Crypto.com CEO: Bitcoin May See Selling Ahead of Halving

Summary

The transcript discusses the business environment in Hong Kong for digital assets and the recent regulatory framework changes, including the approval of Bitcoin and Ethereum ETFs. It highlights the company's strategy for entering the Korean market, emphasizing regulatory compliance and a focus on digital asset access. The conversation also covers expectations for the spot Bitcoin ETF and its impact on market structure, the upcoming Bitcoin halving event, and the company's growth plans, including user base expansion and strategic hiring. Additionally, it touches on the company's approach to sports sponsorships and brand building.

Takeaways

• 📈 Hong Kong's regulatory environment for digital assets has improved, with a new framework and conditional approval of Bitcoin and Ethereum ETFs.
• 🌏 The company is pleased with the support for market development in Hong Kong and sees it as a positive change.
• 🇰🇷 Entering the Korean market has been challenging, but the company has prepared for two years and aims to provide a competitive product offering.
• 🚀 Post-launch, the company plans to continue providing access to digital assets globally in a regulatory compliant manner, with a focus on the Korean market.
• 💳 The company is known for its crypto card program and aims to launch it locally in Korea as soon as possible.
• 📊 The demand for the spot Bitcoin ETF was larger than expected, indicating a positive structural setup for the market.
• 💹 Bitcoin halving is expected to have a long-term positive impact on the market by reducing supply, which could lead to price increases.
• 🔄 The crypto market structure is evolving, with an expected shift from retail to institutional investment driving prices.
• 🌐 The company is scaling up and has almost completed its regulatory licensing across major markets, positioning it for growth.
• 🏢 The company is hiring thoughtfully and strategically to ensure it remains a nimble and fast-moving entity in the rapidly developing cryptocurrency space.
• 🏆 Multi-year relationships with sports properties like F1 and UFC have established the company as a trusted global brand, and future partnerships will be selective.

Q & A

What changes in the Hong Kong environment regarding digital assets have been noted?

There has been a new regulatory framework introduced in Hong Kong, and recently, conditional approval of Bitcoin and Ethereum ETFs has been granted, indicating general support for market development in the region.

How does the Hong Kong market compare to Korea in terms of interest in crypto among retail investors?

South Korea is known for its high interest in crypto among retail investors and is one of the largest crypto markets globally, with a very active user base. Hong Kong, on the other hand, has shown a positive shift towards supporting the development of digital assets.

What preparations has the company made for its launch in Korea?

The company has spent nearly two years preparing for the Korean launch, acquiring two licenses and undergoing a prolonged product buildout to offer a competitive product to Korean consumers.

What can users in Korea expect from the company post-app launch?

Users in Korea can expect the company to continue providing access to digital assets on a global level in a regulatory compliant manner, and they are also looking forward to launching their crypto card program in Korea as soon as possible.

What is the long-term impact of the spot Bitcoin ETF on the market?

The spot Bitcoin ETF is expected to bring structural changes to the market, with increased large scale inflows against the backdrop of reduced Bitcoin supply, potentially leading to a shift from retail to institutional investment driving Bitcoin prices.

How does the Bitcoin halving event in April impact the market?

The Bitcoin halving event reduces the amount of new Bitcoin coming into the market by miners, which, while not immediately impactful, will make a substantial difference over a six-month period and is considered a positive development for the market.

What is the company's strategy for growth in the next six to twelve months?

The company is focusing on scaling up, having almost completed their regulatory licensing in all major markets. They are also mindful of remaining a nimble, fast-moving company to capture opportunities, while continuing their efforts in brand building as a trusted place for cryptocurrency interactions.

How does the company plan to counter aggressive strategies from competitors like Chinese exchanges?

The company has a different strategy focusing on building a solid foundation of regulatory compliance and brand trust. They aim to be the go-to place for people interacting with cryptocurrency, and are well-positioned to take advantage as some competitors facing regulatory issues.

What are the hiring plans of the company in relation to its expansion and long-term plans?

