Vasja Zupan on regulated crypto trading at Matrix

0:01i'm ashton addison from block west capital for investmentpitch media and the Crypto Coin Show and today on blockchain interviews we have vasya zuppin president of matrix exchange fascia welcome to the show and thank you for taking the time hi hi thank you for inviting us and inviting me to the interview so thanks you're very welcome the regulatory environment and the whole

0:23environment of centralized exchanges and cryptocurrency and decentralized exchanges is rapidly changing especially different countries around the world having different regulations i'm really excited to dive into matrix today i would love for you to kick off our conversation with a high level overview of what you and your team are working on at matrix and then we'll dive

0:43into the details yeah great let me give you a little bit of background about matrix and i do agree with you to start with that the regulatory environment is changing rapidly which is really good for the industry unfortunately there's also a lot of noise involved which we can discuss at later stage but in terms of matrix we are a regulated cryptocurrency exchange

1:05to make it in kind of plain language in a as a matter of fact we are regulated by fsra of adgm we have a mtf some multilateral trading facility license and custodial license in adgm in abu dhabi adjm is a free zone with their own regulation in back in 2018 they were the first to introduce a crypto specific or virtual asset specific regulatory framework which

1:33they kind of they launched in 2018 and matrix was the first to launch product and to go live to start accepting customers and trade under this license in mid of last year approximately so what we are we are a cryptocurrency virtual asset exchange we are targeting more professional more institutional high net individual customers so we are not not directly

1:59addressing retail although we can accept retail customers as well so we do offer both but our focus is in on the institutional side currently we are offering the first four approved products from from the fsra side but we are also the first to add additional product just a couple of weeks ago we introduced two more cryptocurrencies two more virtual assets

2:24to our platform and we are in the process of adding additional 30 which would be all the first under adjm in well in the ngm under fsra's supervision and just to put it in the context compared to some other exchanges even the regulated ones we have a really detailed and in-depth process prescribed by the regulator required by the regulator to add any new product so

2:50we need to make an assessment of the product there are certain criteria which they prescribed in the regulation that needs to be addressed on top of that they would do it themselves as well they would go as far as calling the teams where there are some teams involved in launching the product and they also ask for independent third-party verification of the product in terms

3:10of volumes and all the kind of concentration of assets and so on and so forth so much really a rigorous process to go through definitely and it's a good thing for the industry you know because before it seemed like the wild west and it's hard to tell if the volumes are real or you know if you're trading in the right exchange and to make sure that

3:33you're following all the regulations i think brings a lot of a sense of security and safety for those traders and you also mentioned there about targeting more institutional investors high net worth investors i'd love to dive a little bit more deeper into the exchange and just talk about the different products and you mentioned there you know you

3:56have to sort of verify go through a lot of different steps when you're introducing new products often people think exchange okay i can do spot trading or i might be able to do some kind of futures or derivatives or something like that there's also nfts and exchanges seem to be adding more and more products where is matrix at with the main products that they're delivering right

4:16now yeah that's what you are saying about security and safety of the customers is absolutely right the process that we go through just kind of enables us to offer a more secure more controlled environment but that also comes at the cost compared to like let's say non-regulated exchanges that control anything on the market at any time but there is much less of a kind of

4:41guarantee or much less of certainty about the product itself about volumes and so on what you said currently we are offering a plain simple banina spot exchange so spot trading we are already started working with the regulator to in the future to introduce derivatives futures and options we are working in both directions for both of those products because we believe those

5:04are needed for a for a professional trader again in a super regulated super secure super controlled environment we are also offering currently like just as i said like just six six assets from bitcoin to litecoin as xrp and so on you're kind of the most expected top of the line products extending those will be next step and in coming weeks we will be also

5:29introducing the first in this regulated environment the otc kind of rfq product where the customers will be able to trade bigger bigger blocks in single trades will be connected to the biggest liquidity providers globally up to three to five of them and by presenting the best quote for request will enable those customers to efficiently and safely

5:55trade bigger volumes that's important to us because as we are targeting more professional high net individual institutional clients that's the product that they need and especially in the region where we operate so in uae and middle east there's a lot of well there's a lot of investors and they need to do that much more than just kind of small

