All right, thank you everyone for sticking around. Um, we're going to speak indeed about something really interesting that is um, if you obtain a Mika license, right? We've been speaking a lot about that.
What does that really imply in terms of how you run your business? Like what are the advantages maybe? what are some things that our speakers are still struggling with, are observing amongst their clients. Long story short, we're going to speak about the actual real world implications. Um, I'm taking my seat in the meantime.
Um, so basically um I will ask our speakers in a second to briefly introduce themselves while when they are on stage. But yeah, actually may I ask if the gentleman can already uh join us maybe that would be great. Uh feel free to to put your hands together. Why not? Uh if you still have energy left after a whole day of uh of clapping.
We have um Stefan. Oh gosh. See nich. Yeah, I haven't been practicing your name amongst all the different names that I've been practicing. Sales director, CEO of Fireblocks, and Hassan Sutuala, chairman of panning.
Um and we'll be speaking as I said about uh the Mika authorization, right? and how it can imply arguably both regulatory credibility, but it can also pose arguably um a barrier to access to entry at least. And really the question is what happens business-wise, right, with businesses after they get this uh license. So we'll be speaking about how businesses can really turn this authorization into something unique, scalable and a value added probably um something that our uh guests can speak um quite tremendously about whether passporting also one of these really important words right delivers a unified European market not unimportantly um also operationally and technically very interesting as well like which part of the tech stack do you as the company still want to build yourself or perhaps you want to buy or acquire or partner, right? Which also was mentioned earlier today by um our speaker for instance from altcoins.
bg. And last but not least, how thread uh entering in the market is arguably or potentially changing the level playing field. Now given that we haven't done proper introductions, my name is Alex. I'm the founder and CEO of Trol Labs. We have for instance the networking app.
I would love to give the word briefly to our speakers as well. Maybe starting with you Hassan to introduce yourself briefly if you might.
Yeah, absolutely. I'm Hassan Sordala. Really glad to be here. Chairman of Penning Group uh based out of Copenhagen and Denmark. Michael licensed since January.
Congrats. My name is Stephan Sepherovich. That's that's the pronunciation. Um sales director of Fireblocks. Been there for around one year.
I'm I'm a Bitcoiner. Big fan for many years and I decided to turn that into my professional career. So I'm pres representing Fireblocks today at this event and very happy to be in Sophia.
Fantastic. Thank you for being so brief. Amazing. Um let me start actually am I correct to assume here that you guys or at least your companies were already somewhat intertwined or knew each other. Mika wayish like elaborate on that a little bit.
What what happened like between your companies? Oh, so so we've been uh sort of I was about to say spam, but punked by Fireblocks for the past three years and I believe we were in your CRM system as stop spamming us and uh now he finally made it to the stage next to me.
Yeah, now he
from DM and emails.
You can't escape anymore. You're here. [laughter]
No, no spamming.
Yes, I mean can definitely relate to that. I'm also spamming people on a daily basis. Uh not in the last place investors. We're actively fundraising by the way. Just mentioning it here very briefly.
Now more importantly um I want to start with asking you Asan you have obtained with panning your Mika authorization in Denmark just in January right of this year and you've passported your services seven of your services I believe across um the European Union and and and the area basically you probably put a lot of work in obtaining this license like one day you did have it um what changed the most business-wise and maybe how did you celebrate it if you did it at all like what what changed whilst you finally when you finally had it. [clears throat]
Yeah. So, I mean, so the most obvious thing that changed is the competitive landscape. We went from 3,000 plus uh crypto companies in in all across Europe down to 360ish if you count the banks who got register as uh so sort of like being permitted to offer crypto services. Well, 400 something. Um so the competitive landscape changed completely, but also sort of like the permission um the offerings that we could uh then sell to the retail clients.
We so penning comes from a hedgeim background. Um and then we always had the ambition to become full fully retail and with the permission to offer discretion in portfolio management you could do so. Um but another thing is that as a crypto company prea licensed pre-regulation you weren't sort of like able to do paid marketing but after the mika regulation and after getting licensed you were able to do paid marketing across all the major channels like Google, Meta, YouTube which is part of Google. Um, so that as a growth stack completely changed for us.
