The Blockchain/Crypto fintech market is booming as traditional financial players enter Web3.
We interviewed Lionel Rebibo, co-founder and CEO of Trakx, an AMF-registered platform offering thematic indices on digital assets.
Hello Lionel, could you tell us a bit about Trakx? How did the project come about?
Trakx is a fintech offering thematic crypto-currency indices on its trading platform with a high degree of compliance, security and liquidity. Our project was born in 2019 out of the need expressed by investors to gain simple exposure to certain trends emerging in this asset class. It’s an easy and less expensive way to enter this market with a turnkey solution. Our various CTIs (Crypto Tradable Indices) have different degrees of risk and enable you to gain exposure to certain sub-segments of this broad asset class, for example: Defi, Proof-of-Stake, NFT metavers…
With my other co-founders, who come from traditional and alternative asset management, crypto and indices, we succeeded in bringing this project to life with the support of ConsenSys in New York, the incubator at Paris Dauphine University in London and financial aid from the BPI, as well as the participation of some well-known business angels at first.
Tell us more about your background, and the steps that led you to the Trakx project?
I worked for 15 years as an analyst and then trader at Fidelity Investment, CQS and Chenavari before meeting the co-founders and deciding to embark on the Trakx adventure. We’re now a team of around 20 people, including a dozen highly experienced blockchain developers who maintain and develop the platform, a customer service team that listens to our users, and a sales department covering France and Switzerland, to name but a few!
How do you see the crypto ecosystem evolving with the arrival of traditional financial players?
The last 18 months have been difficult for crypto-currencies, but the crypto-winter was not the extinction event that skeptics anticipated. On the contrary, it has laid the foundations for the next bull market that could see crypto-currencies finally go mainstream – a scenario for which the players in traditional finance seem to be gearing up.
Institutional investors are well aware that the disruptions observed in 2023 were not due to technology, which worked as expected, but rather to the practices and behaviors of these individuals. Such behaviors are not unknown in traditional financial circles, and we know that they are usually followed by strong governmental responses, particularly in regulatory matters, which have historically been powerful forces helping to shape the industry.
Instead of dismissing crypto-currencies as an unviable asset class, traditional financial institutions are using the bear market to build up their knowledge of this ecosystem, and develop the necessary infrastructure to support them, so as to be well positioned during the next bull market.
As an example, we can cite BlackRock’s decision to file an application for a Bitcoin cash ETF in the USA, a decision that paved the way for other major traditional financial institutions. The market eventually expects the application to be approved, and anticipates strong popularity for a cash-based Bitcoin ETF.
The institutional adoption of cryptocurrencies is also being boosted by the strengthening and acceleration of regulation in many states, a direct consequence of the FTX scandal, as witnessed in the UK, with the Financial Services and Markets Act 2023, the EU with the implementation of MiCA or Asia and the Middle East, which are advancing even faster on this front. Only the USA is lagging behind.
The regulations thus provide much-needed legal clarity for institutions which, accustomed to operating in regulated environments, have until now been reluctant to increase their exposure to this new asset class.
How will MiCA’s arrival impact your business?
Transparency and regulation have always been at the heart of Trakx’s concerns, as evidenced by our registration with the AMF as a PSAN (Prestataire de Services sur Actifs Numériques) from July 2021. We were the first company to register four times with the AMF! We are therefore preparing now to comply with MiCA, in particular with regard to the strengthening of KYC (know-your-customer) checks for transfers between platforms. Our current registration process will enable us to adapt naturally to the regulations, as the platform has been built on the standard regulatory foundations of banking ecosystems.
PSAN companies will be considered liable for losses in the event of hacks or internal errors involving their customers’ cryptocurrencies. This therefore implies a segregation of funds between their assets and those of investors. Trakx has always followed this logic, with high standards of cyber security, and segregated management of customer assets, in terms of possession and custody. Trakx works on a 1:1 basis on all its customers’ assets, without any leverage, with nominative management, and with a perfect historical distinction between the company’s own funds and the proprietary assets of Trakx’s customers.
The arrival of MiCA confirms Trakx’s historical strategic choices in terms of KYC, asset management and risk management, and respects our philosophy of offering a trusted platform to players wishing to gain exposure to this asset class in a medium- to long-term investment rationale. MiCA regulation is therefore a logical and natural extension of our choices, and opens up positive prospects for our business.
