The Fintech Times sat down with Stephen Stonberg, the CEO of Bittrex Global, one of the world’s biggest blockchain digital asset trading platforms, to learn more about the implications of crypto and blockchain on financial inclusion.
Tell me about your role within the company?
I used to work in traditional finance, so in big banks or hedge funds, with a much more leveraged model of people running global financial service products but with a small team. Now, my day to day job includes dealing with regulators, as an example we obtained another license in Bermuda during the pandemic. Right now it’s an interesting window and as the business has boomed it’s got more challenging to manage the regulation.
What was the purpose of Bittrex Global when it was created?
The three founders, Bill Shihara, Richie Lai and Rami Kawach, who still own the whole company, all came from a very regulated tech-based background, places like Amazon, Blackberry and Microsoft. What that meant was they brought a very mature team with them, all with strong technology backgrounds.
We started off as a US company in 2014 highly focused on security. What has changed is that since then US regulation has lagged behind the rest of the world. The EU is well ahead with a more competitive advantage. For the US, there are rules but it’s unclear, and most of our clients at Bittrex are based out of the US, so our offices are now situated all over the country and we’re growing to meet the needs of clients.
Bittrex was one of the first crypto exchanges to provide real trading with Alt coins in the early days. It got eclipsed by other exchanges, but these haven’t been as focused on regulation, perhaps they haven’t understood the regulation like we do. It meant that we stopped growing and were more inwardly focussed, looking specifically at the regulation. However, competitors now seem to be retreating. Perhaps the message is that regulators will always catch up with you so I’m happy we made the right call.
In the current way we do business, what types of communities do you believe are underserved?
One out of three people are unbanked according to World Bank. That’s a huge number. Financial inclusion is a global problem too, and is even home-grown with 22% of Americans being underserved.
How does crypto and blockchain play into this you may ask? We wanted to create an institutional-grade platform as we knew high use cases were coming in the future, but also provide retail and liquidity to clients. Through mobile phone access, we have clients all over the world now trading on a very safe exchange like ours which you couldn’t do before. The combination of the technology and not having to go to banks that charge large fees has changed the landscape. And for those who are underserved, that’s really empowering.
In what ways can we increase financial inclusion?
At Bittrex we have huge benefits that are helping financial inclusion. For example, far more people have phones than bank accounts. To set up a traditional account you have to physically go to a bank, limited to that country and go through all the paperwork etc. We do all digital onboarding that you can complete from home, and that isn’t compromising security either, our digital onboarding is better than some of the traditional banks.
We also have no limits, You can have 0.01 bitcoin or a similar percentage. Buying fractional amounts opens up the market to so many more people – you don’t have to have a lot of money to invest, you can start with 10 dollars.
I see blockchain as the Amazon moment of financial services. The internet changed the front end but not the back office when it comes to banking. Why does it take 3 days to send a bank wire? And why do banks charge such huge fees? There is no reason why they should, and crypto and blockchain as a use case for this scenario is really going to change things
What do you think is a good example of financial services infrastructure?
Blockchain really is a tsunami, There’s no stopping it. Millennial millionaires have 25% of their assets in crypto, that’s huge. And with blockchain, there are different business models that allow people with no money to have access to diverse portfolios and that is so empowering.
It goes without saying that financial systems are very antiquated. And there seems to be no incentive to upgrade. This is where blockchain is just a better way of doing things, it’s really game-changing. Banks had the opportunity to take that on and they passed. Now that it’s getting more popular and proving to be more efficient, they’re now starting to dip their toes in but it’s too late.
Where do you think 2021 and beyond will take us? Do you agree that 2021 is the Year of Crypto?
Absolutely. Right now, it’s the decade of blockchain. Like how the 90s was for the internet, now is absolutely the year of crypto. There’s a ton of disruption, a lot of new players entering the market as well consolidation and divergence. Everyone is excited about NFTs particularly–and really it comes down to will the banks buy crypto companies or will crypto companies buy the banks?