The company is hiring thoughtfully and strategically, with several hundred openings outside of customer service. They scaled customer service by about 700 people recently to meet new demand and increase traffic.

Will the company continue with sports sponsorships such as F1 and UFC?

The company values their multi-year relationships with these properties and will continue to be selective in their sponsorships, ensuring that they align with the brand's identity and contribute to its growth.

What is the company's stance on its user base and market penetration?

The company is approaching a hundred million users and has hit 250 during this cycle. They believe they are still in the early stages of the market cycle and are focused on scaling their business in a sound and compliant manner.

Outlines

00:00

🌐 Hong Kong's Digital Asset Market and Korea Launch

The first paragraph discusses the positive changes in Hong Kong's environment and regulatory framework for digital assets, including the approval of Bitcoin and Ethereum ETFs. It compares the Hong Kong market to South Korea, highlighting the challenges for foreign players in Korea and the company's preparation for launching its app there. The discussion also covers the company's mission to provide global access to digital assets in a compliant manner and the anticipation of launching a crypto card program in Korea. The conversation turns to the spot Bitcoin ETF and its larger-than-expected demand, the structural setup of the market, and the impact of Bitcoin halving on the market dynamics.

05:02

🚀 Crypto.com's Strategy and Expansion Plans

The second paragraph focuses on the potential factors that could lead to the rise of Bitcoin's value and the long-term perspective on holding the asset. It outlines Crypto.com's user base growth and the current retail investor sentiment compared to previous cycles. The discussion moves to the company's strategy, emphasizing regulatory compliance, brand building, and the importance of scaling responsibly. The paragraph also addresses the competitive landscape with Chinese exchanges and the company's hiring strategies to maintain agility. Lastly, it touches on the company's sponsorship of sports events like F1 and UFC, and the selective approach to future partnerships.

Keywords

💡Digital Assets

Digital assets refer to any online or electronic assets that have value, including cryptocurrencies, digital art, and virtual real estate. In the context of the video, digital assets specifically pertain to cryptocurrencies and the positive regulatory changes in Hong Kong that support their market development.

💡Regulatory Compliance

Regulatory compliance refers to the adherence to rules and regulations set forth by governing bodies, such as financial authorities. In the video, the emphasis on regulatory compliance indicates the importance of operating within legal boundaries, especially in the context of digital assets and cryptocurrency trading.

💡Cryptocurrency ETFs

Cryptocurrency ETFs (Exchange-Traded Funds) are investment funds that track the performance of a specific cryptocurrency, like Bitcoin or Ethereum, and are tradable on stock exchanges. They represent a more accessible and regulated way for investors to gain exposure to cryptocurrencies without directly owning or trading them.

💡Retail Investors

Retail investors are individual investors who buy and sell securities for their personal accounts, as opposed to institutional investors. In the context of the video, retail investors are highlighted as a significant part of the cryptocurrency market, particularly in countries like Korea, where there is a high adoption rate of cryptocurrencies.

💡Product Offering

Product offering refers to the range of goods or services that a company provides to its customers. In the video, a competitive product offering is crucial for the company's strategy in entering new markets, like Korea, and ensuring that they can meet the needs and expectations of local consumers.

💡Crypto Card Program

A crypto card program allows users to spend their cryptocurrency holdings just like traditional fiat currency through a linked card. It bridges the gap between digital assets and everyday transactions, making cryptocurrencies more practical and accessible for consumers.

💡Bitcoin Halving

Bitcoin halving is an event that occurs approximately every four years, reducing the reward for mining new blocks by half. This mechanism is designed to control the supply of Bitcoin, slowing down its issuance and eventually capping the total supply at 21 million coins. The halving is expected to impact the market by reducing the rate at which new Bitcoins are created and potentially increasing the value of existing coins.

💡Market Consolidation

Market consolidation is a phase in a financial market where prices move within a relatively tight range after a significant price movement. It is often seen as a period of digestion or stabilization following a trend, where the market is figuring out the next direction. In the context of the video, consolidation is considered a normal part of the cryptocurrency market cycle.

