BlockEx Asset management

Family Office Investor © Humberto Santos

exposed brick walls near London Bridge. Yet while BlockEx may not conform with the steel and glass offices across the City and Canary Wharf that make up the financial services sector, it sees itself as a link between the old world and the new. From smart family offices in Mayfair, to Ultra High Net Worth Individuals, BlockEx wants to bring them all into a new era.

BlockEx started as an idea in 2014 – to create an institutional grade exchange platform, with all the functionalities of a conventional exchange with regard to financial instruments. It had to be acceptable to the traditional financial services will be distributed proportionately. These products are both part of BlockEx’s ethos of combining the efficiencies of blockchain with the regulatory framework and governance of traditional finance. We spoke to BlockEx’s Edd Carlton, Global Head of OTC Trading, and James Godfrey, Managing Director of Capital Markets. Both worked in capital markets before becoming interested

in cryptocurrencies and blockchain. While the rest of the office has embraced the more casual startup uniform, you can see their heritage in their smart shirts and jackets. Edd began trading cryptocurrencies a few years ago, while James became a blockchain evangelist in 2016. We discussed BlockEx, cryptocurrencies and the future of capital markets. Digital Asset Exchange Platform (DAxP), and plan on adding supplementary tools and functionalities, such as the Digital Asset Creation Tool and the BlockEx ICO Market. The Digital Asset Creation Tool is designed to enable the creation of a suite of digital assets, and BlockEx are currently in the FCA Sandbox to test out bond issuances. BlockEx is also in the process of launching their ICO for the BlockEx ICO Market, a marketplace to list and participate in high quality, compliant ICOs. An ICO is an Initial Coin Offering. Digital tokens are issued, and the revenues generated by these tokens is used to further business ventures. In an ICO, a newly issued token is sold to the buyers in exchange for fiat or cryptocurrencies. The newly issued token will have a genuine utility or application within the project. BlockEx’s token, the DAXT, will grant holders access to the Pot These products are both part of BlockEx’s ethos of combining the efficiencies of blockchain with the regulatory framework and governance of traditional finance.

BlockEx’s James Godfrey MD of Capital Markets (left) and Edd Carlton Head of OTC Trading, in front of their offices in London.

Edd Carlton, Global Head of OTC Trading

Edd joined BlockEx having previously run and managed a cryptocurrency trading desk in the city. He has over eight years of capital markets experience, and is a specialist in cryptocurrencies, Initial Coin Offerings, and blockchain. © Matthew Henry

Why is BlockEx’s OTC (Over-The-Counter) trading desk so important? BlockEx’s OTC desk provides a platform to bridge the gap between traditional finance (banks, Family Offices, Ultra High Net Worth Individuals, venture capitalists and funds) and the cryptomarkets. For many of the traditional parties, they can no longer ignore crypto due to the increasing publicity and impressive performance. However, many would be uncomfortable trading their own book on one of the existing Bitcoin exchanges, as they lack the knowledge and education to transact, store and manage their positions on order books that can be highly volatile at times. One way BlockEx looks to bridge this gap by providing a dedicated OverThe-Counter (OTC) trading desk to assist and overcome the various challenges posed to new market entrants.

“As with all new technologies, the biggest barrier to adoption is always education.”

Trading on an OTC basis generally offers a number of additional benefits to Exchange trading. OTC traders can manage risk, both in terms of counterparty risk, and entry and exit price. When trading with BlockEx, you’re making a trade with a trusted counterparty. The trade is instantly filled and you no longer risk exposure to external vulnerabilities such as holding large quantities of fiat or crypto on public exchanges. Historically, these have proven more susceptible to hacking attempts. Entry and Exit risks are minimised, as you are no longer required to deal with trying to fill orders on thin order books, resulting in slippage. OTC pricing is also less susceptible to volatility. OTC trading lends itself to parties placing large orders. The trade is fixed and locked in off market with quick and efficient delivery of fiat or crypto.

Do you see cryptocurrency going mainstream? I think to a certain degree they already are. However, as with all new technologies, the biggest barrier to adoption is always education. Getting people up to speed, and providing them with the information and tools to get involved, is so important. I also think that good governance and regulation play a huge role in making people feel comfortable in this new

environment. FinTech companies like BlockEx can play a role in this. BlockEx isn’t asking people to take a leap of faith. What we’ve created is palatable to your ‘traditional investor’. We’re operating something where the experience should be no different than transacting in a traditional financial market. We’re creating that familiarity, ease and accessibility, and doing it in a governed and self-regulated manner.

“BlockEx is well placed to bridge the gap between the old world and the new.”

What excites you about BlockEx? BlockEx is well placed to bridge the gap between the old world and the new. I started out working in capital markets, then made the move into crypto. I think it’s really important to link the two. People bandy around the word “FinTech” a lot. FinTech is meant to be

that link, between the financial world and technology. BlockEx provides that bridge, not only when you look at the people who make up the company, but also the products that we’re offering,

from the exchange, to the ICO tool and bond platform. To my knowledge, no one else in the market can offer such harmony between the two worlds.

Edd Carlton is a specialist in cyptocurrencies, Initial Coin Offerings and blockchain.

You have a much more extensive background in capital markets. How do you think BlockEx is going to change this market? Edd talks about us being a link between the old fi nancial markets, and the new, and that’s exactly what we are. It’s interesti ng to note, when I fi rst started talking to people about this almost a year ago, the vast majority of them didn’t know what a blockchain was, or what distributed ledger technology was. Now they do. Now we have traditi onal fi nancial companies looking at buying things like ICOs. But they need to be able to buy them in an environment where they feel safe. For them to feel safe, it has to be something that they recognise. That’s why we’ve built what looks and feels like a compliant exchange. Currently, there

“When I fi rst started talking to people about this almost a year ago, the vast majority of them didn’t know what a blockchain was, or what distributed ledger technology was. Now they do.”

What do you think is the most disrupti ve aspect of BlockEx? A lot of the things we can do with digital assets haven’t been unleashed on the world yet. It’s going to make things very diff erent. What other people are starti ng to realise now is that a bond is just a series of cash fl ows. In fact, any fi nancial instrument is a series of cash fl ows. The Digital Asset Creati on Tool, the DACT, makes it possible to create lots of diff erent types of fi nancial instruments. We could recode the platf orm to do trade fi nance, or syndicated loans, or even equiti es. It’s not a massive build out. So now that we have the marketplace, recoding the DACT to trade traditi onal fi nancial instruments in a digital fashion is not far away.

Why are you sold on the BlockEx bond platf orm? Currently, the Digital Asset Creati on Tool can only issue bonds. But these bonds are very special. They are going to give customers much more functi onality in their products than they currently have. The functi onality of our bond product is way in excess of what is current for a

“A lot of the things we can do with digital assets haven’t been unleashed on the world yet. It’s going to make things very diff erent.”

bond issue, whether its the ti me to market, being able to see who your bond holders are, or being able to process a trade in 30 seconds, eliminati ng sett lement risk. www.blockex.com

Above: James Godfrey considers himself a blockchain evangelist.