I see. I see. And like what would you think apart from the marketing and and all these other things like having now this license in your hand when you're at conference when you're speaking like what is really the biggest opportunity you see now having this license in your hand for panning? Like what do you notice when when you're speaking with people? So the the MIA cutoff date uh for everybody to get approved was January uh sorry June 30th.
Pre that everybody who was sort of like anticipating that they won't get the license and everybody who didn't get the license are sort of looking for partners who has the license either to be acquired. We acquired a wealth management platform back in uh May or partner up to offer or have an infrastructure to still service their clients. Um so those are the kind of conversations that we're having today. Another different type of conversation we're having is from investors who not only wants to come in with capital but also bring in sort of like noneu capital flow and user flow into sort of like the ecosystem.
Interesting. Interesting. So lots of implementations or implications. So you will I will get to you Stefan in a second but I do want to also ask a brief question about passporting and potential fragmentation that we see right because obviously one of Mika's inherent uh promises is that once um you are authorized you can provide your authorized services across um jurisdictions right really without the need to necessarily uh obtain a license in all the different uh jurisdictions out there. Um I want to ask you Hassan first but then I'll move to you Stefan like legally passporting does give you access to all these markets but access as we all know is not always enough like operationally and commercially where do in your opinion some national differences still create friction so you will
right so the so we be immediately passported to all the 27 EU countries and well 30 if you count the EA countries as well The biggest friction is obviously local language. So we start to translate our uh landing pages and web pages into their local language but also some it's not all EU countries that operate and do payments within uh with with euro. It's local currency. So for example, Poland is a country that we really penetrated or try to penetrate and they um settle in Polish lattis. So then we need to go go out and look for payment service providers who has that sort of exotic currency.
um and they would only offer it to you if you can then provide enough volume. So the friction is that you know it's it's kind of like the chicken and egg. Do you have the clients first and then you get uh the the the currency provided by your payment service provider or vice versa.
All right, thank you for that. Now Stefan, finally moving uh to you. May maybe you can summarize before answering my question just in one or two sentences for for some of the audience who don't know necessarily what Firebugs does um what you guys do but I I want to ask you the question first as well um you work with so many as Fireblocks with so many institutions all across Europe uh you're seeing Mika probably being um you know implemented all across um all across the uh EU um with all those thousands [laughter] it almost sounds promot emotional, but with all those thousands of customers and clients and banks and crypto companies that you serve, that you work with, right? Um, are we still effectively dealing with many different markets in your opinion or can you give an example maybe of what you see that goes wrong or is still fragmented?
Yes. So, thank you for the question. I think Asan mentioned something interesting that there are barriers into entering new markets as well. And by the way, at Fireblocks, we are the leading technology provider for digital assets. So we sit kind of a backbone of digital assets.
You can imagine us at the center of a spiderweb where people connect us to different providers, liquidity providers, exchanges, uh on offramp and we sit there as the main wallet management infrastructure for these companies. So if you want to start working in crypto, you have to have a wallet and you will probably come to us. And to maybe also answer your question um so based on discussions we have a customers we have around 100 ma licensed customers ourselves there is an initial intraarket consolidation. This means that companies will focus on the market share within their own countries and you mentioned you have we have different currencies within within Europe. So you have also very established uh exchanges in different countries that have been like historically been operating for many years.
So they will be looking at either absorbing some of the companies that didn't get the license their their volumes their customers um and actually consolidating their place within the within the market because they also have maybe the deepest liquidity pool in the local currency and they can use that also to attract banks and institutions saying like hey you can offer your customers Bitcoin and Ethereum the basic you know uh cryptocurrencies because we have the the biggest liquidity pools for these and that's an easy sale sale as well for the banks to pass on to their customers.
So I think this is going to happen first and there's also language barrier. There's also you know differences between country between countries and there's also an effort to maintain the license. It's not just you get the license and then you're good you know probably better than me. So there are different costs to be taken into account. So I think there will be a consolidation firms within the markets because of historical reasons because of competitive advantage and then we probably going to see at some point uh further down the road like a more consolidation across markets as well.
