus custody um and we we add to that International license it's currently in the Bahamas we in Spain we go to India uh in order to be fully regulated and transparent wherever we go and uh that's the foundation of everything we do you guys have uh an extremely ambitious agenda I had the opportunity just to get to know a little bit more about you and what you're building and I from our our conversation this week I was like wow you guys guys really want to do it all so traditional crypto exchange SO trading you guys have uh a very deep breath of tokens that uh you are already active on the platform plus a number of others you guys are working to get uh turned on uh but there's a lot of other things you guys are doing too from staking and you've got some other products you guys are building so kind of tell us a little bit more just above and beyond being a trading platform how you're building a comprehensive off offering of services in the crypto space yeah you spot on I mean the the idea is to have a comprehensive offering for everything crypto and be as our slogan is the home of Krypto so that starts with everything around trading spot Futures OTC margin trading Etc but then we have the invest side of things so so everybody already has uh token or assets they can deploy them with us and and get a good return on it um so our Flagship product right now is is a BTC and ethern plans where we pay up to 10 and a half% depending on how how long the assets are committed and deployed but the idea really is is to have that comprehensive offering we we are growing more and more products in the in the Structured Products and the investment product side also in the for institutional investors and and um interested investors and then we have other products like crypto loans uh that are being launched probably in two months uh we'll have a crypto payment card um and and various others idea on the pipeline so you're right it's extremely busy the team is working very hard but we're trying the best we can to get a comprehensive an attractive offering out there well I know there'll be uh many announcements uh to come uh cuz I know you guys are uh bringing a number of extremely Innovative things to Market uh you mentioned spot Futures and then you mentioned staking so this is kind of an area where I think M2 has an opportunity to really stand out in the crypto exchange landscape of course in the you know there's only a handful of I think exchanges that we would consider are you know world renowned um you in the in the United States we have coinbase we have Kraken uh and some other smaller ones and there the uh on the staking side there's some legal questions uh here it seems like there's uh more legal Clarity there um but 10 10 and a half% yield on bitcoin um I don't know anywhere else you can get that kind of yield H H how are you doing it yeah so look we we are part it's two two angles we have about that we partially owned by Phoenix Group which is a publicly listed uh mining company and out of Abu Dhabi coin mining company yes so so part of that was we we put into mining uh which in the long run has has higher yields than that uh which we then use to pay that out to our customers of course that's only partially liquid since it's infrastructure so we pair that with our own in inhouse wealth management team uh that deploy the assets in in various Market neutral trading strategies such as cash and carry trades um funding rate Arbitrage uh and Market making activities which are low risk we don't take any any directional positions because obviously it has to be conservative strategy but it helps us generate the yields uh we offer uh to our customers and to answer that question because I kept kept asked that we think it is sustainable it's not just marketing money we spend on those budgets the intention is to to sustain that in the long run right absolutely um and on the I mean on the on the staking side of things in the last crypto winter a lot of the companies that didn't make it and where we had the biggest blowups was in that exact space yeah um so and one of the more interesting developments is really these defi protocols where you didn't have a centralized exchange or centralized intermediary doing this this activity where you had it in the decentralized space they were able to uh you know use Smart contracts and automatically make the most most uh efficient opportunities for those um you know investing in these products or uh or staking uh so do you guys think about that or ensuring the on on the risk side of things given that so on on the risk I mean is is actually well established practices from Financial Services to manage risk and and we we we made sure and when we when we hired the team when we put the team together we always made sure we combine young Innovative uh Crypton native uh um guys who drive that Innovation come up with really great ideas but we pair that with guys with long-standing financial services and risk management experience so we make sure in terms of Market risk concentration risk um um and operational risk also we we keep that to minimum so it's manageable even in a in a black Sor event or sharp Market downturn uh we'd still be able to to sustain what we what we commit to yeah well M2 absolutely I mean that is another distinguishing piece about the M2 exchange uh you yourself come from a more traditional Financial Services Consulting background you a very impressive distinguished career already and then coming into the crypto space uh more recently uh a little bit different than some of the other um crypto exchanges where it's run almost entirely by crypto native uh people so maybe let's talk about how you plan to compete so uh you guys have