Eugen Kuzin, the head of marketing & PR at CoinsPaid, reflects on his remarkable journey. From the narrow miss of a Guinness World Record achievement to his pivotal role at CoinsPaid, he has transformed into a quintessential leader.
Indeed, with his help, the marketing team has evolved into a versatile and cohesive unit, epitomising excellence in every facet of its operations.
There’s no doubt that a well-established marketing department is central to any successful FinTech. Through meticulous role distribution, process optimisation, and the strategic hiring of essential talents, the department emerges as one of the driving forces for the company’s sustained growth, influencing nearly every facet of the organisation.
This comprehensive impact, however, is impossible without the guiding hand of a genuine leader who not only creates the team but also steers it towards achieving business objectives. In the fast-paced, globalised work environment, where employees are scattered all over the world and personal connections are almost absent, fostering a vibrant and positive team atmosphere is no less important. This dynamic setting not only sustains productivity but also fuels innovation and collaboration, contributing indispensably to the organisation’s success.
Eugen Kuzin, head of marketing & PR at CoinsPaid, a crypto payment ecosystem for businesses, shares his experience in this interview. The company operates internationally, employing over 240 people worldwide, and its list of professional awards, including the Best Cryptocurrency Payment Gateway of 2023 by Forbes, continues to grow with enviable regularity.
Eugen, you once aimed for a Guinness World Record with the largest online marketing conference, but it didn’t succeed. Could you share the challenges of that experience and its impact on you?
EK: It took me a year of preparation, but the challenge was inspiring. Long ago, while studying business and marketing at university, I stumbled upon an online course on step-by-step website creation. It captivated me so much that I manually created three websites in the following weeks.
However, I realised there were no visitors, and I needed to learn digital promotion. That’s how I started learning digital marketing, including search engine promotion, social media marketing, and various paid advertising options. While still at university, I co-founded two educational projects consisting of marketing courses, webinars, and conferences. It was during this period that the idea of hosting the world’s biggest online marketing conference emerged, but I quickly realised my skills were not yet sufficient for such an ambitious initiative.
Five years passed, and my professional journey gave me extensive experience in marketing and managing my own business. The turning point came when I attended a live conference in Minsk. The energy of the 5,000-strong audience during the opening ceremony reignited my dream of creating a great online marketing conference. At that time, I was working as the chief marketing officer for the “Anytime car-sharing” company, but a month later, I quit and submitted an application to the Guinness Book of World Records.
As far as I know, together with the project’s preparation, you fulfilled your long-standing dream of spending winter in warm Asia.
EK: Yes, I had two options – building a team and getting everything done quickly, or embracing a solitary project in warm Asia for an extended period. I was limited in budget and could choose only one option – I chose the latter. In total, I spent six months travelling through Thailand, Indonesia, Malaysia, and Singapore, simultaneously developing my new business. The event was planned for March 2020 and coincided with the boom in online projects due to COVID-19 restrictions.
It was a week-long conference where each day was dedicated to a particular marketing direction, featuring a total of 56 speakers, including notable figures like Alexandra Mitroshina, Igor Mann, Denis Kaplunov, and others. As a result, the event gathered over 55,000 registrations with 22,700 unique online attendees, which was definitely a record for online conferences, especially Russian-speaking ones focused on marketing topics.
I submitted all the proofs to the Guinness Book of World Records according to their requirements, but my documentation fell short, as they said. Attempts to dispute, discuss, and defend my rights faced communication challenges, leading me to give up after three months. Perhaps, if I had submitted a paid application, the outcome might have been different. Nevertheless, I successfully achieved my personal goal – hosting the biggest online marketing conference in the world.
This experience sharpened my problem-solving and communication skills, significantly fostering my resilience to stress. Importantly, Marketing Week is not only still alive but thrives as one of the best free online marketing events in the CIS. Currently, the project is being led by my partners, as my workload at CoinsPaid no longer allows me to continue running it.
Could you share a bit about how your journey in blockchain and crypto began and what led you to join CoinsPaid?
EK: My crypto journey began in 2017 when I started buying Bitcoin and altcoins. Unfortunately, cryptocurrency prices took a downturn, and I felt the sting of choosing the wrong investments. I shifted my focus to the stock market for a while. In 2020, my interest in crypto was reignited, this time in the realm of trading rather than investment. To be honest, I still continue to trade and learn to do it consistently and profitably.
In 2021, CoinsPaid’s recruiter reached out to me unexpectedly, even though I wasn’t actively seeking a job as I had my own business. They informed me that the Head of Marketing was interested in talking to me. Initially, I declined, but later agreed to the interview when I learned about the company’s involvement in crypto. The conversation with Dmitry (the former head of the Marketing department) clicked right from the start. We spent an hour and a half discussing marketing, crypto, the industry as a whole, and various other topics. Both the company and Dmitry piqued my interest, and I decided to transition my online events business to a partner and join CoinsPaid.
You joined the company at a stage when there were just three people in the marketing department. Since then the in-house team has grown to 18 people. Could you provide some insights into your initial impressions of CoinsPaid and how the marketing team transformed since then?
EK: That’s true. When I joined, the Marketing department consisted of only three employees: a graphic designer, an SMM manager, and Dmitry himself, in addition to a marketing agency working as a contractor.
Initially, I handled a variety of low-level tasks, drawing on my relevant experience. However, it became apparent that things could be done more efficiently with the right team members. Simultaneously, I realised that the workflow needed significant refinement. So, I had a conversation with Dmitry and expressed my desire to leave the company if, by the end of the three-month probation period, we didn’t make changes. I was hired for international marketing, not to be a one-person band.
We sat down to negotiate future changes and improvements aimed at establishing a proper marketing department. We both agreed on the necessity of building a well-organised in-house team with clearly defined responsibilities and began the hiring process. Consequently, I chose to continue with the company. I appreciate Dmitry for listening to my concerns, agreeing that changes were necessary, and thus creating the conditions that encouraged me to stay.