Yeah. Okay. Fantastic. So with an eye on the time I'm actually going to cut some of my own comments that I that I had and that I had prepared. Um I will just get you know quite uh on point very Dutch uh here.
So I have another question for you uh Stefan. Yes.
Um almost a little bit Shakespearean to to be or not to be in this case to to build or not to build or to buy or not to buy. Um if you are potentially a newly authorized uh CASP, right, or maybe even a traditional bank that is entering into the digital asset space. Um, in your opinion, personal opinion or company opinion, like which parts of the digital asset stack still make sense to build internally or you should arguably outsource with specialist providers such as yourself?
Yeah. So, this is a good question and I will answer based on my own experience, what I hear from customers and prospects. So I personally would say just build your USB, build your product user experience, make sure you're memorable, make sure you stand out from competition. Anything else can be outsourced, right? So you also have to take into account that sometimes you build something that you need to maintain.
So what are the running costs for what you what you have to build? Are they going to eat into your core product? Do you have to take people away from the core product and actually work on the maintenance of these things? An example I give is duck 8. Now it's basically a hot topic in the market because you have to start collecting data.
You have to start reporting next year. But you have to dedicate at least two three people from different departments to build this and maintain this. Especially if you enter a new market, there's going to be some different nuances from market to market. So I use personally relay to buy Bitcoin. They're Bitcoin only.
their focus really shows in their product and I say build your moat your product core product and then outsource everything else to the to whoever you find that is a leader in the market there's also benefit in partnering with larger institutions maybe like ourselves infrastructure that you can get access to basically the remainder of the of the companies that you might be interested in on offramp liquidity etc so we can give you introductions to them or these companies can give introductions to them and then you can cut down the time to research these companies or vet these companies yourselves. So once you enter and start outsourcing, you get basically you enter the web of these digital asset infrastructure companies and you can get access to them much quicker. So I think it's a lot of leverage in outsourcing these things
other than your core product of course. [laughter]
Okay. Thank you. Thank you very much. And Hassan, how is that for you uh at Penning and your company? like uh are there certain capabilities of responsibilities that you really believe that you need to to to build or own internally?
Maybe something that really stands out.
Yeah. So we when we started off we always had that notion of owning everything ourselves. We didn't want to rely on any third parties. We did in terms of payment service providers because we don't have the PI license. Uh but in today's day and age sort of like the era of Mika everything that has to do with compliance we own it.
Um, our biggest team at Penning currently is the compliance department. Um, the headcount grew like 300% since we got Micah license. So, we strongly believe that that should never be replaced by AI and always be uh owned internally. So, we didn't we don't use any external law firms for sort of like legal opinions because that's going to be biased. They're not going to know your operations fully like yourself do.
Actually, a fun fact is that we didn't use any lawyers when we applied for a Michael license. who did it completely without any lawyers because nobody had any sort of like historic data or any experience about how this works. We ourselves know our companies the best. So there's no lawyer that can come from sort of like outside and sort of like explain us how this is supposed to be done. And the FSA actually really like that which might be why we became the first cryptonator company in Denmark to be approved.
Um yeah I don't know does that answer your question?
It does. It does. And it's funny because uh I think that we often say in life, you know, many many things are unsure apart from death, tax, and arguably also lawyers that you need during the Micah application. But apparently you beat that odds. So congratulations um on that.
Now uh I would love to also ask um Stefan actually um a question right about with an eye on the time. Thy financial institutions are obviously building. We've been hearing all a lot about that today and yesterday. All sorts of digital assets uh offerings right now. Um while infrastructure providers such as Fireblocks uh work with both cryptonative companies and banks and the likes.
Now I would love to ask you Stefan like you said that this intersection work with so many of those companies out there. Maybe just from the perspective of the crypto companies that you are in touch with um can you give an example or or or maybe how a crypto company that is licensed is really positioning themselves very well to attract money or credibility or like what what do you see in the field in terms of crypto companies being active?
Yeah, I think this is a very valuable point because you get the license not to survive, you want to get the license to thrive. So the next step is you want to attract capital, you want to attract funds, banks, institutions, pension funds, etc. So to do that, the buzz word right now is custody as a service. You have the license, you're a custodian, you want to present yourself in a certain way to these big institutions, but it's not enough to say, "Oh, look, um, I have the license. I have the biggest liquidity pool, whatever."
