SPEAKER_01: 0:00

Hey, hey, hey, welcome to this week's episode of Blockhead's Blockcast. I'm your host, Takatoshi Shibayama. I'm also the head of APAC for Ledger. I aim to uncover the creative, intelligent, and radical minds who are shaping the crypto industry today. I'm as crypto curious as anybody that's tuning into this show. We're doing this together, guys. Let's go. It's Anastasia Plotnikova, CEO of Fideum. Welcome to the show.

SPEAKER_00: 0:31

Thank you so much for having me. It's great to be here.

SPEAKER_01: 0:34

Yes, it's absolutely a pleasure to have you as well. Before we go into your business, and I love to talk a lot about that, but for the audience, it would be great to know why you came into the crypto industry and how your crypto industry has been so far.

SPEAKER_00: 0:47

Absolutely. I think to an extent that was a destiny. But starting from my early career days, so I'm a lawyer and I started my career working in the European Union law enforcement agencies. So this is how I heard about crypto, you know, to begin with. So the first interaction was, of course, you through this negative lens but mind you i was still technically born in soviet union you know when it was lithuania was part of it and even in my lifetime i saw three currencies so from the personal perspective crypto just made so much sense but i still stayed in my you know corporate track but into that late 2016 early 17 i decided to really switch something up because i was reading more and more you know and forums and upcoming white papers and ethereum arose at the time and it seems like it's the new community and the new parallel monetary system is building and it's being built in front of me so I joined team of EFLINT and then it became AVE so it's the best of the best and the worst of the worst what crypto can do so I think my whole journey is being shaped through immense power of distributed networks but also this regulatory sprinkle that is a must have if you want to truly see mass adoption

SPEAKER_01: 2:00

yeah I really kind of believe in that as well because when I first got in to the crypto industry, I thought, okay, this technology or this cryptocurrency can be worked for people who are living in hyperinflation or people who have capital restrictions, but also the situations that you went through as well. You know, fiat can be very fragile. Governments always changes and your money that you saved up could be worthless one day or exchange for something a lot less of value than it was before. Do you see that commonality amongst your peers? You're living in Lithuania, but Do you have the same kind of conversations with people who are in the scene in Lithuania?

SPEAKER_00: 2:40

I think, mind you, myself, I'm in the age gap between 30 and 40. What Lithuania and, to be fair, Baltic states did after we regained our freedom, we had this massive technological jump. Fasted internet. We grew up on 1G. internet. You know, 1GB, that's a must have, even since I was in the high school. So for us, this ability to innovate, built with our peers from all around the world, you know, speaking English, those simple things that will be given to us, allowed us to really integrate into, first of all, European tech ecosystems, and then, of course, into the global, because crypto has no borders. I do see a few interesting things, of course, for everyone. Crypto, at least in my age gap, is a thing that almost 90% of them have heard actively traded participants in DeFi. And then other people that are younger, but older, they're getting into it. So it's, you know, this bubble of Lithuania, we're very tech advanced overall. It's an interesting phenomenon, I would say.

SPEAKER_01: 3:40

Yeah. And I visited your country. We spoke offline before about this, but it was a lovely country. I heard it was the culture capital of the Soviet Union. I don't know if that is true, but I'd love to learn a little bit more about Lithuania.

SPEAKER_00: 3:53

I was a baby back then.

SPEAKER_01: 3:56

Yeah, well, for me, I guess I'm more in the 40 to 50 age bracket. So I kind of remember those times I was still living in the US at the time when the Berlin Wall fell. And, you know, I kind of remember very clearly back in those times, but I never really lived in those countries before. But, you know, I feel like, you know, this blockchain technology, you know, you kind of of leapfrog into it and then also it kind of speaks to you know the technology that it has to be something away from governments and something that it's for the people and right now I think that regulations are rapidly coming into this space and I just wanted to talk to you about that too because for people who are kind of in Asia I think regulations in Europe is not something that we focus too much on obviously we hear about it but we don't really do some deep diving into it but like if you can let us know like what you know Europe is doing in that regulatory space, that would be great.