6:16high and high frequency trading definitely and great point about the block trading as well you know when i see retail traders looking at coins they often just go to the markets and look at you know which exchange has the highest volume and you know volume you know most of the time means there's more liquidity but of course with unregulated changes

6:39volume doesn't always equate to that if there's wash trading or other you know different techniques going on to increase the volume do you see volume as a very important factor for the spot trading on matrix yes i do there's some kind of noise in the background is that okay it stopped sorry yeah the volume is definitely important liquidity by itself is

7:06important but the volume itself doesn't tell you the quality of liquidity so it's much more important to look at the structure of the market the structure of the order book in our case we have professional market makers on board currently providing liquidity we are adding more as we are adding more products to increase the depth and increase the quality of

7:28of the of liquidity as said before big blocks are meant to frictionless get best possible price for the trade that you want to do in bigger bigger chunks which also enables investors who are just kind of just want to dedicate some part of their portfolio into into virtual assets they are not necessarily that common or that cost accustomed to sleep each and all these things they

7:54can use big block trades to get the best price that they could get for the trade they want to do but besides volumes there's another like talking about volumes there's of course in the past there was a lot of talks of fake volumes there was a lot of talks of spoofing and so on so it's like there's a lot of activity on the market which in

8:15the let's say traditional regulated environments were not discussed yet so much because the regulators in europe and u.s as far as i'm kind of familiar with in crypto space they were mostly focusing on aml and kyc aspects of the of the regulation here we have a different situation the regulator is plugged into our market directly with their market

8:38surveillance tools so they are monitoring the market 24 7 for any potential market abuse and of course any fake volume attempt would be on top of the list of alerts popping up immediately we wouldn't be a we would be able to detect that by our own tools the regulator would detect it as well and we'll we'll we would kind of course prevent it by

9:01whatever needs to be done with the with the involved clients on non-regulated exchanges because there's huge risk for being treated unfairly by other traders or by exchange itself because all of them have their own trading desks and you don't really know what's happening in the background and this is something which environment as we have enables

9:24to protect customer against and this also opens the doors to big investment investors to investment funds to institutions to get involved because they just cannot afford to place a hundred million dollars into a trade where they don't really know who's on the other side when they don't really know how the price is being shaped who is shaping

9:47the price in the position who who knows who who is aware of the of the margin points and spot and so on so this is this is these are the things that we as a like super regulated environment enables to do and i'm i'm super bullish about that because i know in the of course in the beginning the retail was necessary to get in for the for the

10:11first innovation for rapid development all this volatility even speculation kind of pushed the development and push push the market ahead but to get it really mainstream and to bring like proper institutional money on the table which i think is still not there is still only slowly testing and coming you need environment as matrix in order to be to enable the market to go to grow

10:34further i'm sure it will great point basica and you know we've talked a lot about the regulation and about the zone obviously having a regulated exchange is a must-have green check now but with matrix also being in you know abu dhabi and having these special economic zones and the uae seems to be an area that many crypto companies are moving towards maybe you can talk about

10:59you know that area and moving forward with matrix growing and you know just the uae area in general for crypto regulations how do you see the crypto world you know sort of growing with that area over the next year and years to come yeah i fully support i'm really happy that dubai is also introducing their own kind of framework also on the central

11:25government level not just on the free zones which is which is really encouraging because this will further enable the industry to grow so i'm i'm i'm more in favor of competition and this kind of growth because everyone will benefit for that i think there is enough space for multiple players not just for one and i'm sure the virtual assets will

11:46play in a significantly important role in the region because of all of the economic development that's going on all of the financial development and services in the in the region it totally makes sense to bring that on board as well but one thing we also need to be aware of that currently there is a there's quite a lot of noise which kind of in prevents

12:08us to really see what is going on in the background just for the announcement that we've seen in recent weeks about people having some kind of in-principle approvals and people having licenses in dubai actually the dubai license the world trade center license is not existing yet the regulatory the regulation is not published yet it doesn't exist so it

12:32will take quite a lot of time before we all get there like just for you for the illustration the matrix needed two years more than two years to get from in principle approval where someone says okay fine you can go ahead but then they give you this kind of list like hundreds of points of that you need to fulfill and then you can go live so that's a

12:52big big big distinction and the other thing which i always recommend especially to retail investors who are not familiar with the industry be careful with whom you are actually signing the contract when you are signing up on the platform where someone might might claim oh i'm regulated in dubai or i'm regulating abu dhabi but then when you're on board you're

