We at Cryptogeek were lucky enough to have an interview with Ivan Petuhovschii, the EXMO exchange co-founder. Founded in 2013, EXMO is one of the largest cryptocurrency spot exchanges in Europe.
Headquartered and registered in the UK, EXMO is a simple browser-based platform with a suite of advanced trading tools, automated APIs to execute algo strategies. It has almost 2M users, 300k active traders, SEPA, SWIFT, credit and debit cards, 7 fiat currencies, and more than 200 trading pairs.
Cryptogeek: Hello. It looks like after a long bull run the cryptocurrency market is near the new correction phase. Do you believe this to be true?
Ivan Petuhovschii: I believe that the BTC will continue with the bullish trend. There are many factors for that, but I would name Paypal and Visa news as the most important ones. Needless to say, this should force adoption for these crypto-assets beyond speculation. And support from institutions like PayPal and Visa is making it easier to use crypto that pushes BTC price to a new ATH.
Bitcoin is already up by more than 100% since the start of 2021, and I believe that the possibility of reaching USD 100,000 is very high in 2021. Firstly, the dynamics of bitcoin at the moment almost ideally corresponds to the dynamics of an asset with a scarce value and according to the popular Stock-to-Flow valuation model, the goal of 100,000 is possible already this year. The next factor is high demand from institutional players, and big market influencers such as PayPal, Visa, Tesla, etc. And of course 100,000 USD is a symbolic psychological mark (after 20,000 USD) which many investors are guided by.
Cryptogeek: In your opinion, what is the difference between the bull run and correction of 2017-2018 and the current ones?
Ivan Petuhovschii: I would say that the main difference is of course the market itself. In 2017-2018 we were on a very unstable market with a lot of unprofessional investors and scammers who ruined the reputation of crypto for good for many people. The correction itself is nothing to be scared of - it is a natural cycle of the market.
Cryptogeek: How did the market situation influence your company since the beginning of the year? Did you get many new customers since January?
Ivan Petuhovschii: As a crypto exchange we make money on any market fluctuations, so either the price is high or low - we are very happy about it.
We are actively expanding to the UK and Europe and we’ve noticed a surge in our customer base since we’ve been given Temporary Registration to carry out crypto asset activities specified under the amended Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). I believe this shows that the customers have become more financially educated and prefer to trade on the exchanges that are compliant with the current regulation.
The other important factor is the possibility to transfer fiat funds hassle free. We have SEPA, SWIFT, credit/debit cards, Faster Payment, CHAPS, BACS, etc. I guess for us it was really important to become this bridge between traditional and crypto worlds.
Cryptogeek: High BTC price - is it good or bad for your business model?
Ivan Petuhovschii: Actually, as I mentioned before - any fluctuations for us are good, as we make money on the commission from trades - so the more people trade, the more we get. But I guess the green market is definitely putting everybody in a good mood.
Cryptogeek: Did you implement any new interesting features in the last year? What would be the top 3 of them?
Ivan Petuhovschii: Last year has become a year of regulation. As I mentioned before - we were given Temporary Registration to carry out crypto asset activities specified under the amended Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) which was quite a big important step for us. I believe that now is a crucial time when those who still try to make money by any possible means will be swept out from the market by strict regulations without the possibility of getting back in the game. So, now it is important to pick a side in order to stay alive.
The other important change is implementing our new custody services - we’ve integrated with Ledger Vault. Thanks to the Ledger Vault technology, we bring greater control over withdrawal requests with leveraged key generation and multi-authorisation capabilities. EXMO traders can now benefit from secure and smooth day-to-day withdrawal flows.
Ledger Vault was chosen for a reason. The solution boasts an impressive track record of zero lost funds. It was launched in 2018, specifically to address the security needs of digital asset businesses and has since led the way in the industry. With its battle-tested technology and impenetrable security protocols, Ledger Vault is by far the safest place to store crypto assets.
Among other achievements - constant updates of our fantastic mobile app that is available both for Androids and iOS, launching of SEPA instant deposits (that now are available even on the weekends) and of course the growth of our own native token - over the last year, EXM has grown by 1989%.
Cryptogeek: You’ve been on the market for a very long time, since 2014. How would you describe your core audience in 2021? Did it change with time?