Over time, significant changes occurred in the structure of the marketing department. Dmitry left the company, and I assumed his role. The team expanded to 18 people in less than two years. We also decided to minimise reliance on external contractors and now handle most tasks internally. Finding external professionals who meet our standards is challenging, given potential cost issues and concerns about quality. Contractors often work with multiple clients, which prevents them from fully immersing themselves in the specifics of our tasks, ultimately affecting the quality of results.
What guidance would you offer to a manager seeking to recruit new team members and establish a well-rounded team? Are there typical mistakes that managers should be mindful of in such scenarios?
EK: First, a manager should have a clear understanding of the scope of work the person is needed for. Without a clear vision, both the manager and the new employee could become lost in the process.
Second, I pay close attention to an applicant’s personality. It is extremely important for me to see energy and a passion for self-development. Hard skills can be developed, and new knowledge acquired, but soft skills are much harder to change and require more time.
I also prefer to hire middle or senior specialists who already possess good knowledge and experience. The combination of a fresh perspective, high energy, and wide experience brings tremendous potential, shortens the onboarding process, and eliminates the need for micromanagement.
Third, all managers need to learn when to say “Goodbye.” Regardless of how many interviews or test assignments have been conducted, time is always needed to determine if both the company and the employee are content in the relationship. In my experience, it is more effective to replace a poorly competent or motivated person than to try to pull them up.
Okay, that sounds great. Could you perhaps suggest either fiction or professional books to people who might be dealing with the challenge of establishing a marketing department from scratch?
EK: Well, that’s a tricky question as it greatly depends on the type of business, marketing goals, and other factors.
For individuals with little to no knowledge or experience in marketing, I recommend reading books by Jack Trout and Al Ries. While some of their content may seem a bit dated in today’s rapidly changing landscape, their books are filled with examples from well-known brands that I found fascinating to study. These books are not just academic texts; they are engaging business literature accessible to a wide audience.
For those who are looking to study marketing in depth, Philip Kotler’s works are a must-read. His books serve as the foundation for any aspiring marketer and are commonly used in university courses. I also admire Seth Godin’s writings and strongly recommend reading Daniel Kahneman. While Kahneman is not a marketer, his insights into how people make decisions are incredibly valuable for marketers. Behavioural psychology is indeed an area of great interest for effective marketers.
What aspects of CoinsPaid’s corporate culture do you believe set it apart from other industry players?
EK: The infectious energy of our CEOs, Max and Pavel, lies at the heart of the company’s distinctive culture. Max’s passion creates a workplace that transcends the ordinary, emphasising both professional excellence and human connection. His visionary leadership inspires the entire team, fostering a sense of psychological ease and making CoinsPaid a place where everyone feels valued and motivated. This shared people-centric commitment ensures alignment, creating a cohesive workplace.
Moreover, Max’s leadership inspires a unique culture that ripples through the organisation, fostering a shared purpose and enthusiasm among team members. CoinsPaid is more than just a workplace; it’s a community where everyone is part of a collective journey. This vibrant atmosphere sets us apart.
Pavel, our co-CEO, complements this dynamic. With extensive financial market knowledge and exceptional strategic thinking, Pavel excels in setting clear tasks and goals, ensuring consistent team success, especially in challenging times. Pavel’s resilience plays a pivotal role in mobilising the team and swiftly resolving problems.
Together, Max and Pavel form a dynamic partnership, and their distinct strengths harmonise seamlessly. They emphasise that it’s about people and their passion. Thanks to all of this, CoinsPaid isn’t your ordinary fintech company – it’s a unique blend of innovation with a profound human touch.
What kind of manager do you think you are, Eugen?
EK: As a manager, I strive to be supportive and encouraging. While I may occasionally overlook some details due to the volume of communication within the company, I actively seek out interesting ideas and initiatives, making an effort to listen to every member of the team. Well, nobody’s perfect, you know. There are times when I might appear a bit distant or even indifferent to my colleagues – it happens.
Nevertheless, I genuinely try to assist everyone who needs help to the best of my abilities. I make an effort to appreciate all employees equally, with a special acknowledgment for those who show independence and proactivity. I encourage individuals to take the initiative, identify challenges, and propose solutions. I believe in empowering my team members to be self-starters who contribute ideas and take ownership of their work. By creating a culture that values autonomy and encourages proactive problem-solving, I aim to cultivate a dynamic and innovative team.
Additionally, I work to foster a positive and vibrant atmosphere within the team. As an example, I frequently share work-related memes to kick-start our day with a positive and energised vibe. I’m pretty sure this approach works.
I’ve heard you enjoy sharing memes, Eugen. It’s great to see your team views you as supportive and positive. It’s special when the manager’s vision aligns with the team’s perspective.
Now, let’s talk about work-life balance. What’s your approach? Do you prefer the office’s structure or the flexibility of working from home?
EK: What is work-life balance? Work is life! No, really, I’m the kind of person for whom professional fulfilment is an essential part of my identity. For a long time, work consumed a significant portion of my life, and I found myself working 60+ hours a week, responding to work messages at any time and place, even during the deep night or early morning. My wife even made a funny reel during our 5th anniversary vacation.
Recognising the need for a better work-life balance, I’ve been learning to set boundaries between my professional and personal life. Now, I make an effort not to immerse myself in work-related chats before or after official work hours. I’ve also resumed going to the gym after a one-year hiatus, not just for staying healthy but as a deliberate mental break from work.
Regarding the work environment, I’ve discovered that I prefer the structure of the office. While I understand the convenience of working from home, I’ve noticed that my productivity tends to suffer, and it becomes challenging to maintain a clear distinction between personal and professional life. Of course, there are times when remote work is necessary and beneficial. However, I’ve been intentional about creating a clear separation between home and work to achieve a healthier balance.
Even when I’m physically present in the office, my communication with colleagues is somewhat limited due to the demands of my role. There’s a constant influx of calls and messages, and everyone seems to have questions. While this ongoing communication is crucial for the team, I’ve been exploring ways to streamline it to preserve some quiet evenings for personal activities like reading, watching movies, playing PS5, or engaging in sports. I also enjoy playing billiards or squash.