SPEAKER_00: 4:49

Absolutely. And just to add to our previous point, my parents, especially my dad, who is in his 70s, he understood crypto perhaps even quicker than I did, because he lived in actual Soviet Union without ability to trade, travel freely. The main blocker for him to enter that market was that in early days, crypto software wasn't really usable unless you were techie. So I think as an industry, we did an amazing job in making it more accessible. But of course, we have a long way to go, especially when it comes to DeFi instruments and tools for average user, not tech geeks, you know. But regulation in Europe, perhaps you saw it in markets and crypto assets regulation, Mika, how Europe is doing. And there are a few, I would say, dimensions to it. On one, why would anyone care what European continent is doing that is lagging, you know, in innovation and other things, but Europe has 700 million people, out of which 200 million people are eligible crypto buyers. So the market's potential to expand into European markets and onboard these users, younger users, users with disposable income, is massive. And you can see that on average, Europe is really lagging in both DeFi usage, you know, on average and participation, as well as CeFi. And you know, there are some, of course, historical aspects, you know, not very robust capital markets compared to the US or let's say Singapore or Hong Kong. But nevertheless, it's a fantastic market that needs to be targeted. And with micro-regulation, of course, we have clarity and there are different types of licenses that companies and crypto firms can seek to achieve. And on one side, it's fantastic. We have clear rules. You know, you go through the licensing process, capital reserves, just go ahead and operate. But then on the other side, the trend appears that only very large firm can afford to do And then it means what is happening with smaller firms, innovators, where they go. So right now it's in the midst of licensing across all European continents. We see some interesting movements of some companies relocating to US, some relocating to Dubai, Singapore, even Hong Kong. A lot of things are happening in front of us and I just hope that Europe won't lose its edge.

SPEAKER_01: 7:04

Yeah. And why do you think that crypto adoption in Europe is not high compared to, let's say, the US or Asian markets?

SPEAKER_00: 7:12

I would say some things perhaps are, well, Europe is, let's compare it to Europe. United States, you know, 27 countries that are so different. German citizens, they had very different interests compared to Lithuanian citizens that has, I think I saw actually some stats from chain analysis for the last year. Lithuania, I'm not sure the method, how they tracked it, was seventh in using all the bridges in DeFi. We're a country of three million people. So if we split between old Europe and this newer Europe that joined to European Union in 2004 and later, those are very two different sets of countries. So I think countries like Lithuania, Baltic States, Slovenia, Slovakia, Czech Republic, the desire to invest, innovate and close the gap because for 70 years, we were not able to capitalize in any capital markets. Like we didn't have tools while, let's say, western side of the europe they were able to do so so for them this crypto is was i would say less than a social lift well for us it was one of the means how we can build wealth quicker or at least try

SPEAKER_01: 8:17

to yeah no it totally makes sense i think that's in a very traditional mindset i feel like in asia you know obviously there are you know robust regulations around finance but i always thought it was more of like a social mobility kind of thing. You know, like in the US, we see that with the, you know, kind of financial nihilism that it's having with the meme coins. I think in Asia, they just inherently have this mentality to quickly move up to social class as possible, because I think more and more going into the future, it feels like the social mobility element is kind of, you know, thinning away, especially we see that in like in markets like Korea, where everybody's punting on crypto. I think a lot of the Asian countries are kind of experiencing somewhat similar. I think we might be, you know, kind of heading towards kind of a future where this social mobility is like really disappearing from the edges and people are looking for things like this not necessarily because they believe in a technology not necessarily they believe in having an alternative financial system but it's just like i would just want to you know make money fast and that mentality seems like it's getting stronger and stronger especially in the younger generation

SPEAKER_00: 9:24

i do see it through the lens when I lived abroad I lived almost 10 years in the Netherlands and just traveled Europe pretty well I think it has something to do with stagnation and just as you said lack of the social lift this really upward mobility you know when the rule book was very clear you work hard you know 10 years in the corporate and then you buy a house whatever your dream is that it can be executed but most of us at least in my generation we entered workforce after 2008 you know and we didn't you know buy property or stocks so we didn't a lot of us didn't see this 25 to 30 year essentially uprising in asset value so what is accessible for us and i do agree with your nihilism it's buy crypto and bet it all either i lose it or i win big i would say to an extent it's understandable but dangerous mentality because you see it through the meme coin cycles and previously with nfts and there's millions of pumps and dumps that nobody cares about tech that given we're too naive thinking that everyone's here for the tech. Also, sense of community is disappearing. Our communities are clashing with each other. The fabric of crypto is changing or maybe it has already changed.

SPEAKER_01: 10:38

Yeah, I kind of think it already is. I mean, when I joined pretty much at the same time as you in 2016, there was a different set of people that had a very Bitcoin maxi mindset. And then the generations that we've seen, you know, coming in from like, you know, the ICO days, the 2020 times, they're all kind of start to look very different and I guess it's like we're experiencing a new generation of people younger people than us coming into this space and they come from very different social backgrounds or economic backgrounds you know for my generation you know you probably thought you know my generation probably had a little bit more upward mobility but actually it was kind of like dangled in front of me it was just rug pulled out of me right after 2008 but yet we don't really see that kind of like mindset of people who are like okay I just want to come in, make a lot of money and then get out. I think my generation of people had a little bit more of a mindset like, okay, I like the technology. I like the philosophy behind it. It just kind of feels like it's degrading over time a little bit. But I think innovation is still happening. I don't want to paint a bad picture of the crypto industry.