Ivan Petuhovschii: Of course, and we are quite happy about it. As I noted earlier - the whole market has changed for the better! We are observing that our retail clients have become more sophisticated and financially educated. The UK and EU markets are beating everyone else in terms of verifications as we are one of a very small number of exchanges that offer a wide range of fiat deposits and withdrawals. Another important change is the inflow of institutional investors, trading firms and hedge funds. We had some corporate firms, but now we see the increasing demand and proactive approach from them.
Cryptogeek: What does it mean to be in the cryptocurrency field for so long? What are the pros and cons?
Ivan Petuhovschii: That is a very interesting and fresh question. Well, first of all - it is the reputation. We have 2M users - you can’t attract this kind of user base overnight. We’ve been there and back, we’ve survived through the 2017-2018 scam year and we haven’t deceived our users. That is definitely our advantage. It’s really hard to say what the disadvantages are - as I don’t see any.
Cryptogeek: You have 192 currency pairs available on the exchange. Quite a big number. What are the pros and cons of having so many trading pairs? Does it affect the performance of your exchange?
Ivan Petuhovschii: Let’s not forget that trading pairs don’t equal the number of coins (we have less than 60). Each exchange has an exclusively individual listing policy. While selecting projects to add to the listing, my team and I have encountered a “scam” more than once. Therefore, accumulating experience from traditional finance and auditing, we have developed our own system of rules for the selection of projects. In general, consideration of the teams’ application for listing takes from 3-5 days to several weeks.
Cryptogeek: Being on the market for such a long time, you must have a lot of interesting data. Is there anything you could share with us? For example, trading patterns of common cryptocurrency traders. Did they change with time, throughout all these years?
Ivan Petuhovschii: This is quite a difficult question, as all the data is confidential and I can share just some general stories with you. For example, cryptocurrency almost never is the first investment. Holders are over twice as likely to also have invested in gold, bonds and stocks/shares. The UK has the highest concentration of cryptocurrency holders in Europe. The cryptocurrency community is male-dominated, but the gender imbalance is less than many would assume.
Cryptogeek: What are the important industry trends for cryptocurrency exchanges in 2021, in your opinion?
Ivan Petuhovschii: Needless to say, 2020 was the year of hacker attacks - about $ 500 million was stolen by hackers. More than 20% came from DeFi protocols. It looks like regulators will start to pay more attention to DeFi and their compliance requirements. Unaudited smart contracts of projects often have vulnerabilities that attackers can exploit. As for the rest of the losses, 2021 will definitely be the year of rethinking and introducing additional security measures and custodian services. In addition, we very much hope that more and more exchanges will begin to apply AML and KYC policies in practice, which will make the lives of scammers very difficult.
Cryptogeek: Let’s talk about government regulation of the cryptocurrency field. Is it hard to be a cryptocurrency exchange in Europe? When it comes to legislation, has it become better or worse in the last few years?
Ivan Petuhovschii: This is a very good one. I believe that all today’s problems and crypto bans have their roots in lack of knowledge. Every day I read some news where bitcoin is blamed for money laundering or anonymity while we all know that this is the most transparent system ever if we apply all the AML and KYC procedures. Politicians make statements not even knowing that there are such compliance tracking systems in place that traditional institutions didn’t even dream about! So it’s essential for governments to have people who not only understand the technology but also have great experience on the market.
Cryptogeek: What is the best country to be in for a cryptocurrency exchange in a legal sense in 2021?
Ivan Petuhovschii: I consider the UK a fintech mecca, as the UK government understands the importance and revolutionary nature of crypto, hence the need to create a well-structured, regulated environment. We are very happy with everything that happens here in the regulatory frame.
Cryptogeek: Do you have any predictions for the future? What, in your opinion, awaits the cryptocurrency industry in the next 2-3 years? What is going to change specifically for cryptocurrency exchanges?
Ivan Petuhovschii: Overall, last year proved to be an incredible year. A lot of sad and unpleasant events took place this year, but the green market has become the most long-awaited and desired gift for us. We are very pleased that cryptocurrencies are strengthening their positions and the market is becoming more mature and interesting. I am sure that 2-3 years from now we will be firmly standing on the ground and the market will stabilize.
I wish all readers to always stay on the bright side of cryptocurrencies and believe in a decentralized economy. React less to stupid information noise, rebalance your portfolio, study the fundamental and technical analysis and trade with a cool head.
Cryptogeek: Thank you for the interview.