How do you envision the future of CoinsPaid and what are your expectations for the evolution of the crypto payments industry in the years to come?
EK: I see a significant transformative journey ahead for CoinsPaid. While I’m confident that the company will thrive as a business, the path to success will undoubtedly be challenging. Our unwavering commitment to constant growth and excellence, combined with our exceptional team, leaves no doubt that we will succeed.
Despite recent obstacles, I wholeheartedly believe in CoinsPaid’s resilience and its potential to achieve even greater success in the coming years. The transformation we are embarking on will not only solidify our position in the market but also pave the way for innovative solutions and sustained excellence.
Turning to the broader crypto payments industry, I am confident that crypto payments will become commonplace in the next five years. The shift from speculative to mainstream use is evident, with major players like Ralph Lauren, Rakuten, Overstock, Hublot, PayPal, and others leading the way in practical crypto integration across industries worldwide.
I anticipate exponential growth in crypto adoption, driven by the versatile applications of cryptocurrencies in settlements. Regulatory developments also play a significant role in driving acceptance of crypto payments. I foresee crypto gaining broader recognition and extending into various industries beyond its current associations with luxury and online retail.
Despite persistent challenges, such as regulatory complexities and technological considerations, the promises of crypto payments, including faster transactions and reduced fees, are too compelling for businesses to ignore. The future holds immense potential for mainstream acceptance, and CoinsPaid’s forward-thinking approach positions it as a leader in this transformative journey.
The author Yuliya Mironchyk has been navigating the cryptocurrency sphere for 4 years, previously working with crypto and CFD trading platforms. She joined CoinsPaid as a public relations manager. With a focus on contributing to PR activities, Yuliya is actively engaged in crafting press releases, blog posts, interviews, and building connections with the media.
The cryptocurrency world is poised on the cusp of a potentially historic development, with the imminent approval of spot Bitcoin ETF (exchange-traded fund) filings.
While the US Securities and Exchange Commission (SEC) last week delayed this approval, the consensus remains that at least some of the 12 filings could be approved in the coming months; Bloomberg ETF analysts James Seyffart and Eric Balchunas predict a 90% chance of an approval sometime before 10 January next year.
Potential price surge
The approval of these ETFs could catalyse a significant surge in Bitcoin’s price. This expectation stems from the influx of institutional legitimacy and accessibility these ETFs bring.
For institutional investors who have been on the fence, these ETFs serve as a gateway, reducing the perceived risk and complexity associated with investing in Bitcoin. Additionally, for retail investors, ETFs provide a familiar investment vehicle, potentially widening Bitcoin’s investor base.
Greater adoption of Bitcoin should lead to further investment and innovation in digital guide rails and financial infrastructure. From payment mechanisms and risk pricing to insurance tools, all of which will help to build a new digital economy.
The approval of Bitcoin spot ETFs would therefore be a monumental endorsement of Bitcoin’s legitimacy in the financial world. It’s a sign that Bitcoin is not just a speculative asset, but a fundamental component of the modern investment portfolio.
This transition is exemplified by the evolving stance of financial heavyweights like Larry Fink of Blackrock. Initially sceptical, Fink’s warming up to Bitcoin isn’t a mere change of opinion but a response to market dynamics.
His clients are increasingly demanding exposure to Bitcoin. This shift indicates a broader change in perception, recognising Bitcoin as a quality, ‘risk-off’ investment, countering its previous image as an inherently volatile asset.
A new era
As the community awaits these pivotal decisions, it may be the case that overall transaction volumes remain low, even if Bitcoin and wider crypto valuations are up as the year comes to an end.
The significance of Bitcoin, however, transcends its investment appeal. It represents the backbone of a new digital era for money.
Bitcoin’s underlying technology, blockchain, offers a permissionless, immutable, secure, and transparent method for transactions, challenging the cumbersome legacy financial infrastructures.
As we move deeper into the digital age, Bitcoin and its underlying technology are poised to redefine the concept of money, offering a decentralised alternative to state-backed currencies.
An often-overlooked aspect of Bitcoin’s rise is its potential to address the financial inclusion of the unbanked billions.
By building layers on top of Bitcoin, we can create a financial ecosystem that provides digital property rights and financial services to those previously excluded from the traditional banking system.
This is not just about investment; it’s about using technology to democratise access to financial services, offering a lifeline to those in economically marginalised communities.
However, the effects will ripple beyond just Bitcoin.
Approval of these ETFs could enhance the credibility of the entire cryptocurrency sector, leading to increased investment and innovation across various digital assets. This could be the spark that ignites a new era of growth and diversification within the crypto space.
“The opportunity is potentially much greater than just enabling new capital to access the crypto market,” as ETFs “will ease the restrictions for large money managers and institutions to buy and hold bitcoin, which will improve liquidity and price discovery for all market participants,” wrote David Duong, head of institutional research at Coinbase.
Additionally, having an investment vehicle that meets “key regulatory and compliance requirements may also open the door to new products,” which could multiply the existing crypto offerings for accredited investors and expand adoption, the note said.
From fringes to mainstream
As we await the SEC’s decision, the stakes are high.
Recent months have also seen a string of SEC-led enforcement actions undertaken in the wake of the FTX collapse and ahead of founder Sam Bankman-Fried’s sentencing in March 2024.
In this regard, Gary Gensler’s SEC is adamant that it wishes to clean-house before firmly bringing Bitcoin into the fold.
The approval of these ETFs would be more than a regulatory green light; it would be a signal of a shifting financial paradigm.
Bitcoin’s transformation from a fringe asset to a mainstream investment choice reflects a broader evolution in our understanding and use of money.
In this regard, I enjoy working daily with a host of companies bringing both Bitcoin and blockchain technology into this mainstream at Yolo Investments.
The potential approval of Bitcoin spot ETFs represents a seminal moment in the digital financial era. It’s a testament to Bitcoin’s resilience and growing acceptance.