SPEAKER_00: 11:44

DeFi is blooming with all the new tools that's happening and to an extent also with tokenization and RWAs. For the longest time, it was just a hyped word that didn't mean anything. But I think starting this year, we actually see some actual developments, not only tech developments, because for tokenization of real world assets, we need to see tech marrying legal, marrying the whole wider capital market structure to have the system flowing and working. So I'm very hopeful and I agree with you. We're not pessimistic about the state of tech.

SPEAKER_01: 12:20

Yeah, we actually see in a stablecoin space as well, right? There's absolutely a lot of adoption stablecoins. I think banks are going into this space properly. The payments company are going into the space as well. You've seen it from Stripe acquiring Bridge. I think a lot of companies are starting to do this. There's absolutely adoption in this space. And then one day, very soon, cross-border payments will be all transacted on blockchain. So I'm very hopeful that that will be happening. But the other part is just going back into the regulation side of things is that while the industry is still yet immature i feel that regulations might put like a moat around larger companies as you mentioned so that it makes it difficult for startups to come into this space and continue innovating and it might drive more of these kind of companies into kind of a darker place or maybe they just pivot into more like a DeFi space where it's more open for the regular people as opposed to like the institutional side where they want to trade and that they want regulatory clarity and they only want to work with bigger companies.

SPEAKER_00: 13:29

Yeah and this I would say brings us to some unintended consequences. If we discuss regulations and the benefits or lack of thereof within the European Union and microscope on paper the main spirit it in the letter of the law and all subsequent legislation is to protect investors protect retail investors with all the disclosures white papers which is great and this really lacked but then when you see what actually firms have to do and how to comply and what restrictions to impose on investors and users, some of the systems might become not very usable or attractive to use. And then as an investor who values his or her time and has the whole busy life to live, instead of providing all the mandatory documentation and filling out travel rule requirements, you'd go to DeFi. And if there you lose money, you won't find any justice. So what we see, at least on this side, it's very practical problems to solve being compliant with all additional requirements. That's one. Let's say you're a larger firm, you can do that. But also not to make user experience horrible. Because perhaps you witnessed all the questionnaires that you have to provide and source of wealth and source of funds, which is absolutely understandable and very fine with institutional customers. But if you are a DeFi DJ who decided to move assets to a centralized entity that is regulated, oh boy, the amount of paperwork you need to provide. So what is your incentive?

SPEAKER_01: 15:00

Yeah, no, absolutely. I mean, I think that, you know, even my experience is, okay, I'll use, I have to use a regulated centralized exchange for on and off ramping, but all the activity probably would go to DeFi because that's where the innovation is. That's where it's a lot more shinier and brighter. And the regulated exchanges generally offer, at least in Singapore, it's like spot trading, no staking and just pure trading. spot only

SPEAKER_00: 15:25

yes so you as a user you're very protected yes but also it means that if you're more sophisticated user institution you can use that you know and maybe you can even trade some futures or options as a larger or qualified investor but what to do for just let's say normal people you know we will go to defy or you'll go to hyperliquid then build amazing tech you know per se and then you go and play there and then we see some users using CIFI regulated platforms only for limited use. Let's say buy and hold, occasionally trades. So the new as a platform, you'll be also losing some of the revenue.

SPEAKER_01: 16:01

Now, if you're starting a business in Europe and you're already hitting this kind of barrier, what could be the catalyst for it to grow then? Because if you already create a moat and then you're already protecting the larger businesses and it makes it hard for other startups to come into this space, what positive things can come out of this?

SPEAKER_00: 16:21

I think the biggest social positive is that we see that crypto and crypto companies, we used to be almost persona non gratis, very similar to crypto industry being unbanked in the US. think in singapore and hong kong there were less issues because they were much more proactive with their legislation so this is it like crypto became just another asset class this is good for the industry as a whole because it changes social opinion and subsequently opinion of the banks and other institutions that are even planning to work with crypto or they have crypto assets so this is not positive for all of us but when you as a company you decide let me build a an amazing centralized exchange with great features that can potentially compete with the greatest, like Bybit and Binance, well, you can't really do that because you need to apply for a license. Or you can go DeFi route because DeFi is not technically regulated. What is regulated is, well, as you mentioned, is on-route and off-route. So you can still innovate and hopefully you find really good product market fit. They will start generating revenue and then you can go for the license. Or you move to friendly jurisdictions. And when you're big enough, then you move back to the European Union. as an entity, or you'll start servicing the European clients more.

