Interview with CoinSmart Financial Inc.
CoinSmart Interview: This crypto platform is unique
time to read: 9 minutes | The interview was conducted by Nico Popp on December 8th, 2021 in Toronto (CAN).
CEO | CoinSmart Financial Inc.
1075 Bay Street, Unit 403, M5B 2B2 Toronto (CAN)
Table of contents:
news|financial: "Blockchain, DeFi, and cryptocurrencies are promising growth themes that create gold-rush sentiment in the market. How long have you and your team been in this business?"
"[...] Most of all we were on a mission to MAKE CRYPTOCURRENCY ACCESSIBLE [...]" Justin Hartzman, CEO, CoinSmart Financial Inc.
I came across Bitcoin for the very first time in 2010. The concept was very promising of course, however, it was a highly niched invention used mainly by underground forums. However, as it kept picking up steam, it became impossible to ignore. In 2017, Bitcoin reached a then all-time high of ~$20,000 and the ICO boom had propelled the entire industry to a whole new level. That was when we decided to open CoinSmart to create a safe and secure digital asset trading platform. Most of all we were on a mission to MAKE CRYPTOCURRENCY ACCESSIBLE. It was simply too hard to get on a platform and verify, and getting fiat dollars there seemed impossible. While this mainly started out as a hobby at the time, this quickly became a passion and over a short period of time took on a life of its own.
news|financial: "CoinSmart's founding team has known each other since childhood. What does that mean for your collaboration, and how do you ensure that external expertise also provides new impetus?"
Our founding team really has known each other for a long time, and we know each other inside out. That includes our weaknesses, which makes it easier for us to target new employees exactly where we have a need. We have a clear mission: we want to make cryptocurrencies accessible to everyone, and we want to be regulated in the process. To do this, we inevitably have to rely on external expertise. For example, we are regulated as a provider in Estonia, an EU country.
Experts are needed to implement such processes quickly and reliably. The best way to attract these experts is to give them and their work free rein. I have no problem being the person in the room who knows the least about meetings on specific topics. It is just crucial that we function well as a team, and there is always someone to ask. We are not about egos; we are all about the progress of CoinSmart!
Employees as the key to success
news|financial: "How do you convince new employees? I imagine the best minds in the industry are being courted."
"[...] With us, you gain experience in a short time that you cannot get in the financial industry or even at technology companies. [...]" Justin Hartzman, CEO, CoinSmart Financial Inc.
We get a lot of very qualified applications! People from corporate finance, sales, or customer support find our business interesting and want to work in this field. Blockchain and crypto is an entirely new market that offers many opportunities. For this reason, the savvy and curious from many industries are contacting us and bringing their skills with them. On the one hand, this is good for us, but also for the employees. With us, you gain experience in a short time that you cannot get in the financial industry or even at technology companies.
news|financial: "Between 2020 and 2021, your revenues are expected to nearly quadruple. The number of customers increased from 26,500 at the end of 2020 to 158,600 at the end of October 2021. How do you ensure your team can keep up with all those new customers?"
It is not an empty phrase when we say we want to make cryptocurrencies accessible to all customers. We have always put the customer at the center. That is why our platform is designed so that as few questions as possible arise. Added to this are offers and tutorials and comprehensive support on many channels available to our customers around the clock, seven days a week. Add to that technology that helps us manage customer growth, such as our new chatbot. Our business is scalable, which helps us deal with many challenges.
From the very beginning CoinSmart made the extra effort to operate each aspect of its business and operational processes by the book. Our goal was to be an asset trrading platform that closely works with regulators, such as the OSC/CSA, Fintrac, FIU, Fincen and more. We believe that the crypto ecosystem will grow only if we have legitimate trust agents like CoinSmart that bridge the gap between tradefi and defi.
Successful thanks to AI
news|financial: "Tell us more about your chatbot!"
The technology will be deployed in the next three months and is a game-changer for customer service. The software understands what customers are up to and analyzes such things as movements on the website, previous search queries, etc. In this way, the software can use AI to grasp even complex interrelationships and point out possible solutions. At the same time, we also uncover usability weaknesses in this way. As already mentioned, we aim to ensure that users always reach their goals easily and without obstacles.
Regulation as a guarantee for success
news|financial: "In contrast to many of your competitors, you have ensured that your business is regulated, and you do not have to operate in the gray area. Would you please provide an overview of the level of regulation in different regions of the world and explain what that means for your company's growth potential."
"[...] Those who are regulated in large markets can go through corresponding procedures in smaller markets, as certain standards are repeated, and legislators in smaller markets also follow existing legal frameworks. [...]" Justin Hartzman, CEO, CoinSmart Financial Inc.