More importantly, it’s a step towards realising the broader potential of cryptocurrencies, not just as investment vehicles, but as tools for economic empowerment and innovation.
As we stand at this crossroads, the future of finance is not just being rewritten; it’s being reimagined.
Tim Heath draws upon two decades of experience within the iGaming and emerging technologies sectors as GP of Yolo Investments. An early adopter of Bitcoin in 2013, he was founder and CEO of the Yolo Group (formerly the Coingaming Group) until 2020. The group operates leading crypto gaming brands Bitcasino and Sportsbet.io, with the latter securing high-profile sponsorships with Premier League clubs Arsenal and Southampton.
According to the latest Bitcoin casino statistics, crypto gamblers bet $3m worth of crypto daily, and approximately 60% of all Bitcoin transactions are related to gambling.
Driven by a growing industry demand, early adopters are actively seeking payment solutions that enable their players to place crypto bets. CryptoProcessing.com, one of the leading crypto payment gateways in the world, is the ultimate solution for these operators.
The crypto gambling market size is $250m – a growing share of the $93bn iGaming industry. There is no denying the world of gambling is crazy, and these numbers can confirm that.
All this, in turn, catalyses a corresponding surge in cryptocurrency adoption among gaming enthusiasts. Yet, one might wonder: What drives these players to opt for cryptocurrency?
“Besides offering enhanced security and anonymity, cryptocurrencies facilitate faster and more efficient transactions. Players enjoy seamless, near-instant deposits and withdrawals with lower transaction fees in comparison to traditional payment methods,” explains Max Krupyshev, CryptoProcessing.com CEO.
“Overall, crypto is becoming a widely popular means of payment rather than a speculative-only asset, and as cryptocurrencies continue to blossom, gambling will follow closely behind. This trend is partially driven by the fact that access to cryptocurrencies has become easier.”
How can accepting crypto payments affect an iGaming platform?
The benefits of accepting cryptocurrency bets extend beyond the player’s experience; some of the hardest payment challenges, such as chargebacks and settlement delays, are taken off operators’ shoulders.
Along with this, one major advantage is lower transaction costs. Cryptocurrency transactions are cost-effective; this enables casinos to save money and enhance their services for players.
Moreover, online casinos can attract tech-savvy players who are early adopters of innovative technologies. This can give casinos a competitive edge and position them as forward-thinking establishments.
The growing crypto audience, with over 420 million users worldwide is another reason why companies should consider accepting Bitcoin payments. This allows businesses to tap into an extensive global client base, expanding accessibility and reaching customers in diverse regions. It eliminates traditional payment hurdles, such as the need to search for local providers.
Finally, integrating a crypto payment gateway is simple for those unfamiliar with blockchain technology. Thanks to near-instant conversion to fiat and the ability to transfer funds to a bank account, clients do not have to handle crypto directly. Moreover, crypto payment providers like CryptoProcessing.com offer round-the-clock tech support.
Crypto payments resilient amid market challenges
The casino industry is experiencing a significant surge in crypto adoption, positioning cryptocurrency as a promising future payment method.
Straits Research predicts that by 2030, the global online gambling market will reach $153bn, underlining the growing demand for crypto-related services. Remarkably, crypto payments have proven their resilience, even during market downturns.
CryptoProcessing.com, a leading crypto payment gateway, serves as a testament to this resilience. It witnessed no decline in cryptocurrency transactions during these challenging market conditions. Instead, transaction volumes doubled in 2022 compared to 2021, with a 1.9x increase.
This positive trend continued into 2023, with Q1 showing a remarkable 14% net volume growth and a 9% increase in transactions compared to Q4 2022.
In Q2 2023, the majority of transactions were conducted in BTC, USDTT, and ETH. BTC maintained its dominance at 55.8%, though its share decreased by 9.7% compared to Q2 2022. Conversely, USDTT and ETH saw slight increases of 3.9% and 1.4%, respectively.
Despite BTC’s decreased activity due to market fluctuations, it remains the largest cryptocurrency by market capitalisation. Concurrently, the popularity of stablecoins is rising due to their stability, and altcoin transactions are gradually increasing.
It’s fair to say that the benefits of crypto payments extend beyond the casino industry. They are considered a win-win for everyone involved, from developers and gamers to the broader gaming community.
Some players now can’t imagine playing Blackjack without using BTC, ETH, DOGE, USDT, and other altcoins and stablecoins. In fact, there are even a number of casinos that exclusively operate within the crypto space.
However, despite these positive developments, many individuals remain unfamiliar with the fundamentals and potential benefits of crypto payments. This lack of understanding extends beyond players and operators, and questions continue to surround regulation and compliance.
Regulatory bodies play a pivotal role in ensuring the security and trustworthiness of cryptocurrencies. Successfully achieving this could unlock a multitude of new opportunities for operators and players alike.
What are the risks of connecting to a cryptocurrency payment provider?
When integrating a cryptocurrency payment gateway, companies should remain vigilant about potential risks.
One prominent concern lies in the high volatility of cryptocurrency prices, subject to dramatic fluctuations without apparent triggers. Without support for instant conversion to fiat by a crypto payment provider, there exists a considerable risk of swiftly eroding profits.
Furthermore, companies must contend with the potential receipt of digital assets implicated in illicit activities such as money laundering or terrorism financing. Such an occurrence not only damages a company’s reputation but also invites legal repercussions.
To avoid these challenges, it becomes imperative to safeguard the integrity of incoming transactions. CryptoProcessing.com possesses solutions to efficiently address and mitigate the above mentioned risks.
Amazon-owned livestreaming platform Twitch has added two more online casinos to its list of websites users are prohibited from streaming.
In September last year, the platform announced it would ban users from streaming content from four gambling websites, namely Stake.com, Rollbit.com, Duelbits.com and Roobet.com.
Now, that list has been expanded with the addition of two crypto-focused, Curaçao-registered operators in Blaze and Gamdom.