SPEAKER_01: 17:35

Yeah, it makes sense. And how is Fideon kind of being involved in this build-up in the European crypto space?

SPEAKER_00: 17:41

We're unbred in Lithuania and also Canada, so we are a Lithuanian-Canadian company. We are in process of securing our Mika licenses in two jurisdictions, Lithuania and Malta. Fingers crossed, it's a lot of work, but we're very excited. We're just separating different business lines or different jurisdictions. What we see on the ground, there are a lot of really good triad-5 print principles being implemented we tried to follow them almost from the day one because the draft legislation wasn't works for years and also it's a common sense you know from obvious things like separations of company funds segregated user funds those things that are must have and they were supposed to be must have years ago and we saw what happened when it wasn't done properly and remember of before the podcast we discussed how come FTX Japan users didn't lose any money That was because of exactly that. So good practices, they do protect investors. That's a fact. But what we experienced from our side, of course, it's additional hiring of additional IML officers, additional tools. So there is an extra administrative burden. What we're trying to do, we're trying to make it more productive to keep our clients happier and then streamline and innovate. But in this very regulated space, how we can operate better and be friendlier to our customers.

SPEAKER_01: 19:01

Yeah. And you obviously started off as a startup founder and you built this business was it that you were able to kind of build this early so that when the regulations came in you were big enough to apply for this or are you experiencing you know kind of the challenges that you mentioned previously

SPEAKER_00: 19:20

I would say we were forward thinking enough to pre-build things that we knew that are coming that was one but second you can never expect regulators to be very straightforward and provide you everything in advance And mind you, sometimes the European problem is it's not only regulation for CryptoMika, but all subsequent regulations that you have to comply with. For instance, DORA, it's a Digital Resilience Act, which is very similar to, in its administrative burden, to GDPR, the Personal Privacy Protection. And perhaps you know it from your professional career and the peers that, first of all, it's admin burden. Second, actual enforceability. And C, privacy. What is the outcome? Do we have more privacy in the European Union because of GDPR? Or we just have slowing down innovation and additional costs for businesses? So balancing of all existing regulations and taxation with micro-regulation, I think this is not even challenging. It's just a lot of work the team is working day and night to deliver.

SPEAKER_01: 20:22

And how do you find the difference between Asia or other regulated jurisdictions compared to Micah and how it can improve?

SPEAKER_00: 20:30

I would say for European legislation, It is too late to be improved right now. We need to wait for Mika 2. They were similar to how we had Mifit and then Mifit 2 for capital markets. This is the usual process and it's fine. But realistically, it will be another four to five years until we see that. So our job as an industry... Well, just being realistic. Our European legislators don't work at a very fast pace. So we need to, as an industry, provide very clear feedback and guidance on what can be done better because it's our job. They're regulating us. So we need to be very cooperative with national authorities as well as European authorities. So that's one. When it comes to jurisdictions such as Hong Kong and Singapore, both have very good and very straightforward licensing regimes for VASPs and payments and payment tokens. The biggest practical difference I see, because both Hong Kong and Singapore are very strict and tier one jurisdictions to get licensed. But their approach with the sandboxes that they have on the national level are much more flexible. You can go in and test your solutions. So it's this flexibility and I would say lack of hostility towards DeFi. is something very inviting you know as a also larger firms smaller firms or just individual builders

SPEAKER_01: 21:48

yeah i agree and why do you think it's a little bit behind in that sense i mean Obviously, you mentioned about there's different countries, different types of people that want to enter into this industry. So are they planning it very conservatively? Because it's very hard to get a consensus across all the EU nations.

SPEAKER_00: 22:08

Oh, consensus in the European Parliament. This is something that we see rarely. Remember a few years ago, to be fair, it was pre-COVID. We had Facebook's Diem, the stable coin, right? During the discussions in the European Parliaments, when they were just... was early deliberations on the scope of stablecoins and stablecoin regulations. Some of the offices there, they had like meeting room kill DM. A lot of spirit in the current stablecoin regulation in the European Union came from that approach. It doesn't make it automatically bad. It makes it very cautious, very careful. Stability of the euro system and payment system was the utmost importance. And hence, it shaped requirements for very large reserves, if you're a stablecoin issuer, and the hostility towards USDT, as an example. So European block, of course, it has to protect its own monetary interest. Because it's not backed by a stable euro. It's backed by a stable dollar. So also we have a sprinkle of politics. And it's just monetary competition. And then you as a user and a firm. You're trying to navigate through all of that.

