Detroit-based Benzinga, a media and data provider bridging the gap between retail and institutional investors, sent its team to Switzerland June 2-3, for Crypto Valley.
During that time, Benzinga sought to recognize the innovation in digital assets, speaking with founders, investors and beyond.
The following is a conversation with Oliver Yates, the CEO and co-founder of Aplo, an EU-licensed broker leading institutional investors into the crypto universe. Check it out!
Q: Hi Oliver, nice to meet you. Care to start off with an introduction?
Oliver Yates: I’ve been in the crypto space for over six years now, on a professional level.
I started out in France, working in insurance smart contracts on Ethereum (CRYPTO: ETH).
That was pretty early for Ethereum and there wasn’t that much going on. I actually worked on the protocol in a research lab on security issues.
Then, I worked in San Francisco for a company called Merkle Data where I built and sold trading signals to hedge funds. Later, after finishing my studies, a few friends and I founded Aplo.
This company has been going on for three years, now. We’re 25 people and hiring, based out of Paris, France.
How did you find Aplo?
In the U.S., we studied at the University of California, Berkeley.
That’s where we got the idea for Aplo, formerly SheeldMarket, a dark pool, and worked quite a bit with the blockchain accelerator there.
Ultimately, it comes down to friends wanting to work together. We had all been in the space and in France there was no one doing stuff in 2019.
What actually is Aplo?
It’s simple.
We’re an access point to the crypto market for institutions. We act as a regulated counterpart sitting in the middle of everything. Instead of having to open 10 exchange accounts, these institutions need only one account with us.
They just have to have a bit of collateral and they have access to everything from one API, one interface and one settlement.
How are you different from some of the competitors that are out there?
The biggest difference is that we’re the only one out of all these players to be licensed in the European Union or EU.
For those that can’t work with American players, we’re kind of the choice.
Second, if you’re a U.S. provider, you can’t really connect to all the Asian exchanges like Binance, Huobi and OKX. However, these are the exchanges that have all the coins and liquidity. We’re able to connect there while being compliant and regulated by the French.
You get access to deeper liquidity, rather than going to an American player.
Was it difficult to get regulated in the EU?
Yes, it’s tough and there’s no standard framework.
You’ve got to choose. In Germany, BaFin has a framework for crypto. Then, you’ve got France with the AMF, which is the one we chose. You also have Malta, among others, which is not on the same tier, and Switzerland, which is non-EU.
We chose the French because we’re French and it’s easier to communicate with the regulators. Two, they’re the only ones with a definite and clear framework.
Isn’t France somewhat of a booming finance and technology community, now?
Yes, somehow it is very attractive for foreign capital. Fintechs there have raised serious funds in the past year and a half and on the Web3 side you’ve got Sorare and Ledger.
I think the main reason for that is the pool of quant and math people. If you go to any big American startup and look at the data science or quant team, it’s just French people.
What does your solution do for the overall market for crypto?
At a high level, you have a bunch of venues — marketplaces — and then you have protocols that can act as marketplaces or service providers.
It’s all fragmented which means that whatever you’re doing in one place can’t be transposed to another. Your capital is cannot be used somewhere else.
The fragmentation leads to friction and makes everything more expensive. So, we were really just an interface between professionals and whatever DeFi is, whether that is protocols, cryptocurrencies and the like.
And, you’re overseas, only? Not the U.S., right?
We don’t have any U.S. customers, but as you know most investment firms across the world have an offshore entity. It’s been the same thing for years now. So, we’ll never onboard a U.S. customer, but we can onboard customers from a bunch of different countries.
Are you engaged in conversations regarding fundraisers or even acquisition?
Everybody is being approached for acquisitions in the past two years.
We’re a longer-term, technology play and so, we don’t need to be acquired to work. At this stage, it’s more about growing and making our business sustainable, and being more than a prime broker, rather than being acquired by a bank.
How do you make your money?
When you’re trading through us, we take a transparent fee. You don’t have to pay any other venue fees.
If you’re borrowing crypto from us, you’ll pay a premium fee for borrowing. If you’re lending crypto to us, you get a rate, and so we make money by the difference between the rates we distribute and the ones we get.
Then, we have some services like shadow books for fintechs. They’ll pay a SaaS fee.
Since you’re bringing all these venues together, so to speak, are there some discounts that you pass on to the other end?
Yes. We aggregate volumes and get cheaper rates from exchanges. That allows us to be competitive on the rates.
Looking into the future, what excites you the most?
Ideally, we want to interact with more DeFi protocols. Right now we’re limited but, in two years, we’ll have some pretty decent liquid DeFi protocols that have a KYC layer. We’ll be able to leverage them and that’s going to be great stuff for us.
Additionally, as we move on, I’m going to be less involved in the day-to-day and more focused on the vision and culture, doing whatever is necessary to drive our success.
Any comments on the Terra-apocalypse?
Half of Terra was premiums from loans due to the protocol. The other half was a gift from the foundation itself. That’s unsustainable.
At the end of the day, there’s no free lunch. Crypto is no different. There’s no free 20% return. If you’re lending, you can potentially make 10% but there’s default risk.
You’ve got to ask the right questions. Does the yield come from anywhere apart from inflation?