At CoinSmart, we do not see regulation as a necessary evil. We believe that a regulated business convinces customers and creates the long-term trust that financial products should also stand for. In recent years, many of our competitors have been acting like cowboys, offering services without approvals. Many of these products are excellent and innovative in their own right, but we have decided that regulation is a solid foundation for us to grow from in the long term. We are currently regulated in Canada, the US, and indirectly in the EU via Estonia, and we are in approval processes for some US states and Australia. In Canada, we were the first regulated crypto exchange. We believe it makes great sense not to shortcut. Instead, our path should prove to be the faster one in the long run: Those who are regulated in large markets can go through corresponding procedures in smaller markets, as certain standards are repeated, and legislators in smaller markets also follow existing legal frameworks.
Estonia as the key to the whole EU
news|financial: "What does your regulation in Estonia mean exactly?"
Since Estonia is in the EU, regulation there means we can offer our service in all other EU member states. Specifically, CoinSmart is registered with the Financial Intelligence Unit of Estonia.
It made sense for us to start our foray into Europe with Estonia since the country is well-known to be a digital pioneer. People there are open to new technology, and there is a lot of movement around crypto. So it made sense for us to get regulated there first, opening the door to the rest of the EU. We are currently working on a market authorization in Lithuania to put our offering on an even broader regulatory footing. This approach will also help us in markets where there is still no legal framework for crypto. There, we can refer to existing approvals elsewhere and use them. In doing so, we attach great importance to the fact that we are in exchange with supervisory authorities from the very beginning. We do not force ourselves into any market and present authorities with a fait accompli. If there is no regulation anywhere yet, we first do what is possible. This approach has served us very well so far.
Opportunities on the European market
news|financial: "Since you are already active in around forty markets, you also notice differences in the usage behavior of the various customers. Where do you think the crypto market stands in Europe? Why did you decide to expand into Europe?"
When we rolled out our offering in Europe during a soft launch this year, we noticed that while Europeans are very curious and want to try everything, deposits turn out to be larger in markets such as Canada. In 2022, we plan to expand our marketing activities significantly in Europe and communicate the benefits of our platform even more. It is quite possible that we will then convince some experienced crypto investors to join us, and deposits will increase. All in all, however, we believe that the crypto markets in North America are more mature. But that is an advantage for us: we know where the journey can go. Since we also focus on making crypto easily and quickly accessible and offer our users learning opportunities around crypto markets, we believe we are well-positioned to participate in the potential in Europe, which is huge simply because of its large population.
Coinsmart valuation in comparison
news|financial: "You see your company as undervalued compared to the peer group. Can you back that up with numbers?"
"[...] Unlike our competitors, we have a positive net result and a solid user base with more than 120,000 customers. To catch up with the competition, in terms of market valuation alone, our stock market value would have to multiply. [...]" Justin Hartzman, CEO, CoinSmart Financial Inc.
CoinSmart is currently valued at slightly more than double its revenue. For Voyager, this value is over 10, and for Netcoins, it is around 14. Of course, companies are not readily comparable on a 1:1 basis, but we do not believe this discrepancy is justified. Unlike our competitors, we have a positive net result and a solid user base with more than 120,000 customers. To catch up with the competition, in terms of market valuation alone, our stock market value would have to multiply. For investors, this offers great opportunities but also a lower risk - after all, the facts are on the table. We are growing at a positive rate, are fully regulated, and are very innovative. It is only a matter of time before word gets out in the market. We have done a lot of detailed work in recent months to make our offering better and position ourselves for the future. Now comes the marketing.
news|financial: "You want to be more than a trading platform. Please give us a preview of what can happen with CoinSmart in the coming years!"
Our long-term goal is to become a full-service provider of blockchain-based financial services. That includes payment services and financial investment. Specifically, we want to offer credit and debit cards and tokenization of tangible assets, lending, NFTs, derivatives and margin trading or even credit offerings. The opportunities are vast, and the market is waiting for innovative solutions. We want to seize these opportunities and offer these solutions within the framework of a reliable and regulated platform.
The role of supporters
news|financial: "In a growth phase, young companies depend not only on competence and a good product but also on luck. A good network can help this luck along. Who supports CoinSmart, and how do stakeholders get involved?"
We have strong partners and long-time supporters with good relationships and access to capital, such as family offices. These supporters are from Canada, Australia, and Switzerland and have already helped us with our expansion in the past. Good employees have also been placed with us through these channels. We value the cooperation with our stakeholders very much and see ourselves in a very good position. The encouraging thing is that we are getting more and more attention from professional investors in the course of the IPO. The number of stakeholders is growing, a trend from which we can all benefit!
news|financial: "Thank you very much for talking to us."