SPEAKER_01: 23:15

I see. And do you find that maybe potentially. When looking at the US. I don't know how it's going to look like. I mean obviously there's a lot of. positive expectations, but, you know, obviously Trump is only going to be there for four years. So it might flip up and, you know, a lot of the executive orders can be canceled, but just on the kind of near term. Everybody looks at U.S. regulations, how it's going to look like. And if it's somewhat positive, it might reflect back into Europe as well. Is that something that you think might potentially happen?

SPEAKER_00: 23:44

I think this is the hope, what we call on the ground. If U.S. does its job right as the largest market, the most powerful market when it comes to the buying power of crypto and assets in general, if crypto will be regulated not through the executive order, but through the standard legislature channels, meaning passed by the Senate and in the house, it can be, and I do believe it will be absolutely transformative. It will be regulated very clearly per crypto type, per asset class. And imagine how much innovation it can unlock. You know, for both crypto firms, firms based in Singapore, Hong Kong, starting to service American markets or vice versa, the partnerships and implementations that we can do without being afraid of being prosecuted, because for the longest time it was regulation by enforcement. And both Coinbase and Ripple, they fought for all of us to make it happen. you know, in a sense, right? I do have a very positive outlook seeing the crypto team and crypto czar and crypto NAIs are David Sachs. I do believe that right now, US is on the right track. Let's see how fast they will execute and what will be the content of the legislation.

SPEAKER_01: 24:54

Yeah. I mean, I think we all kind of have this positive feeling around it. If they can positively impact this side of the world as well, hopefully there'll be some unlock as well. I mean, there's a lot of countries, even in Asia, where there's kind of gray regulations or things that kind of change quite frequently. So it'll be good to see some kind of universal standard sort of way that we can all kind of understand, and then we can port our regulatory status to other countries. And I think that's the thing that, you know, in the traditional finance world, it exists, but It doesn't really seem to exist in crypto as of yet.

SPEAKER_00: 25:31

This is such a good and interesting point. Because first of all, crypto is 24-7, 365, unlike traditional markets. And it's fine. And almost every regulator or jurisdiction, they have same concerns. They don't want to be too lenient. Jurisdictions, their licenses, they do have value because it's a reputation of the country and the firm, etc. And investors need to be protected. Right. and mostly retail investors because TradFi has enough tools and capabilities to protect itself if we simplify it. And yet we don't see any attempt to synchronize regulation, so to say. Because now firms need to be licensed in the European Union, fair enough, then in Singapore, then in Hong Kong, and then in other respective jurisdictions in the Middle East, etc. So I do hope that maybe in the next 10 years we'll have more or less standards across the board, at least for some types of assets or operations. But it's a long way to go because there are no initiatives to do so yet.

SPEAKER_01: 26:33

Yeah, I think it's just an early days. But obviously in the crypto space, nobody creates regional businesses there. Everybody's thinking global. And nobody really wants to spend all the time and energy and money to get regulated in every single country. It has to be more of a simple registry system that people can register their business. They're already regulated in a certain tier one jurisdictions and then be able to get going. And I think that's the next kind of unlock that needs to happen.

SPEAKER_00: 27:03

I do agree when it comes to regulated CeFi businesses. I do think that currently, even in crypto, we have two parallel universes. One CeFi regulated structured products, and then we have DeFi. And they do not really intersect unless it's... on-ramps and off-ramps or stablecoins. DeFi is going its way and I would say there are so many amazing and interesting things happening from shielding the transactions from privacy tools and digital IDs on the blockchain to transactions and different bridges and wrappings. Amazing. We don't see it being poured into CeFi due to the regulatory barriers. So there are like Two worlds, one regulated CeFi and one this exciting, I would say, really exciting CeFi.

SPEAKER_01: 27:51

Yeah, I agree. We're almost at the end of the episode. Are there any parting messages that you would like to share?

SPEAKER_00: 27:58

No, I think we're good.

SPEAKER_01: 27:59

Right, great. Well, thank you very much for your time. How can people follow you, follow your business?

SPEAKER_00: 28:05

Please go to ethereum.com and you'll find all our social channels there.

SPEAKER_01: 28:09

Awesome. Thank you so much for your time. And thank you for listening. If you like what you hear, give BlockCast a like and subscribe on your favorite podcast channels, Spotify, Apple, wherever they are. For all your juicy web three news. Keep updated on blockhead.co. Catch you all in the next episode.