💡Strategic Hiring

Strategic hiring refers to the deliberate and well-planned process of recruiting and employing individuals who align with the company's long-term goals and strategic objectives. It involves thoughtful consideration of the company's needs and ensuring that new hires will contribute effectively to the organization's growth and success.

💡Brand Building

Brand building is the process of creating a unique identity and image for a company or product in the minds of consumers. It involves marketing efforts, public relations, and other strategies to establish a strong and positive reputation, which can lead to customer loyalty and increased market share.

💡Sports Sponsorship

Sports sponsorship involves a company supporting a sports team, event, or athlete, often in exchange for advertising and promotional opportunities. It is a marketing strategy that can increase brand visibility and connect with consumers who have a shared interest in sports.

Highlights

Positive changes in Hong Kong's environment and approach towards digital assets.

New regulatory framework for digital assets in Hong Kong.

Conditional approval of Bitcoin and Ethereum ETFs, indicating support for market development.

Comparison of Hong Kong and Korea in terms of market interest in crypto.

Challenges for overseas players entering the Korean market and strategies for long-term success.

Mission to provide global access to digital assets in a regulatory compliant manner.

Crypto card program as a significant product offering with plans for launch in Korea.

Spot Bitcoin ETF experiencing higher than expected demand and its implications.

Structural setup for Bitcoin with large scale inflows and reduced supply.

Inclusion of Bitcoin in the global financial system and its connection to equities and monetary policy.

General consolidation phase in the crypto market similar to previous cycles.

Expectation of significant market activity following the Bitcoin halving event.

Change in the crypto market structure due to the introduction of ETFs.

Impact of Bitcoin halving on market supply and its long-term effects.

Recommendation to hold Bitcoin for long-term investment horizons.

Crypto.com's strategy focusing on regulatory compliance and brand building for long-term growth.

Hiring plans and emphasis on remaining a nimble, fast-moving company.

Continued sports sponsorships with strategic selectiveness for brand alignment.

Transcripts

[CC may contain inaccuracies] First off, the pros and cons of doing business in Hong Kong.

Obviously, we are very pleased with the change in Hong Kong environment of

approach to digital assets. There has been a new framework that came

out from the regulatory perspective and this recent conditional approval of the

Bitcoin and Ethereum ETFs is a sign of a general support for the market

development in Hong Kong. So we're quite pleased with it.

And how does Hong Kong, compared to a market like Korea, for instance, where

there is great interest in crypto among retail investors and you're launching

your app at the end of the month? How do you expect to do in a market like

Korea? A Korea has historically been very

difficult for overseas players to enter, and we've spent almost two years

preparing for launch. It's obviously one of the largest

crypto markets globally with a very, very high adoption rate and extremely

active retail user base. So we'll see how do we are in it for the

long term. We've entered through acquisition of two

licenses and a very prolonged product buildout.

So we'll do our best to provide a competitive product offering to Korean

consumers. But in terms of products and services,

what can be expected after launching your app?

All right. We will give our mission is to provide

access to digital assets on a global level and doing it in a regulatory

compliance manner So users in Korea can expect us to continue in this fashion

being the trusted place where they could trade crypto and

a good selection of it further down the road.

And we are very well known for our crypto card program.

We are the largest reserve crypto card program globally.

We will do our best to launch it in Korea

locally as soon as possible. Chris, I want to talk about the spot

Bitcoin ETF. There was a bigger than expected demand

for it. What what assumptions are you making

about appetite going forward and the long term impact that may have?

I think structurally it's a very good setup.

You've got daily large scale inflows and this is against the backdrop of Bitcoin

having coming in a couple of days, which will reduce the supply side further.

So I think structurally this is well positioned.

Obviously, Bitcoin and crypto right now in general is a part of the global

financial system. So we are not completely disconnected

from what's happening in, in, in equities for example, and what's

happening with monetary policy or with what's happening in the geopolitical

environment. So

I think there's a general consolidation phase going on right now,

which is similar to the previous cycles, and I expect a pretty decent action in

the six months following the Bitcoin halving.