already have an extremely ambitious uh offering that you're looking to bring to Market a competitive offering uh you've got you know a team of uh people from the traditional Financial space coming in to to operate looking at this uh very clearly from legal compliance um when we look across the crypto exchange uh landscape I think there's a bit of a perception that there's kind of like two main players in in town you have uh coinbase which is the largest Exchange in the US and then you have binance who's kind of serving the rest of the world where does M2 where do you see M2 in the competitive landscape yeah look I mean both of them of of course are larger than us um I I think our differentiation is is two things one is uh it's fully compliant and and regulated from from the ground up uh so customers can trust that their assets are safe they're protected and there's um government or their supervision to everything we do so it's safe that that's that's a very important aspect especially after what happened the last couple of years yes um the the other I think different Chase is really the the market leading yields so if if you want to earn a high yield on your assets on a secure platform that's really where a sweet spot is right and how do you plan to compete what is how do you break into this space given that competitors EX existing trading platforms have been in operations for a number of years are you thinking of mergers Acquisitions you know what's the go to market strategy yeah I mean by and large I mean there's there's an angle of slow and steady to be honest as well I mean we we want to make sure we we don't rush and and and take on risk or or or mistakes uh we happy to take our time to to build up the size and the growth but it really comes down to Country by country region by region make sure we got the foundation in place the regulation it's it's safe and secure secure and then the rest is is is a mix of course of offering attractive products and again our our earn plans the BTC the eth plans are a flag offering that attracts a lot of attention um and of course you know it's an ongoing marketing effort as well which is why why we here why we we very lucky to have the opportunity to host the event as as one of the Highlight sponsors um that's really getting the message out there who we are and make ourselves known in the market yeah absolutely um well can you also tell us about you mentioned some of the you know jurisdiction to jurisdiction this is a global industry a global landscape uh I come from the United States we you saw um you I think early days the United States was an extremely exciting jurisdiction uh for the crypto space a lot of uh investment Innovation development happening there uh the US really hasn't done a great job of creating a legal environment that Fosters development and innovation Advanced Technologies within our borders so from the way I see it as the US's loss is the rest of the world's gain and we're here in Dubai you guys are a a UAE based uh company so can you talk a little bit about what countries you're currently operating in the the regions that you're looking to focus on where you see the biggest opportunity for growth for M2 but also the crypto markets overall yeah I mean to to your to your point to start with we we'd love to offer our services in the US but because of the reason you mentioned it's just there no regulatory Clarity uh people tend to get sued there's enforcement without clear rules so that's why ourselves as well as many others I talk to unfortunately have to stay out for now until there is that Clarity once it's there we happy to do that um in the meantime uh we we we offer our services in any non-sanctioned country so anywhere we we can legally uh and and and transparently offer those Services we will um our licenses for as as as mentioned are here um we are about in the final stages to offer um to file for a MAA license in out of Spain so that covers the European area uh we will move into various Asian countries as well always on the same pad and try to make sure we got the registrations and licenses in place and then offer in those countries is based on those services so you mentioned the US you don't have plans for the us today you need to see that legal Clarity that regulatory Clarity you don't want to get in trouble you want to do the right thing which I appreciate as someone that works directly with public policy makers it's super helpful when you have those good intentions when you have companies that want to do the right thing um but it's it's extremely unfortunate that today there are jurisdictions that aren't really interested in in achieving that goal and I I think that can have devastating impacts for you know the markets and the economies of of those jurisdictions um but what would it take what what does regulatory clarity mean to to you what exactly would you need to see in order to even consider offering your products to Americans like me I mean look I mean it it comes down to having a clear view of what kind of an asset crypto is is it is it a commodity is a security or is it is it a virtual asset in its own right uh and I guess between the various Regulators in the US that's that's still a debate there's no clear answer to that um and then what it takes to be able to offer offer trading for those assets so what what is the asset how's the asset defined and what's the required approval and mechanisms to be allowed to offer trading of those assets um and then obviously you know the the the the accompanying rules around onboarding kyc AML transparency Etc uh once those rules are clear and and a lot of other countries have those by the way I mean the uee has the oldest written