13:12actually on boarding on some kind of i don't know iceland island somewhere in either seychelles or something else some totally different entity and that doesn't give the same security as the regulated entity it's just if the name is the same it doesn't mean it's the same thing this is something that i've noticed is been around a lot lately and unfortunately the

13:36especially retail investors are are confused and sometimes deceived in the way that it's presented definitely and great point vasya you're right about the regulation there and that they often set up multiple entities and you really need to double check because that your funds are on the line if you're gonna deposit them in an exchange to be traded and share the private

13:58keys now you know we talked a lot about the regulation there and how the economic growth is just exploding in the uae region i'm curious if you can also touch on you know with all this growth needs to also come sustainability and hopefully green initiatives and other ways to give back and make sure that we're not you know taking too much that we can't give back as well is that

14:22something that major matrix is a part of and you know the regulatory area in this region yeah we are closely looking at this space as well and i'm i myself i'm i'm i'm great supporter of sustainability i was like just for illustration i first came across bitcoin in like i think was 2012-11 sometimes that time i was looking at the other white paper and everything and i thought

14:48at the time oh my god this is consuming so much so much energy this is not good so i left it aside for a couple of years unfortunately before returning then in 2014 to do the industry back in a different kind of product project but honestly i do believe that in this space currently we see positive development for bitcoin for crypto in general even proof of work

15:13Products to be to be green environmentally kind of step to work in a sustainable approach sustainable manner just to give you an example like uae has a has a huge demand for electricity but only for part of the year like it's super hot you have 45 degrees humid so there is no way to survive without ac you need air condition on but only for the part of

15:40the year in the summer in the winter it's actually quite chilly sometimes so you switch it off so you have this big spike big differences also day and night there's a big difference but if you want to produce this kind of energy you need i don't know nuclear power in uae i think they just switched on the second generator the reactor some weeks ago so the another

16:03plant and in those cases you cannot just dial it switch it on and off anytime you want it's much more sustainable it's much more economic to just keep it running you cannot just switch it off if there's a day which is cooler and there's less air conditioning on so in that way economically what you can do you can for example invest that kind of

16:25surplus of energy into mining and at the end of the day bitcoin is energy like value is energy this is like that's kind of the equivalent that we can take and if you can store this energy in the form of bitcoin that's also beneficial and you are not necessarily doing anything bad because otherwise the same electricity would be produced but it

16:48just wouldn't be used it would be basically dumped immediately yeah great story there dacia and that was my first thought was mining bitcoin in a sustainable and renewable way and i feel like more countries are going to do the same so i'm looking forward to seeing how that progresses now we don't have a lot of time left but i want to talk about the next steps

17:09moving forward for matrix you know there's so many different things to continue to do as you continue to grow the exchange can you talk a little bit about you know part of the road map for the next six months and what you're looking to bring out on the exchange yeah so we are focusing first on the basics to catch up with additional virtual assets so more products more

17:32more pairs derivatives will come towards the end of the year and then we are also started to look at nfts so nfts are one thing which the regulator has just published a consultation paper a couple of weeks ago and those are covered so we'll be able to produ to develop a platform for those for that kind of product we are also looking at etfs because we see demand in the

17:58region we see demand globally for that is again talking about the institutional investors who can who can for whom depending on the mandate they have the their kind of white paper of the of the found how the this is governed sometimes etf is easier to enter into new asset class than going straight to the spot trading and even holding it yourself with keys so us

18:26having already this spot platform of course and the custard the combination of those expanding to these new products this is the way to go i'm great i'm looking forward to that and for the viewers to start doing the spot trading and to follow along with these announcements as you mentioned as they roll out on matrix what is the best way for them to learn

18:47more and get involved in the exchange yeah so obviously we have our website matrix.co we have also the social media places where we are regularly publishing blogs you can you can find us on twitter and on linkedin specifically because again because we are focusing to a more institutional professional customer we are focusing on linkedin we are focusing

19:11on twitter and we are kind of not diluting on other social media but we are regularly posting blogs with all kind of interesting information from sustainability to market trends great thank you so much vasya i will leave those links in the description box below all the best with everything matrix moving forward and let's follow up in the near future

19:31thank you