Do you see any change in terms of the crypto market structure on the back of

that, not to that ETF? Definitely.

Definitely. You know, those are flows that were

previously not present. So I would say that probably the

proportion of of Bitcoin prices being driven by retail

activity or small investor activity versus institutions is is changing

during the cycle. And, you know, the things that we look

forward to is the decision making on Bitcoin ETF apps and perhaps other

cryptocurrency ETFs or even cryptocurrency basket apps in the

future, because again, this may strengthen the flows.

Chris, you talked about that Bitcoin halving expected to happen in April.

And just wondering how much impact that may have given, you know, the kind of

demand we're seeing for that ETF of late.

Might that take away some of the impact? I would say that this just improves the

overall situation because you've got less Bitcoin coming into the market

that is being sold by the miners and you're just cutting this in half.

So you know, it won't make a difference over a day or two or a week, but over a

period of six months, it's it makes a substantial difference.

So I think this is a very positive development for the market.

One has to always remember that there is this buy the rumor, sell the news kind

of thing. So as we approach this this date, there

may be some selling coming out. Right.

And, you know, we're seeing an easing of bitcoin prices right now below 64,000 as

we speak. And just wondering, do you see the rally

continuing? What might

lead Bitcoin higher from here? Oh, again, I think this is a period of

consolidation we've seen exactly just in fact, it's happening in the previous

cycles. So this is an asset that you want to

hold for a very long period of time. You should measure it in years, if not

decades. So I strongly recommend everybody

who has this kind of time horizon to add it to their portfolio.

And I personally expect great performance over the next six months.

In terms of your own strategy at Crypto.com, how does it look like for

the next six, 12 months? Ask the soul about scanning the size of

the platform. We are approaching a hundred million

users, as you mentioned at the beginning.

We also hit 250 doing this cycle. The retail intent so far has been muted

comparing to the previous cycle. So it

gives us this kind of notion that we are still early into the early innings of

the cycle. So it's all about scaling.

And again, we've almost completed our regulatory licensing puzzle in all major

markets. So we were ready to grow the business as

fast as we possibly can. At a time when we're seeing pretty

aggressive strategies from Chinese exchanges.

How might you counter that? We have a completely different strategy

and in our view, where we're building this business to for the last decades.

Right. So from day one, we've created every

single customer on the platform. We followed very stringent

rules regarding anti-money laundering. So this is our way of building this

business. And we believe that if the market is

supposed to reach a billion people, it has to be done properly in a sound

foundation of regulatory compliance. So we parallel with

pretty decent efforts in terms of the brand building because we want to be the

trusted place for people to interact with cryptocurrency.

So I think that our strategy does not change.

Some of our competitors that's pursued somewhat aggressive tactics are now in

hot water and we are perfectly positioned to take advantage of that.

Chris, given your expansion plans and your long term plans as well, I mean,

what are your hiring plans on the back of that and which markets are likely to

drive growth? Right.

So where we are hiring right now, what we are doing so very thoughtfully and

strategically, we've got a couple hundred openings in the company outside

of the customer service, which we scaled by about 700 people in the last couple

of months. But outside of customer service to meet

the new demand and increase traffic, we are doing so very thoughtfully,

strategically. Again, we want to make sure that we

remain very nimble, fast moving company into the rapidly developing space so

that we can capture all the opportunities.

We don't want to be in a very large and slow moving corporate center.

That's just not how we want to build a company.

Any plans for sports sponsorship? Will you continue with F1 UFC, for

instance? Those are great properties and great,

great partners that we have multi-year relationships with.

I think we've already established ourselves as a globally recognized,

trusted brand. We will again be very selective moving

forward and speaking. Not all of these partnerships move the

needle for a brand like Crypto.com. So we want to make sure that whatever we

choose to do is true across and what we stand for as a brand.