In addition to the ban on those websites, Twitch has also updated its community guidelines to explicitly prohibit the promotion or sponsorship of skins gambling websites for esports such as Counter Strike: Global Offensive.
Twitch originally implemented its ban on the first group of offshore operators after a controversy on the platform saw a streamer accused of scamming users on the platform to fuel a gambling addiction.
In response, Twitch vowed to ban online operators that weren’t “licensed either in the US or in other jurisdictions that provide sufficient consumer protection.”
This week, in a post on social media platform X (formerly Twitter), the company said: “Our goal now, as it was last fall, is to protect our community, address predatory behavior, and make Twitch safer.”
Twitch has also claimed that after implementing the new gambling policy last year, its viewership in the gambling vertical had fallen by around 75%.
It has also, however, “observed some new trends,” it said, and is in the process of updating its policies to better protect users.
Twitch continues to allow streaming from websites that focus on sports betting, fantasy sports and poker.
In June, CEO Dan Clancy insisted the company had “no problem” with users streaming regulated gambling activity.
Britain’s financial services minister Andrew Griffith has firmly rejected the proposal to regulate cryptoassets under the same framework as gambling.
The suggestion to classify cryptocurrencies as gambling, as recommended by the UK Treasury Committee in May, has been met with strong opposition from Griffith.
One of Griffith’s main concerns is the potential discord this move could create between the UK and international regulatory bodies, including those in the European Union.
He also argued that such categorisation would not effectively address the risks associated with the crypto sector.
In his reply, Griffith stated that he “firmly disagrees” with the Committee’s recommendation to regulate “retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service”.
He emphasised that globally agreed-upon recommendations from organisations such as the International Organisation of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB) support the current financial regulatory approach.
Griffith explained that these recommendations follow the principle of “same activity, same risk, same regulatory outcome”.
In other words, any cryptoasset activity with similar functions and risks to traditional financial systems should be subject to regulations ensuring equivalent outcomes.
He warned that the proposed approach could lead to confusion and overlapping mandates between financial regulators and the Gambling Commission.
The UK government further clarified that the Gambling Commission is well-equipped to safeguard consumers in the context of gambling activities but lacks expertise in overseeing financial risks akin to those present in financial markets.
As the cryptoasset industry is highly globalised and borderless, the UK’s unilateral adoption of a different regulatory system could “push cryptoasset activity offshore”, exposing consumers to residual risks.
Instead of classifying cryptoassets as gambling, the UK government believes that a financial services regulatory framework is more appropriate for addressing the risks associated with unbacked cryptocurrencies while fostering safe innovation.
Measures are being taken to mitigate consumer risks, including the risks of misinformation.
To this end, the government has introduced a dedicated financial promotions regulatory regime for cryptoassets, with legislation set to come into force by late 2023.
The Securities and Exchange Commission (SEC) has filed a lawsuit against cryptocurrency trading platform Binance and its founder Changpeng Zhao.
The US financial regulator has accused the company of misusing investor funds, operating as an unregistered exchange, and violating a slew of other US securities laws.
Binance responded that “any allegations that user assets on the Binance.US platform have ever been at risk are “simply wrong” and that it intends to defend its platform “vigorously”.
The lawsuit, filed yesterday (5 June), lists 13 charges against the crypto trading platform and its founder Zhao — including mingling and diverting “billions of dollars of investor assets” and sending them to another entity owned by Zhao.
“While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action,” Binance said in a statement, adding it had been in discussions with the regulator “to reach a negotiated settlement”.
Binance said it cooperated with the SEC’s investigations and “worked hard to answer their questions and address their concerns”.
“Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry,” the company added.
“Web of deception”
“Through 13 charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” SEC chair Gary Gensler summarised.
“The public should beware of investing any of their hard-earned assets with or on these unlawful platforms,” he added.
Among other things, the SEC alleged that while Zhao and Binance publicly claimed that US customers were restricted from transacting on Binance.com, they secretly allowed high-value US customers to continue trading on the platform.
Further, the SEC alleged that while Zhao and Binance publicly claimed Binance.US was created as a separate, independent trading platform for US investors, they controlled the Binance.US platform’s operations behind the scenes.
Moreover, the SEC said, in one instance, Binance’s chief compliance officer messaged a colleague saying “[w]e are operating as a fking unlicensed securities exchange in the USA bro.”
Gurbir S. Grewal, director of the SEC’s division of enforcement, said: “We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk – all in an effort to maximise their own profits.”
Binance responded to the SEC’s actions by asserting that the SEC’s goal was not to protect investors but rather “to claim jurisdictional ground from other regulators.”
The crypto giant concluded that due to its size and global recognition, it has become an easy target “now caught in the middle of a US regulatory tug-of-war.”
Today (6 June), the SEC also filed a lawsuit against Binance rival Coinbase, alleging that the company was acting as an unregistered broker and exchange and demanding that the company be “permanently restrained and enjoined” from continuing to do so.
The SEC has alleged that at least 13 crypto assets available to Coinbase customers were considered “crypto asset securities” by the regulator.
“We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer and clearinghouse functions,” said Gensler.
Coinbase has not yet issued a statement.
Photo of Changpeng Zhao by Stephen McCarthy/Web Summit
How do you solve a problem like crypto?
In the Financial Times this week, business columnist Helen Thomas argued that governments shouldn’t treat crypto like gambling – “even if it is largely pointless.”
Reporting from the world’s “biggest bitcoin event” in Miami, Florida – where attendance was about half as strong as it had been this time last year – Thomas noted that “some of the buzz and meme coins are gone,” as was the crypto industry’s “sense of indestructibility.”
Having faced several major challenges and crises over the past 12 months, the world of crypto has battled against those who would seek to bring it down.
Not least among them are governments, with US agencies launching “a slew of enforcement actions in the sector,” and politicians in Westminster recommending cryptocurrencies be regulated as gambling.
For Thomas, that meant “an influential parliamentary committee suggested that crypto was, not disruptive or renegade, but worse: borderline irrelevant.”
