We Are Still Early (Interview)

Bitstamp is one of the veteran crypto exchanges, operating since 2011. It’s a European-focused platform based in Slovenia, with its headquarters in London, England — and serves the USA and many other countries as well.

CryptoPotato a chance to meet up with Jean-Baptiste Graftieaux (JB for short), the company’s global Chief Executive Officer (CEO). He has held leadership roles in traditional finance, fintech, payments, and eCommerce – as well as cryptocurrency. He became the global CEO of Bitstamp in May 2022 – before that, he was serving as the CEO of Bitstsamp Europe.

At the Paris Blockchain Week Summit, Graftieaux shared with us the story of the early days of Bitcoin (“in 2011, the only way to buy BTC in Europe was by sending money to Japan”), the enormous growth of Bitstamp (“we were 8 in 2014 and now 570”), how Bitstamp picks which cryptocurrencies to list on their exchange, and the institutional growth (“we are still early”).

The Days When You Could Buy BTC Only in Japan

Many people wish they had bought Bitcoin back in the early days when prices were in the range of a few cents. However, while we’re currently used to being able to buy BTC as easy as putting your credit card details back in 2011, it was different story – according to Graftieaux.

“Back in 2011, when you wanted to buy crypto in Europe, you had to send your money to Japan. The two founders (of Bitstamp), Nate and Damian, 20 years old at the time probably, their idea was, ‘Let’s give crypto access to European users, not going to Japan, but with a European platform, European bank.’ So overnight they put together Bitstamp.”

Three years later, Bitstamp was still a startup venture, but today it’s a vast global operation with a billion dollars a day worth of crypto trade volume.

“I joined the company in 2014. We were just eight people at the time. It was still a startup. It was in the garage. But nevertheless the market has evolved significantly over the last six to eight years. Now we have 570 employees over in Europe, in the US, in APAC [Asia-Pacific] as well.”

The First European Regulated Crypto Exchange

Along with that much trading volume comes the compliance responsibilities for Graftieaux and his team to manage in collaboration with national regulatory authorities:

“The DNA of Bitstamp is to be a trusted company. Very early in the process we became regulated – in 2016. We were the first exchange to be regulated in Europe. Then after in the US, and very soon after that in APAC. But that’s part of our DNA. That’s why we are very, very strong with institutional clients, banks, and payment service providers— but also 5 million retail [users].”

Today Bitstamp remains a top 10 cryptocurrency exchange, but JB still remembers the days they were processing only $20 million in a day – a number that has grown to billions. He also shared that they had 15,000 clients back in 2014, whereas now they have over 5 million.

It’s a completely different story, a completely different ecosystem.”

Today Bitstamp facilitates liquid exchange markets for a wide variety of cryptocurrencies, including Bitcoin (BTC), Ether (ETH), Tether (USDT), USD Coin (UDC), Ripple (XRP), Cardano (ADA), and dozens of others.

The company’s work is one of Slovenia’s greatest exports and claims to fame, says Graftieaux:

“Interestingly the company is still in Slovenia where it was founded. We have offices in Luxembourg, Amsterdam, New York, and Singapore. Out of the 570, probably 450 people are in Slovenia. Bitstamp in Slovenia — it’s like Apple in the US. Everybody wants to work for Bitstamp.”

In recent years there’s been a rise in cyberattacks on cryptocurrency companies and users. It’s reminiscent of the early days when crypto first rose to prominence as a major bounty online for cybercriminals.

Bitstamp is one of three exchanges, Graftiaux tells us, that keeps a U.K. SOC 2 audit/certification for information security:

“We have an InfoSec or CISO [chief information security officer]  team internally with tons of experience. And what we do to comfort us and to comfort the ecosystem is that we are audited, and we have the higher certification in terms of IT security, which is a Soc 2 report.

I think we have only three exchanges in the world with that type of audit or certification. So for us it’s outsourcing to reputable very, very solid partners, and at the same time, getting this validation that we are set of the art in terms of security.”

Bitstamp has notably stayed out of the news over incidents or security breaches for the last eight years. The CEO said that out of the roughly 300 cryptocurrency exchanges operating today, he doesn’t think there are more than 20 fully regulated exchanges. He believes that focusing on compliance first, then build, as opposed to build first, ask questions later has been a key ingredient to Bitstamp’s staying power.

‘Exchanges List Everything’

He says another aspect of that is quality control in the choice of trading pairs on the exchange. There are fewer coins to trade compared to some of the exchange’s newer competitors. That could be a high reward opportunity for holders, but also with the trade-off of higher risk.

One of Bitstamp’s criteria for quality is liquidity:

“We want to ensure when our clients want to buy the coin — there is coin on the market, there is coin on the platform. That when they want to sell, we want to make sure there’s a buyer. Otherwise there is no transaction.

What we have seen on the other exchanges is that they will be listing everything, every kind of coin. You buy the coin, but at some point when you want to sell, there is no one— and the price is dropping. You lose all your money, basically. So in terms of consumer reputation, this is bad. We think it’s very bad. So for us the first point is we want to ensure there’s liquidity on the platform.”

The second criterion is the team behind the crypto or token. The CEO explained that they are extremely selective because they want to make sure that if users buy a cryptocurrency – “there is a business plan, there is a team behind it, there is knowledge, there is IT security – that this coin will stay for the next 20 years, 50 years – forever.”

On Institutions: We Are Still Early

Speaking of that kind of longevity, Graftieaux told us he thinks we are still early in terms of institutional players making big investments in cryptocurrency.

While many institutional investors are beginning to add crypto to their holdings — especially in the U.S., where a more clear regulatory framework has begun to emerge — the Bitstamp CEO thinks there’s still big growth that we haven’t seen yet coming. Here’s the timeframe he guesses:

“The way to look at it is that the ecosystem is only 12-years-old. From 2009 to 2016, it was the Wild West: no regulation, no best practices, no law, no mediation whatsoever.

We played by the book, by the best practices at the time. Now it’s very fragmented. The US has a very clear regulatory framework. In Europe it’s less clear, but it’s coming.

At the moment, it’s more like a regulatory puzzle, with the VASP, the Virtual Asset Service Provider. This means that we are in a transition phase, which means that institutions are preparing themselves for the next wave, which will come after… let’s say 24 months more or less. Hopefully 24 to 30 months. So is it still early? I think it’s still early. There’s been growth, but the big one is coming.”