“MiCA will empower my company,” said Thomas Restout, the CEO of B2C2, while talking to Finance Magnates recently. “From our side, MiCA is a great benefit.” Although B2C2 is a cryptocurrency liquidity provider, it falls under the MiCA’s purview to distribute digital assets across Europe.
“MiCA will define the rules of the game,” Restout remarked. “Once the rules are defined, many more players can come in… If there are regulations, you know what the standards are, you have a clarification on the products. It will continue to raise the product and, certainly, what can and cannot be distributed.”
“As ETF opened the crypto world to new participants, MiCA will also open the crypto world to new participants,” he clarified.
The European regulator is implementing MiCA in two phases. The first phase, which concerns the rules around the distribution of stablecoins, took effect on June 30, while the second phase will be effective at the end of this year.
Despite the benefits, there might be some short-term disadvantages due to the limits in the transactional volume with the non-euro-pegged stablecoins.
“MiCA could slow down the volumes,” continued Restout, adding: “But I think this would be for a given individual. However, if it gives the required comfort to other new players to engage, and thus I’m pretty sure the negative impacts will be compensated. I think it’s an important piece of what’s required for this ecosystem to strive for more adoption, not large players dominating the space.”
In it, he contends “the SEC’s decision to approve the launch of bitcoin ETFs is a pivotal moment for the crypto industry providing greater accessibility to bitcoin investment, confidence in digital assets and regulatory authority.”/2
— B2C2 (@B2C2Group) January 22, 2024
“It’s Not the Product That Matters from SBI’s Perspective, but Reputation”
The London-headquartered firm entered the European Union last year by acquiring the French market-making firm Woorton. This allowed B2C2 to operate in the 27-country bloc with Woorton’s PSAN licence issued by the AMF. To expand its presence in continental Europe, it further obtained a virtual asset service provider registration in Luxembourg.
In Asia, it also has a significant presence, especially in Japan. At the end of 2020, 90 percent of the company was acquired by Japanese giant SBI Holdings, only five months after the conglomerate invested $30 million in the crypto company. And the backing of a big name like SBI is always a benefit.
“It’s not the product that matters from an SBI perspective,” said the B2C2 CEO, who took over the apex role earlier this year. “It’s a reputation. People can relate to a publicly traded company, and SBI is well-known.”
He further asserted: “We have some of the best credit you can find in the crypto space. Why? Because we are backed by SBI, an A-rated, publicly traded entity. And there is no A-rated entity that you can face in the crypto space.”
“It’s very important for us because when large institutions, blue-chip companies, or tier-one Institutions want to enter the space, they are looking for partners who are publicly traded companies with the best credit rating and transparency,” he added. “We have that.”
However, SBI’s involvement in B2C2 is limited. The conglomerate helps the crypto liquidity subsidiary distribute products in Japan. But overseas, the support is from a credit and reputation standpoint.
USDC and USDT are serving different demographics and user profiles. @Tether_to has been instrumental liquidity backbone of our space, especially in areas with tight capital control and oligarch capitalist regime. In most part of Asia, not only for crypto use cases but also cross… pic.twitter.com/sBk9lKJGH1
— Dovey “Rug the fiat” Wan (hiring) (@DoveyWan) September 8, 2023
“We Are Not Limiting Ourselves”
Meanwhile, B2C2 is also expanding. It has opened a new Singapore office with plans to apply for a Major Payment Institution (MPI) licence in the city-state. It already has offices in London, Paris, Luxembourg, New Jersey, and Tokyo.
“We are not limiting ourselves to Singapore or Asia,” the B2C2 CEO added. “We have a regional expansion roadmap for each vertical of the group. We will be looking at servicing Brazil, Turkey, and the UAE in the near future.”
Pointing at the challenges, he added: “For Asia, the challenge is that it is far more fragmented than any other geographies… China, Singapore, Hing Kong, Japan, Thailand, and Malaysia all have vastly different rules on the requirements of capital and licensing.”
He justified the expansion to Singapore by citing its “capabilities as a financial place, stability and a competent regulator.”
“Our objective is to service Singapore clients,” he said, adding that “the hub of Singapore will be to distribute in Asia to the extent that you respect every local jurisdiction, regulations and requirements. But first and foremost, it is to be distributed in Singapore.”
“Pushing Aggressively on the Tokenized Representation of Assets”
B2C2’s performance has also been excellent over the years. In the fiscal year that ended on March 2024, the company generated revenue of JPY 57.14 billion, an 88.5 percent yearly jump. It also became profitable, with a pre-tax profit of JPY 8.4 billion. In its annual financial report, SBI Holdings highlighted that the growth of B2C2 was due to the successful implementation of the customer base expansion strategy.
Notably, B2C2 does not cater for any retail clients. Its business is strictly with B2B customers.
“We provide liquidity in digital assets, as well as tokenized assets, stablecoins, and other types of digital representation of fiat and real-world assets,” the B2C2 CEO added. “And product-wise, we offer crypto spot derivatives in the form of spot, which are often used by hedge funds or retail platform distributors of derivatives like contracts for differences (CFDs) or other wrappers around Bitcoin and other cryptocurrencies, and derivative options.”
He further observed: “Our main value proposition that differentiates us, is our systematic approach. For example, our clients can still trade through chat. But most of the business that we process is done through either API or a single lender platform and is electronically processed.”
“We would like to push reasonably aggressively on tokenized representation of assets,” he added. “The reason we’re pushing into that space is because the blockchain ecosystem or Web3, in general, revolves around a few ideas such as instant movement of value. So, we’re very keen to push the utility that this ecosystem brings onto real-world assets.”
The CEO concluded: “We’ll be above and beyond just the liquidity provider in cryptocurrency and other digital assets. We want to push for an ecosystem that has an alternative way of moving value, and that will be any value.”
Further, highlighting the demand for cryptocurrency CFDs, Restout said that there are “a lot of competitors who are trying to get in the space. It’s difficult, but it’s catered for a reasonably specific client base. It’s very comparable to the FX client base.”
“They are the same people who have offered FX and CFDs. They want to offer crypto CFDs because it’s an easy transition, and clients understand the product. Regulation-wise, it is very comfortable. However, institutions are split between CFDs and NDFs (non–deliverable forwards).”
Explaining the difference between CFDs and NDFs, he said: “The difference between CFD and NFD is the fact that CFD has a daily rollover, whereas NDF comes with the rollover of, say, a month, which is standard. The products are fairly similar, but the institutional side, especially people coming from FX, are used to an NDF. They can book NDF products which are defined in their systems. So, it will be much easier to trade in NDFs than CFDs.”
“But even the people that you would expect to trade an NDF, a lot of time they prefer CFDs. One specific reason is that short-term funding is far more lucrative than long-term funding,” Restout explained.