Eric Demuth: « Mass Crypto Adoption Can't Happen Without Regulation »

You are doing a lot of work to democratize cryptocurrencies, such as partnerships with banks, creating tools for family offices, and announcing ambassadors like Bayern Munich or Stan Wawrinka today. Do you think that cryptocurrencies could be included in all investment portfolios?

Éric Demuth. - The same question could be asked about stocks. Are they suitable for everyone? I don't know. But in my opinion, cryptocurrencies have become an interesting investment for a large number of people, provided they diversify their portfolio well. In any case, the philosophy remains the same: don't put all your eggs in one basket. If someone wants to get into cryptos, it's better to try by allocating a maximum of 2 to 3% of their portfolio. It is very important not to be financially dependent on their fluctuations.

Annonce

What do you think about crypto-based ETFs, like the recent spot Bitcoin ETFs  and the spot Ethereum ETFs that should be available soon?

This is one of the elements that greatly aids the industry's adoption: ETFs open up a new asset class to investors who previously could not have access to cryptos. Some investment funds and institutions wanted to buy Bitcoin, but were unable to do so outside of a traditional financial framework. With spot Bitcoin ETFs, they can now invest. The same will be true with Ethereum. When these ETFs get approved, sooner or later, other investors will become interested. We've seen billions invested in Bitcoin this way. I don't know in advance how much capital the Ethereum ETFs will attract, but there will likely be a similar effect. It's also important that the legal framework adapts to the crypto universe. We see this in Europe with the MiCA regulation.

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Do all these developments have the potential to completely reshape the market in your opinion?

Evolution is something that continually happens. A new technology emerges and society, politics, and laws adapt. Ten years ago, in crypto, nobody talked about regulation. It was a too confidential market; it wasn't necessary. Today, this sector is heavy-weighted and crypto adoption is increasing. So yes, the market evolves a lot, it is logical.

You founded Bitpanda back in 2014, making it one of the pioneer platforms in Europe. As early players in this field, do you believe that the connection between traditional finance and the crypto sector is a good thing? After all, the initial promise of Bitcoin was to create a decentralized currency that would break away from the traditional system?

Yes, it's absolutely a good thing, because mass adoption cannot happen without the financial world. Otherwise, it would remain a niche. It's delusional to think that when a sector becomes this significant, it will not be regulated...

With problems like the one encountered by Binance, can individuals still trust platforms?

This is precisely why regulation is important. In the case you're referring to, the problem raised is compliance with local regulations. Bitpanda is a European platform that has a PSD2 payment service provider license and a DASP registration [Digital Asset Service Provider, ed]. We have nearly 700 employees, of which a large portion are dedicated to security, engineering, and compliance. For instance, each European country has differently transcribed the obligation for « AML checks » (Anti-Money Laundering, or Fight against money laundering, NDLR), imposed by a directive. As a local platform, we specifically adapt to each of the countries in which we are established.

Beyond these regulatory aspects, our local implementation also means that we offer a platform and customer service in French. It's these kinds of signals that should help reassure.