Bitcoin 2022 Exclusive: Tapping Traditional Finance Expertise For Crypto Innovation
Detroit-based Benzinga, a media and data provider bridging the gap between retail and institutional investors, sent its team to Miami, Florida April 6-9, for Bitcoin 2022.
During that time, Benzinga sought to recognize the innovation in digital assets, broadly, and spoke with founders, investors, and beyond.
The following is a conversation with Robert Zagotta, the CEO at Bitstamp USA, a cryptocurrency exchange. Check it out!
Benzinga: Hi Robert, it is an honor to meet with you. Care for an introduction?
Robert Zagotta: I’ve been at BitStamp for about seven months. I’m CEO of the Americas.
Prior to this, I was the chief commercial officer for Kraken for about three years. I led all of the growth side functions, globally.
Earlier, I was at the CME Group Inc (NASDAQ: CME), the Chicago Mercantile Exchange. I was a member of the leadership team there for over five years and worked with the company for ten years as an M&A advisor, first. Then, I was head of products and services for the company.
At CME, I oversaw our venture capital arm CME Ventures, too, when we started investing in crypto and blockchain companies in late 2014. We were able to do the Bitcoin futures project, and I was the executive sponsor for that.
Then, I met Jesse Powell and decided to join Kraken. Prior, I was the CEO and co-founder of a firm we grew and sold, and I was a strategy consultant.
Tell me more about your experiences at the CME.
As a traditional exchange guy, at the time, we invested in Digital Currency Group, Ripple (CRYPTO: XRP), and some early blockchain companies.
I started to understand this technology could conceivably disintermediate, in some respects, the CME Group business model, which is a thing of beauty.
It’s well-protected and a profitable business model, but it relies on central clearing. With a blockchain, you could do that a lot differently. In fact, in the crypto space, you have a real-time settlement.
As an executive, I started getting both excited about the possibilities and also concerned about the threat to the traditional business model. Then, you step back and think about financial services more broadly, and I became convinced that it’s revolutionary.
The actionable strategy for us, at CME, was a futures product. We did that, and it took a lot of effort, but we got the business comfortable with bitcoin.
From my standpoint, I wanted to be part of a company that was inventing this.
Also Read: This Country Is The Most Crypto-Friendly Nation In The World
Tell me about Bitstamp’s core products and services.
We’re the longest-running spot exchange. We were founded in 2011 and have a real track record. In Europe, we’re a household name, and it’s a very big business in Europe.
In the U.S., we’re on that path. They started the U.S. business in 2019, and it was primarily getting licenses for two years. Now we need to grow it.
Currently, the U.S. is about a third of the total company from a revenue standpoint. We think it’s the biggest growth opportunity, though. The thing we’re excited about is Bitstamp as a Service (BaaS).
It’s a white-label offering and there are so many fintech and financial services companies that are getting demand from their customers to enable exposure to crypto, but they’re realizing they can’t build that in a day.
We’ve got 10 years of experience, the right tech stack, and we’ve got the licenses.
That’s a major thrust for us in the U.S.
The primary difference between other exchanges?
We have an industrial-strength technology. That’s Nasdaq Inc (NASDAQ: NDAQ) technology.
It’s scalable and we have the best uptime in the business. Others regularly go down and people put up with it. The next wave of institutions that get involved are not going to put up with that, and I know. I was at the CME.
The next waves of adopters are not digital natives, and they’re going to need support also. We have a customer service regimen that’s human-focused.
At BItstamp, you get a person in an average of 22 seconds.
The other thing is compliance. We’re compliance forward. We were the first exchange to ever have a license in Europe, and we’re super proactive about working with regulators and not trying to drag our feet. We think that’s going to matter more to these next waves of adoption.
How do you maintain and grow your market share?
I think the bigger opportunities are in the next waves of adoption.
I want the hedge funds and the next million baby boomers or female investors, the people who are underserved in this world today.
Talk to me about fundraising and partnerships.
We’re in a different spot in that we’re private equity-owned.
From a fundraising standpoint, we don’t have significant needs.
We’re in the process of building out a multi-custody kind of solution. If an institution has a preference for Fidelity or Copper, you will be able to allow them to choose how they custody of their funds with us. That’s true of Nasdaq matching.
We’re trying to build a technology stack that’s based on best-of-breed existing technologies.
Noting, we did sign a major sponsorship deal with Immortals, a professional esports organization. There’s no denying the growth in esports and gaming, in general.
There’s an overlap in the audience between crypto users and gaming. And there are a lot of strategic linkages because games want to provide good services.
Crypto is a natural way for people to transact in games.
Talk about regulations.
Regulation. My current feeling is that the Executive Order [on Ensuring Responsible Development of Digital Assets] was a big help. It’s the groundwork for the regulatory agencies to work together, as well as research and study.
The president asked for thoughtful research and study across these agencies, so they can create a direction for rulemaking. I think that’s very smart.
At Bitstamp, we just want to follow the rules. That’s a DNA-level issue for us. We’re hoping for engagement and to work with regulators.
We’ve been at it for years and think we can bring perspective and knowledge.
What about challenges?
Focus. There are just so many opportunities.
I think derivatives are a really important marketplace for crypto, and it’s going to become more and more important. So, on our roadmap, we have a path to get to derivatives, globally. And, in the U.S., we think banking is quite interesting.
My belief is that every single financial services company today, whether they’re a fintech or traditional, will need answers for [crypto], and that’s where we come in.
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