regulation in the world out out of adgm we have Clarity in in Mika now in Europe um there's Clarity in Hong Kong uh in in Singapore and in many other jurisdictions uh once a clear regulation like that is is in place and a clear agreement of what a digital asset is we'd be more than happy to do that and I think that's what everybody I mean there's so many guys have I've talked to that that are just waiting for that there's a lot of uh projects also moving from the US to other jurisdictions including here and everybody is saying the same thing everybody's dying they they happen to comply but they can't you got to tell us we need Clarity right we don't want to find ourselves in in litigation and enforcement action it's just not it's not good for business it's not good for the government either it's not good for the markets it's not good for users consumers uh so it's it's completely understandable and you you kind of talked about is it you know the big question in the United States when we talk about regulatory Clarity is which digital assets are considered a security thus under the Securities and Exchange commission's jurisdiction and then which digital assets are defined as a commodity under the cftc's jurisdiction and that is one of the things is a little bit different about the United States versus a number of other countries in the world is we have a separate Futures regulator than uh then the Securities regulator and most countries it's all Consolidated and into one group but one of the things that's kind of unique to this region is digital assets are defined as their own definition so do you think and as we look around the world we'll need Global harmonization because if some countries are looking to fit digital assets into their existing regulatory Frameworks then you have other jurisdictions like here where they create a whole new framework what about global harmonization you want to operate globally not having the same requirements and every jurisdiction is going to create operational challenges how do you how do you think about that and who is best suited to do that Global harmonization yeah I think I think looking at it globally that's that's the way it's headed as as country by country develop their own regulation and Frameworks um it'll be harder if not impossible to just have one and the same offering globally um similar to what we see in traditional Financial Services there's even Global players like in HSBC or city uh will still have Regional flavors or local flavors for some of their offerings just because the regulatory requirements the legal requirements in each country is different and I think we'll see a similar development in crypto we'll have let's say Europe has has one common regulation now I'm sure the US whenever they ready will come up something else and then I look here in the UAE there there's already differences to what we have and what the European Union has uh and Singapore again has different flavors then we have overlaying things like stable coin regulation which is yet a whole different topic in in the whole mix right so I the reality is I think you need to be able to adapt to local requirements if you want to offer your services globally right and I I think that clearly highlights we're still in extremely early days for the digital asset space even though some of your competitors have been in oper a for over 10 years it it's we're still at the beginning so we've talked a lot about M2 I'd like to talk about you just give you an opportunity just to talk about why you're here so for our final question what does this industry mean to you what does the innovation of digital assets cryptocurrency blockchain technology why are you dedicating your career at this stage to this space what does it represent for you that's a good question yeah look I mean I've I've I've been working in in fintech and and and digital transformation all my life I was a consultant first then later on an IT service provider and then a banker for a while but always focused on using technology uh to provide better services and products to our customers uh and then when when obviously crypto and blockchain the web 3 space came around it's it's a game changer a step change to the ability to offer Innovation and better and more interesting services to customers and then you know when when you start reading up I think what happened to me is what what many of us can can uh correlate to is you know you start reading into it and you just fall into the rabbit hole and it's it's it's so endlessly fascinating and it it just doesn't stop it's it's the most exciting space I think uh in across many industry to be in terms of innovation in terms of Fascination in terms of excitement um and then when you when you start really emerging into into the into the uh into the space it's a great Community it's a great set of people coming together even potential competitors what what I'm experiencing is at the end of the day we all in it together to to bring the industry forward to work together to help each other and that sense of community and doing something together something great and and Innovative and revolutionary together I think that's a major driver for me yeah I think it's it's in our all everyone's best interest that we work together because ultimately as you said this is extremely uh disruptive technology it's gamechanging technology it's going to completely change how not only financial services operate but how we engage in all types of transactions as we move towards a global digital economy uh Stefan thank you so much uh for joining me today thanks for your uh support and leadership in the industry please join me and helping think Stefan thanks l peran