Indeed, parliamentarians in the Treasury select committee judged currencies like Bitcoin to have “no intrinsic value” and serve “no useful purpose,” instead suggesting that trading cryptocurrencies was hardly different at all from backing the favourite in the 5:50 at Sandown or lumping it all on 17 in roulette.
This “dismissive” approach was wrong, in Thomas’ view, as she argued that even though cryptocurrencies themselves may have failed to clearly elucidate the use cases of distributed ledger technology, that doesn’t mean it is totally without utility.
“The industry still does a very bad job of explaining things,” said Oliver Linch, chief executive of Bittrex Global. “It’s been wink wink … if you know, you know, to the moon nonsense.”
Lawyer Marc Jones went on to suggest that “to say [cryptocurrency] is gambling makes no sense legally,” with Thomas adding that it also wouldn’t contribute to effective regulation of the sector.
And all this at a time when “UK gambling regulation is still trying to catch up with the invention of the smartphone.”
Still, there remains a challenge in working out who exactly should be looking after the crypto sector – should it be the gambling world or the finance world?
Thomas suggests that “dividing responsibility between regulators would be a mistake. The crypto universe doesn’t neatly split into conceivably useful and definitely pointless.”
For the time being, she suggests that financial regulators still seem the most likely contenders for the position of Bitcoin watchmen in the future, with the latest report “unlikely to prompt a change of direction from the government.”
Unlikely, perhaps. But stranger things have happened.
UAE casino still a gamble
Wynn Resorts’ much discussed project to bring the first casino resort to the United Arab Emirates was the subject of another story in Forbes this week.
The article suggested that the cost of developing the resort is likely to push the local government of Ras Al-Khaimah – one of the seven emirates that make up the UAE, and the first to develop plans for a casino – into a fiscal deficit.
The integrated resort is expected to open its doors in 2027 after ground was first broken on the project earlier this year.
For a small economy like Ras Al-Khaimah, however, Forbes said “the project represents a giant gamble.”
The development is set to cost close to $4bn, equivalent to some 32% of the emirate’s total GDP last year.
RAK Hospitality and Al-Majran Island, two state-owned companies, are developing the project together with Wynn and are assumed to hold a majority stake in the venture once it’s up and running.
According to a report from Fitch Ratings, however, the resort is expected to “weigh on public finances initially” before boosting growth prospects and national revenues in the longer term.
The development will likely push the government’s budget into a 0.1% deficit this year and 0.2% in 2024, according to Fitch, as a result of the cash injections needed to build the resort.
On the upside, however, the ongoing construction work should boost the emirate’s GDP by one percentage point this year and three points in 2024, with real GDP in those years set to grow 4.4% and 5.1% respectively.
And, with the resort set to be the only destination of its kind in the surrounding region, there’s no telling how much it could generate once it arrives.
A fine mess at Meta
Dominating discussions earlier this week was Meta’s record-breaking €1.2bn fine in the EU, as reported by Bloomberg, which was levied on the social media giant just a couple of days before the fifth anniversary of the introduction of the General Data Protection Regulation (GDPR).
The Facebook owner was ordered to cough up, and to stop transferring user data to the US within the next five months, after regulators said it had failed to protect personal information from American security services.
The Irish Data Protection Commission said continued data transfers to the US didn’t address “the risks to the fundamental rights and freedoms” of the people the data belonged to, and were promptly deemed unlawful.
The decision had been widely expected, according to Bloomberg, as there was already some precedent here. The last time Meta’s transfer of data between the EU and US came to under inspection by regulators in 2022, the company threatened to pull its Facebook and Instagram services out of the region entirely.
This time, Meta said it would appeal the latest decision, which it described as “flawed” and “unjustified”. It will also immediately seek a suspension of the banning orders on its transfers of data, which it said would cause harm to the “millions of people who use Facebook every day.”
According to Meta’s chief legal officer Jennifer Newstead and former UK Deputy Prime Minister Nick Clegg (who for some reason is now Meta’s president of global affairs), the rules risk chopping up the internet “into national and regional silos, restricting the global economy and leaving citizens in different countries unable to access many of the shared services we have come to rely on.”
Any appeals from Meta will have to be filed in Ireland, and will take months at best to be resolved.
It seems that while the internet might make it seem like we live in a world without borders, that doesn’t mean companies like Meta can simply ignore them.
The UK Treasury Committee has called for the consumer trading of cryptocurrencies such as Bitcoin to be regulated as gambling.
A cross-party committee of British MPs has determined that cryptocurrencies such as Bitcoin “lack intrinsic value and fail to serve any meaningful social purpose”.
Moreover, the report points to negatives including the high energy consumption of cryptocurrencies and their potential exploitation by criminals in scams, fraud and money laundering.
Unbacked cryptoassets, commonly known as cryptocurrencies, constitute the most prominent form of digital currency.
The two most popular cryptoassets, Bitcoin and Ether, currently account for approximately two-thirds of the overall cryptocurrency market.
The committee believes these cryptocurrencies pose significant risks to consumers due to their price volatility and the potential for substantial losses.
MPs have therefore urged the government to classify the retail trading of crypto as gambling, as it would then be subject to what the group considers “appropriate” regulations.
One of the committee’s major concerns is the potential “halo” effect created by regulating crypto trading as a financial service, as previously proposed by the government.
The group fears that such regulation could mislead consumers into perceiving the activity as safe and protected, in contrast to its inherent risks.
HM Revenue & Customs data shows that approximately 10% of UK adults currently hold or have held cryptoassets, a figure which underscores the need for effective safeguards and regulations to protect individuals engaging in crypto trading, according to the committee.
The report does acknowledge the potential benefits of the underlying technologies of cryptoassets, particularly in cross-border transactions and less developed countries.
The report has also cautioned against the allocation of public resources to projects lacking clear and beneficial use cases, such as the now-abandoned Royal Mint NFT scheme.
The committee has advised the government to adopt a balanced approach to supporting the development of cryptoasset technologies and avoid promoting technological innovations “solely for the sake of innovation”.
