B2Broker Founder and CEO, Arthur Azizov, discusses the current state of the cryptocurrency market, overcoming obstacles affecting the development of the industry, and his plans for the future.
B2Broker is a leading provider of Forex, Cryptocurrency and CFD technology solutions. How would you best describe the current state of the cryptocurrency market?
The subject of cryptocurrency is perhaps not so actively discussed in the media these days as it was a couple of years back. The hype is over, many projects have shut down and a lot of people now think that cryptocurrencies are a tool for scammers.
However, the market clearly continues to develop. Exchanges are still setting up at a considerable rate and traditional brokers are starting to launch cryptocurrency trading. You сan also see new cryptocurrency payment systems, brokers and exchanges entering the market on a regular basis which indicates consistent market activity.
I am confident that we will see the continued development of cryptocurrencies. Even as far back as some of my earlier interviews several years ago, I was clear about where I believed the industry was going. Today, the major stock exchanges are centralised, fully adjustable and require KYC procedures while the leading platforms have launched margin trading.
From a trading point of view, cryptocurrencies are following in the same steps of the Forex market. In fact, their development is going at a higher speed, mainly due to the technologies that exist in the traditional financial markets. With ten years of experience in this industry, our team combines the best practices paralleled with blockchain technology.
Tell us about your cryptocurrency exchange B2BX. What made you decide to create your own exchange and what are its key features in comparison with other cryptocurrency platforms?
We launched B2BX in 2018 after completing an ICO in 2017. On the one hand, we wanted to take advantage of the hype surrounding crypto, and on the other, we realised that B2Broker clients would sooner or later want to gain access to cryptocurrency liquidity. Our predictions proved to be accurate. We were one of the first players in the market to provide cryptocurrency CFD (margin) and spot liquidity to brokerages and corporate clients.
A distinctive feature of B2BX is the large number of Fiat pairs (EUR & USD markets), top 10 liquid coins only, all popular stablecoins and large applications/orders at all levels of the pull for all instruments. Other features available to B2BX customers include access to a wide range of deposit and withdrawal methods, for example, instant SEPA payments within Europe and direct bank deposits/transfers on EUR and USD payments. In addition, B2BX is a licenced, reliable KYC-provider, offering operational customer support on a 24/7 basis.
How big is the demand for cryptocurrencies from institutional investors? There is a perception that with the advent of “institutions” the industry will reach a new level, creating a powerful impetus for development. Do you agree with this or do you think the role of corporate players is overestimated?
B2Broker is mainly focused on institutional and corporate clients and large financial institutions. More and more traditional financial institutions are asking us to connect margin and spot liquidity, and on the basis of our products, build their own solutions for their retail customers. For example, consider a Forex broker which has a traditional set of tools and 30,000 clients who are interested in trading bitcoin and other cryptocurrencies. In this case, the broker would connect crypto CFD liquidity with a leverage of 1:5 and then begin distribution to its clients, but with a leverage of 1:10, thereby responding to its customers’ requests and market trends.
The idea is that it is not the institutional clients themselves that bring their money to the market. Instead, they implement new tools so as to provide direct and easy access to their current clients. Of course, this is a bilateral process. With the arrival of institutional clients, cryptocurrencies have become available to the masses. We must also not forget the ‘old players’ who have a huge customer base, powerful infrastructure and vast experience – the more players that come into a new market, the more widespread cryptocurrency will become.
According to recent studies in 2018, the number of people who bought or used cryptocurrency doubled in comparison with the previous year, reaching 35 million. However, the percentage of people using or planning to buy cryptocurrency remains extremely low. What do you think prevents digital money from reaching higher levels? In your opinion, what is the main obstacle hindering the development of the industry and how do we overcome it?
Today, less than 1% of websites accept crypto payments. Once you are able to pay with cryptocurrency in stores, buy a coffee or pay for dinner, that is the time when you will be able to say that digital currencies are recognised globally. The fact is right now, cryptocurrencies are a way of investing, but there is the necessity to make them a real payment unit. I would like to add that for this purpose, we have developed a payment system called B2BinPay which is designed to make cryptocurrency payments convenient for both buyers and sellers.
A completely successful scenario will occur when the distributor and the manufacturer will be able to pay each other by way of cryptocurrency and when manufacturers can pay salaries and taxes in cryptocurrency. At this point, the circle will end and we will be able to talk about the mass use of cryptocurrencies.
However, we can see considerable changes occurring even today. Gram and Libra are just a kind of an ecosystem consisting of more than a billion people who will use e-wallets, coins and transfers – and they can do all this without banks.
The crypto community is divided into two almost irreconcilable camps. Some believe that cryptocurrency’s primary use is for making payments in stores whereas others believe the purpose is to accumulate it as a store of value. Can you comment on this?
As far as I am concerned, cryptocurrency has been a store of value for a long time, so I always keep in mind the investment aspect. I’m not going to give any predictions here but I am confident in the continued growth of bitcoin. Since stablecoins came along, I have been observing them with great interest.
What are your thoughts on the issue of cryptocurrency regulation? Will it not be “a straitjacket” for the industry, originating from the idea of independence from the establishment and centralised institutions of power?
Of course, cryptocurrencies have attracted a huge audience, thanks to the aspects of independence, decentralisation and anonymity surrounding them. Today, however, the reality is that people are willing to use custodian services to pay for the storage of digital assets. This is a strange paradox in that they have tried to escape from what they came into.
I am sure that when the issue of cryptocurrency regulation is resolved, there will consequently be a mass adoption of cryptocurrencies.
In 2017 you held a successful ICO. Do you think that this boom has passed or are we waiting for the second wave?
I am 100% certain that there will not be a new wave of ICOs. This format of investment attraction in crypto projects has been perceived as deceptive for a long time and the name itself has negative connotations.
IEOs (Initial Exchange Offering) have since come along which are looking more secure for investors. I’m not sure how long this trend will last but I think this format of raising funds will take root on trustworthy regulated exchanges. As for exchanges, they are another way of earning and attracting users.
Another trend is the STO (Security Token Offering). Nowadays, several companies in the US have received permission to issue and sell tokenised shares to unqualified investors. For obvious reasons, the range of projects that will be able to reach STO is very narrow.
Could you tell us more about your future plans? Will you launch new projects in the near future?
The focus of B2Broker is the B2B segment. We set up brokerages as well as providing liquidity and technology for businesses that are already up and running. We are engaged in development and attract customers from across the world. In parallel, we are developing B2BX crypto exchange, the advantages of which I have already spoken about.
Our other key project is B2BinPay which is a payment system that helps companies process major cryptocurrencies. If you want to expand payment methods in your business, you can connect B2BinPay and have the opportunity to accept at least 15 cryptocurrencies as payment. The system then converts funds which can be received into your company’s bank account the next day. It’s a simple solution with low fees and 24/7 support. B2BinPay is already used by around 150 merchants.
Our future plans are to continue to expand globally, including obtaining licences in other jurisdictions, issuing prepaid cards and launching a mobile application for wallets.