Because these banks have very specific requirements. They're very riskaverse. So you need to be able to provide out of the box and present yourself features that are strictly related to them. So you have to go in and say okay this is your segregated workspace. This is your cold storage infrastructure.
Uh you can actually trade without using your funds using something we call off exchange. Uh here's your premium insurance we can discuss with the broker specifically to your I don't know users to your transactions to these exchanges. and here's your business continu continuity the DRS dis disaster recovery system uh partners that we work with so I present you with the whole package and then I can be taken serious as well the added onon feature is that you can include ourselves firebox in these conversations because we're the technical knowhow so you can come in create basically a triangle where you are maybe a small company like 15 20 people usually they get the license uh but you can show up at the table with the big players is talking like very important discussions and showing like I have the package to start working with you which means you know you have much higher chances of converting this and then of course taking more market share from your own market.
Okay, that is on point I would say with an eye on the time I'm going to um pose a quick question once again to Hassan. Um, Penning arguably sits at a really interesting position, right, as a regulated crypto broker, but now also as a portfolio management provider as more and more traditional institutions are entering in in in the space. As I said before, what can a crypton native and and regulated business like yourself really offer that is, you know, a lot different or very difficult for banks? Like in other words, how do you stand out?
Sure. So what one thing that we bring is experience and we bring a different sentiment that uh than banks do. So when penning started off 5 years ago, we were banking with a tier one bank and then we got unbanked 3 years later because they said their excuse was they didn't understand what we were doing. Um and fast forward to post Micah, that same set bank, no, you know, I'm not going to mention any names, but they in the modern day banking history, they're known for the biggest uh moneyaundering scandal. You can make your guesses.
Um they then came out and said we still have a negative sentiment towards uh crypto assets but now that everybody's getting micro licensed we now want to and then they register to offer crypto uh services as well offering ETPs and ETFs which is basically you know just uh mirroring the Bitcoin prices. So what native crypto companies like us can offer is regulated, safe, compliant, um exotic sort of like products uh which banks won't offer
and on top of that a different uh sort of sentiment and experience.
Fantastic. Thank you very much. I much appreciate uh your your honesty of both of you actually. Um with an eye on the time gentlemen, we just have like one or two minutes left. Arguably, if we think about all the regulation that's being put in place, um if we if we draw the line and really look at the level playing field, the costs, uh the opportunity costs perhaps your your your maybe your your your increased uh competitive position.
Um is it really like worth it? and and and how does it the the all the Mika um regulation, how does it position Europe in regards to the rest of the world? Like are we better off or have you ever considered going elsewhere? Um maybe really briefly both of you. I I had to summarize like a massive long question, but talk to us about Europe, your position, and are we better off, yes or not, with all of this business-wise as well.
So quick quick answer is that yes because now we have a regulatory framework where users are put first. No because it does hinder innovation a little bit for each time when we build our road map we have to double check our micro sort of framework and see are we allowed to do so. Um
and for you Stefan
from my side I would say I would say it's more consolidation with this first version of of Mika uh consolidating the market understanding who can do what how people respond to regulation what is the feedback how can we improve um I mentioned earlier there's a lot of you know buying mergin acquisitions as well so once this has all been defined u there will be some new activities going on maybe more democratization but the running cost of applying for mica you better than me and your company. That's in my opinion still very high. That's hinders a lot of companies from entering. We have customers who had to double triple the headcount to apply for Mika or even raise funds basically to apply for it. So that's something that regulators can look at and be like we need to cut it down because there's so much more talent available that can benefit that we can benefit from.
So that would be my piece of feedback actually.
Yeah. Fantastic. So massive yeah some costs uh needs for liquidity. Uh, I can only say we're on the time, gentlemen. Thank you so much.
I hope to see many of you. Yeah, thank you for the applause. I appreciate it. Hope to see many of you tonight during the side events or after party and get some more liquidity. And yeah, let me hand over um to to my colleague uh moderator for for whatever is up next.
Thank
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