Digital Asset Management Limited (DAM) is a digital assets servicing firm able to assist with cryptocurrency and tokenized asset custodianship, and are currently raising capital on Crowdcube UK. Their CEO, Sam Buxton, was born and raised in Gibraltar, and after spending years vested in the crypto space set up the company to specialise in digital asset custodianship, tapping into a gap in the market at the time, as well as providing broker-dealer services.
Mark Walker, Editorial Director for The Fintech Times, sat down with Sam to find out more about the company, their origins and the future of the cryptocurrency space.
Delving into the company’s background, Mark asked how the platform initially got up and running.
Sam said: “So quite honestly, there wasn’t a platform at the very beginning, we were using offline cold storage hardware devices and we had the private keys distributed in several highly secure locations within Gibraltar. It’s a bit gimmicky but “inside the rock of Gibraltar ” was the pitch at the time.”
The first 13 months after they had left their jobs to pursue their new company was all focused on going through the rigorous DLT license application. “There have been hundreds of applications since, but there are only 13 DLT licensed and regulated companies, the GSFC and Gibraltar have been highly selective on who they’ve brought on. The regulators were fantastic with us in the early days and really helped us get to where we needed to be.”
He added: “The other DLT licensed companies, to give you an idea of the quality of the applicants, were the likes of eToro X, CEX and BITSO, some of the biggest exchanges in their regions – and then there’s us. A startup with a really prestigious DLT license that as of a year and a half ago started becoming a profitable organisation.”
In terms of how they managed to get clients interested in the platform, Sam said that in the beginning, it was about custodianship, and then broker-dealer services was the second service going after high net worth individuals who want to invest 50k-100k into the space – “which was a very difficult pitch back in the day.”
A moment of enlightenment
Though starting off as brokers; focusing on education, getting people into the space and selling, Sam advised that they had a “moment of enlightenment” that changed the direction of the company to become focused on crypto payments.
“The moment of enlightenment was when we had a big organisation call us,” Sam explained. “It was a big entity, more than a thousand employees – when we picked up the phone we couldn’t believe what it was. They wanted to know if we could set them up with a wallet to receive Bitcoin for payments from counterparties that just preferred bitcoin.
“So my question was, oh hang on a second, you just want me to set up a wallet to receive this bitcoin for you, sell it and send you the Euros? Brilliant because that’s about all we can do. So we did that, and that was the point we were like, wow, this is payments. This isn’t wealth management, this is trying to bring on some fortune 500 companies that find it easier to receive payments and cryptocurrencies from international markets because payments can be challenging.”
DAM are currently in the middle of a pre-series A fundraise on Crowdcube for the next 2 weeks. Initially targeting a 1 million pound raise, they have overfunded and are aiming to get as close to 1.5 million as possible.
“We’ve had close to 600 investors, which is amazing and I’m super proud of that number. It’s amazing to think that our starting community is going to be close to 1000 investors, who are our future ambassadors – which is a success story in its own rights. About 50% of the money is going to be used as regulatory capital, and the other 50% is going to be used to grow our products, human resources and legal fees.”
Stablecoins and the crypto space
The conversation moved to stablecoins, highlighting the massive explosion of coins in the last few years. Sam argues that the increase in popularity of stablecoins takes away the argument that cryptocurrencies are no good for payments as a use case because of the volatility. This, combined with central bank digital currencies, has seen an evolution in the market from what we used to call cryptocurrencies, like Bitcoin and Ethereum, into a multitude of different types of digital currency.
“We’ve had an increase in stable coin trading,” said Sam, “To the point where it takes up about 70% of our business right now.
“Because we brand ourselves as a crypto payments company, we’re preparing for that shift and adoption by going for multiple licenses that facilitate traditional fiat management and movement, for example, e-money institutions licenses, payment licenses and even a banking license eventually. We want to build an infrastructure that really catches or prepares us for future regulation that might capture stable coins in traditional regulatory frameworks, staying close to the market trends.”
Competition with the Challenger Banks?
As the world’s challenger banks potentially look more into cryptocurrencies, Sam believes that DAM is definitely going to be competing with the challenger banking applications. However, when it comes to their niche, Sam advised that it wasn’t cryptocurrency or challenger banking services.
Sam said: “Our niche is going to be connectivity; connecting with people and the world in a unique and novel way.”
He added that this is initially going to be done by tracking people’s steps and spending activity, rewarding how healthy people are and how healthy their decisions are in life and connecting that with sustainability, like planting trees.
“I know that it sounds a bit out there,” he said. “But our MVP model for what I;ve just explained is as simple as this. We’re going to track your steps, if you hit 300,000 steps you get a notification and 1% more cashback for the next 30 days, or free trading for 30 days or an NFT airdrop or even planting trees. These are just some examples of rewards.
“There’s so much we can do within a smart finance ecosystem, but we really feel like we’re building a platform that can make a positive change. That’s what’s going to set us apart is connectivity.”
The future of Digital Currency
Finally, the conversation moved to look ahead at what the cryptocurrency space may look like in 2022.
“Out of the 5000 publicly listed companies around the world, there’s around 40-50 companies that hold bitcoin on their balance sheets. In 12 months time, I think there’s going to be 250 companies with crypto on the balance sheets. In two years time, there will be 500, in 5 years time there will be 1000. So this is just a metric that I look at which gives you a very black and white idea of how much institutional adoption there is in the space, and that institutional adoption is going to drive mass adoption.
“As we see hundreds of more companies owning crypto on their balance sheet and bringing credibility to the space, that’s all going to drive retail adoption.”
To find out more about DAMs Crowdcube capital raise, click here.