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November 25, 2020

In Conversation With

Operating in the Japanese market as a non-domestic player with B2C2


(7:54) B2C2 launched in 2015 as an electronic market maker providing liquidity to exchanges like Coinbase, Bitstamp, etc. In 2016, the team decided to make an aggressive entry into the OTC markets with a focus on being electronic. That part of the business has grown faster than the rest of the industry.

They were the first player to get into the Japanese market in a big way and signed on big broker names like GMO to trade. They hired a Goldman Sachs alum to run the business from Tokyo. In 2019 they expanded into the US markets. Most recently, b2c2 has scored a $30 million investment from SBI. Max Boonen, founder of B2C2, explained,

(9:29) “That deal with that’s taking a $30 million stake in the company I think that growth story has been quite, quite important in getting them to want to make that transaction. I think that there’s two things: first non-domestic players in the Japanese market, there’s only a handful. So they were quite comfortable with the fact that we had been in their country for quite some time. And secondly it’s a more classical story of, they liked the quality of the offering, especially on the tech side. And there’s another thing that is quite important, which is the quality of the client franchise. I don’t think that there’s anyone in crypto whose got such a valuable institutional client franchise as B2C2.”

(12:27/Teana) JPMorgan recently agreed to extend its services to cryptocurrency exchanges, which has the industry wondering if it marks a shift in the long-term standoff that has existed between banks and crypto firms.

(13:01) “I think on banking [and] the ice breaking, I don’t want to be too optimistic. Because it wouldn’t be the first time that we think ok, well this is happening,” said Boonen.

(13:53) – “Just the fact that JPMorgan is going to be banking some crypto exchanges, I think it’s nice. we’ll take it. It’s good news obviously. But I don’t want that to make us complacent and think that well it’s ok we don’t need to do more education and work with the banks to get them to be more comfortable with our industry,” Boonen added.

(15:30/Teana) There is a trend among cryptocurrency firms wanting to get into the prime brokerage business.

(17:32) A report from Blocktower said a few weeks ago, I really like that quote, and I think it was in The Block, that a lot of players are trying to address the prime brokerage feature set from different angles, but thus far it’s really more aspirational than anything else. And I agree with that. I think that everyone’s got an interesting approach, but in each case, there’s something that’s missing,” said Boonen.

(18:00) Boonen went on to explain the three core ingredients to having a successful prime brokerage:

Proper knowhow and an electronic offering/strong automation
An existing client base
Balance sheet

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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