Harriett Baldwin MP, chair of the Treasury Committee, said: “The events of 2022 have highlighted the risks posed to consumers by the cryptoasset industry, large parts of which remain a wild west.
“Effective regulation is clearly needed to protect consumers from harm, as well as to support productive innovation in the UK’s financial services industry.
“However, with no intrinsic value, huge price volatility, and no discernible social good, consumer trading of cryptocurrencies like Bitcoin more closely resembles gambling than a financial service and should be regulated as such.
“By betting on these unbacked ‘tokens,’ consumers should be aware that all their money could be lost,” she added.
As the crypto industry continues to evolve rapidly, both inside and outside of gambling, it remains to be seen how the government will respond to these recommendations.
The full report can be accessed here.
Last month, the former CTO of Coinbase and General Partner at Andreessen Horowitz, Balaji Srinivasan, accepted a bet with renowned hyperinflation doubter James Medlock totalling $2m that Bitcoin (BTC) would reach $1m per coin within 90 days.
Srinivasan believes that there is an impending crisis that will lead to the deflation of the dollar, resulting in mass hyperinflation that will in turn drive up BTC’s price.
It might be that the bet is unwinnable based on BTC’s current price, but I do believe there is a lot of truth in Srinivasan’s arguments, both now and prior, that DeFi solutions such as BTC are needed more than ever in our current, broken financial system.
Indeed, we are moving from over half a century of dollar hegemony to a multipolar monetary system encompassing other currencies, the dollar and, of course, BTC.
I don’t believe that there is an impending crisis. My case is that we’re bang in the middle of one right now.
The Bretton Woods financial system architecture which established a global system based on the US dollar around us is creaking. We have witnessed a multitude of Lehman Brothers moments manifesting over the past year alone, a clear sign that something has to change to protect consumers.
Multipolar monetary order
The dollar today is solely backed by debt. Free of a link to gold since 1971 and with the petrodollar system looking increasingly vulnerable as major Gulf states pivot east towards the likes of Beijing, the value of the dollar now relies solely on trust.
With BRIC nations increasingly calling for their own currencies for international trade, we are seeing the emergence of a multipolar monetary order with currencies like the Yuan increasingly being used for international transactions.
The inherent value of the dollar is now less obvious than it ever has been, with only faith in the Fed alone backing it.
Should there be a debt ceiling, the Fed would likely default, resulting in a major stock market crash. Such realities are resulting in de-dollarisation and reinforce the need for BTC which has a set supply and cannot see its value inflated away. Trust in third parties and reliance on debt is not a factor with BTC.
Over just 11 days in March, four US banks failed: Silvergate, Silicon Valley Bank (SVB), Signature and First Republic. We also saw Credit Suisse bailed out, with total direct support for these major collapses totalling over $400bn just to keep the ship above water, by many metrics eclipsing records set in 2008.
No lessons learned
The ‘too big to fail’ narrative continues to be reinforced emphatically at the expense of consumers each and every time as we fail to learn lessons from each collapse. Indeed, many of the changes implemented post 2008 continue to fail.
Rampant money printing and inflation remain out of control, with customers continuing to abandon banks out of fear of collapse and as they seek higher yields, a move catalysed by SVB’s collapse earlier this year.
Average US bank account savings rates are just 0.37%, compared with the Fed’s benchmark rate of almost 5%.
With recent banking collapses, subsequent bailouts and at a time when dozens of regional and midsized banks are set to announce their financial results, it is highly likely that mass deposit outflows by traditionally staid retail investors will continue, thus further impacting market volatility.
In the past year alone, commercial bank deposits have sunk by half a trillion dollars, a decline of nearly three percent as investors move their cash into money-market funds. As consumer funds remain in such ‘narrow bank’ accounts, banks are being undermined and slowly bled as deposits grow scarcer, meaning that further SVB-type collapses are inevitable.
Large corporations like Apple are also giving banks a run for their money. The Silicon Valley-based company entered the savings market this month, offering 4.15% interest in high-yield savings accounts, more than ten times the US national average, in a move designed to test big banks.
In a letter to its investors issued in November last year before the aforementioned major crashes, Elliot Management, a major US-based hedge fund managing nearly $56bn in assets, warned that rising inflation and continued interest rate hikes ‘have set the stage for the biggest economic upheaval since World War II’.
Such warnings, as stark as they may be, unfortunately should come as no surprise to us given that we are working with a system designed in 1944 ill-equipped to deal with the realities of the situation in 2023.
Continued war in Eastern Europe, ongoing recovery from a worldwide pandemic, global supply chain issues, rising inequality and increasing protectionism are rallying together to stress test our existing system en-masse; a test our system is failing.
Taking the situation in Ukraine as one example and subsequent Western sanctions on Russia, we are seeing BRIC currencies such as the renminbi used for international transactions at an increasing rate, at the expense of the dollar.
All of a sudden, Balaji Srinivasan’s assertion that our current system is ill-equipped to deal with our existing situation and that DeFi has a large role to play in forging a better future doesn’t look like some utopian ideology.
Need for major change
There is no ultimate silver bullet solution, but existing problems demand major financial architecture change.
Bitcoin, I believe, holds the key to helping us unlock a more stable, prosperous financial future.
As investors have increasingly fewer places to shelter in our current financial storm, it should come as no surprise that many are looking to crypto, and particularly Bitcoin, as a hedge against inflation and the fiat standard’s major deficiencies.
Bitcoin hit a 10-month high earlier this month, a psychologically important milestone as it represents where it stood last summer before the market’s decline.
BTC is a form of currency that cannot be manipulated, unlike fiat and traditional banks. Further, its fixed supply means it is the check balance and opt-out of the problems associated with money printing.
Other inherent benefits such as its self-custodial nature and being able to reach anyone with an internet connection and compatible device mean that people need not be needlessly left behind as its cross-border potential is realised every day, reaching those who need it the most.
