A worse time to start a trading platform for crypto investors seems hardly conceivable. The price of bitcoin, ethereum and other cryptocurrencies collapsed last year. A number of trading platforms have already collapsed. FTX is the most spectacular example – and perhaps the most nonsensical.
What average investor dares to take an adventure in crypto?
Finst live with crypto platform
And yet Julien Vallet (above left) went live on January 9 with Finst, an online cryptocurrency exchange. ‘We worked hard on this for a year, we planned to go live as soon as we finished the registration with De Nederlandsche Bank. It came in mid-December, so we got down to business’.
In fact, the timing was almost perfect. The price of bitcoin finally moved after the turn of the year, and even increased by more than 20 percent. ‘Ha ha, of course our launch had nothing to do with it. But of course we were not immediately happy about such an affair as with FTX. It confirmed that we are working on something good: Cryptoinvesting is ready for a broker that works safely and transparently.’
Challenger to Bitvavo and the rest
Finst wants to conquer the crypto investor market as a challenger to the established order. It is Bitvavo with its millions of customers, Coinbase and other marketplaces.
We are transparent: We do not post
The main weapon that Vallet’s startup uses for this: the cost to users. It promises up to 82 percent lower prices than other trading platforms. “You can compare them on our site to those of our eight closest competitors, which includes Bitvavo.”
That’s step one. But don’t forget that many platforms make a living from the so-called dispersion: you never get the best price at the moment, but they still profit from the exchange rate difference. It is difficult to estimate how much it will give. It can be up to 1 percent per transaction, even if they claim that they work without commission. But we are transparent: we do not post.’
From DeGiro to Finst
That approach: disrupting the investor market at super low cost is very similar to DeGiro’s. And it’s not by chance. Until recently, Vallet and his co-founders Marcel Putina and Maria Gallo all worked at that contender. As product manager, head of compliance and Vallet himself led the French operation for a period.
Also read: Why DeGiro comes into German hands for DKK 250 million
DeGiro was sold to the German broker Flatex in 2019. At a good time he swept up the scale through the diet, but that was not the reason why Vallet left and started something new.
“It was purely a personal decision. I was part of the core team there for seven years. We had become number 1 in the Netherlands. When we also became number 1 in France, it was a good time for me to do something different.’
DeGiro founder Gijs Nagel invests
Together with colleague and friend Putina, Vallet has seen for some time that the crypto investment market was ready for a new challenger. “Of course, we had been watching crypto for some time, and the existing ways to invest in cryptocurrencies. We decided: this has to be much better. We saw similar things as when DeGiro started: for example, private individuals pay much higher costs than professional investors.’
The founders took their idea for Finst to Gijs Nagel, co-founder and for years the face of the success story DeGiro. He saw it. He stepped in as a shareholder along with Finch Capital.
‘Gijs also acts as a shareholder, but of course we have regular contact. After all that time with DeGiro, we have of course become good acquaintances, and he has plenty of lessons to share. But it’s not like he talks on the phone every week.’
Lack of security and trust
“Besides the rates, there is still a great lack of structure and security that you encounter in the traditional financial world. An important condition is, for example, that as a trading platform you keep the assets you invest in, in this case cryptocurrencies, separate from your own balance sheet.’
“Proper risk management is also often missing from the established providers. You’ve seen plenty of examples of this recently: Who guarantees investors that their currency won’t be lent to third parties? In our case, everything runs through a third-party account with a bank: Bunq . We have set up a robust structure.’
We do not attract students who want to day trade very actively and skim the market
Finally, Finst has built a platform for desktop, iPhone, iPad and Android, on which customers get a lot of extra analysis and information about crypto trading. The current providers also fail in this area, says Vallet. ‘We provide much more insight. Let’s start with something very basic: How is my portfolio doing compared to the market?’
All these properties must ensure greater confidence among investors. That, plus these predatory prices, should make them switch to Finst. ‘The investors really see the difference between a party based in an exotic country lending assets and us, a platform embedded in the Dutch banking world.’
Fine as new
As Finst is now set up, it’s pretty straightforward: you can trade 28 currencies with your euros. They go into a wallet and that’s it. More features are on the way, the founders promise. But is there still room for newcomers like Finst? The Netherlands has 1.8 million crypto investors according to recent research from Multiscope. But if market leader Bitvavo is to be believed, almost everyone trades via that platform.
“But that’s how the market was when DeGiro started: BinckBank was the absolute number one. No one had thought that there would still be room for a new competitor, but it clearly turned out to be the case. We did it once and now we’re confident we can do it again.’
Already in the first week of its existence, investors are flocking, says Vallet. Without any kind of marketing. He declined to name numbers. However, they have invested hundreds of thousands of euros together and their average age is 43. It is therefore not yet the kids who invest in the cryptocasino, but somewhat experienced investors. Maybe even a little risk-averse, if you can talk about it with bitcoin and other cryptos.
“It’s true, we don’t attract students who want to act actively and search the market. The slightly more mature investor also seeks diversification, and believes that cryptocurrencies are a good tool for this.’
Largest crypto platform in Europe
Perhaps with DeGiro’s insane growth in mind, Finst is not exactly modest in his goals. Within five years, it wants to become the largest crypto platform in Europe.
“Europe has 38 million investors who also face the same problems in France, Germany and other countries as the Dutch: high fees and lack of transparency”, says Vallet. ‘So we want to make the same difference there as in the Netherlands.’