New financial market infrastructure
Of course, DeFi has its own problems, and FTX’s collapse showcased the need for further regulation and measures such as third-party confirmation of ‘proof of reserves’ in major exchanges. Bitcoin however, as the first kid on the block, is well established and trusted by hundreds of millions already.
The emerging multipolar monetary order will require new financial market infrastructure that enables the co-existence of TradFi and DeFi.
This means that further crypto regulation, large-scale investments and government support is required. The technology must be respected, understood and utilised, and we must work with it, not against it if we are to secure a better financial future.
We have been plastering over the major gaps in our 1944-based financial architecture for too long and must look to DeFi technology when forging a more secure, better financial future placing consumer protection at its very core. The world must move on from dollar hegemony to one where the dollar, BRIC currencies and BTC can co-exist.
As central banks continue creating instability by manipulating money supply, it is only a matter of time before the next collapse.
This post first appeared on Medium.com.
Tim Heath draws upon two decades of experience within the iGaming and emerging technologies sectors as GP of Yolo Investments. An early adopter of Bitcoin in 2013, he was founder and CEO of the Yolo Group (formerly the Coingaming Group) until 2020. The group operates leading crypto gaming brands Bitcasino and Sportsbet.io, with the latter securing high-profile sponsorships with Premier League clubs Arsenal and Southampton.
The US financial industry has suffered a major scare, with not one, not two, but three banks shutting their doors in the span of just one week. iGaming NEXT has summarised the key developments and the blame game that followed.
The most significant of the three closures was Silicon Valley Bank (SVB), which collapsed Friday morning following a shocking 48 hours of a bank run and capital crisis.
On Wednesday, the company’s surprise announcement that it needed to raise $2.25bn to address balance sheet issues triggered a downward spiral.
By Thursday, customers had withdrawn a staggering $42bn in deposits, according to a California regulatory filing, further exacerbating the situation.
The closure of the tech lender was then ordered by California regulators, who placed it under the control of the US Federal Deposit Insurance Corporation.
With this, SVB became the second-largest financial institution failure in US history, second only to Washington Mutual, which collapsed during the 2008 financial crisis.
Meanwhile, New York state financial regulators shut down crypto-focused Signature Bank on Sunday (12 March) due to concerns about its potential impact on the US economy as a “systemic risk”.
Adding to the upheaval, Silvergate Bank, which had also specialised in cryptocurrencies, announced on Wednesday (8 March) that it would voluntarily wind down its operations, after crypto market plunge sparked a depositor exodus.
What caused the collapse?
There are different opinions on what caused the ultimate collapse of the banks, and there is quite a bit of finger pointing going on.
One of the significant reasons behind SVB’s downfall was the bank’s decision to invest billions of dollars in long-term bonds, expecting that interest rates would remain stable.
However, the US Federal Reserve Bank’s decision to increase interest rates resulted in the devaluation of these bonds, forcing SVB to sell them at a loss to bolster its capital position.
A Forbes article highlighted that the scale of bank failures in terms of total assets for 2023 was now similar in size to 2008 at the peak of the financial crisis.
However, in 2008, a higher number of individual banks failed compared to the current situation.
Tim Heath, founder of Yolo Group and Yolo Investments, told iGaming NEXT that the current scenario resembled 2008 and that “crypto is just another asset class that will be collateral damage”.
“There have been systematic risks in the banking industry for decades,” he said.
He cited fractional reserve banking as an example, stating that this system only works if customers do not withdraw their deposits.
Heath added: “These three banks were not shuttered because they were crypto banks. They were shuttered because their duration mismatch in assets versus liabilities meant they could not survive the impending run in the short term.”
He acknowledged that the failsafe system worked as designed, but it should not have reached this point.
Social media response
The SVB collapse has sparked a debate among members of the VC community, with some investors attributing the bank run to social media panic.
Brad Svrluga, co-founder and general partner at Primary Venture Partners, commented on LinkedIn that while “SVB made significant mistakes”, the “hysterical urging” by some VCs to withdraw deposits on social media ultimately triggered a run on deposits that led to the collapse.
Meanwhile, amid reports about start-ups that had funds frozen in the bank and struggling to to pay their staff, some members of the VC community offered support to affected companies.
Lloyd Danzig, managing partner at Sharp Alpha Advisors, wrote: “If you are a post-revenue sports, gaming, or entertainment startup impacted by the Silicon Valley Bank failure, we remain resolutely bullish on our thesis and are looking to be supportive. Please reach out directly if you are experiencing financing challenges.”
Emanuel Pearlman, chairman, board member, and advisor at MidCap Financial Investment Corp, also encouraged early-stage sports betting and iGaming companies in need of immediate capital to get in touch.
Mitigating the impact
The collapse of Silicon Valley Bank, along with the two other banks, has sent shockwaves through the financial world, raising concerns about the stability of the banking sector and the potential impact on tech start-ups and other businesses.
In an effort to avoid a financial crisis, the US government announced on Sunday night that all SVB depositors would have access to their money on Monday morning.
This unprecedented intervention was intended to provide relief to those affected by the bank’s collapse.
According to Danzig, the real-money gaming industry found itself especially vulnerable to the SVB failure because of difficulties that companies in the space often have finding suitable banking partners.
“Although founders are breathing a sigh of relief this morning, those utilising regional banks are still attempting to set up new accounts elsewhere in order to be more robustly insured against any fallout or future issues,” Danzig told iGaming NEXT.
He added that the broader start-up ecosystem is still trying to adjust this week, “with many waiting to see how the fallout will impact operations and fundraising activities going forward”.
Meanwhile, HSBC has announced today (13 March) that it has acquired the UK arm of SVB for a nominal fee of one pound, a move aimed at mitigating the impact of the biggest bank collapse since the financial crisis on UK tech start-ups.
This was received as welcome news by a battered cryptocurrency sector.
On Monday morning, Bitcoin reached $22,560.20, up by almost 10% and its highest level in 10 days, while Ether also surged about 10% to $1,614.89, based on CoinDesk data.