Insights

Inside the world of crypto: Interview with Kraken

Interview by Doug Beck, Principal Consultant at X4 Technology.

Based in San Francisco, Kraken is the world’s largest global bitcoin exchange in euro volume and liquidity. Founded in 2011, Kraken was the first bitcoin exchange to have its market data displayed on the Bloomberg Terminal, the first to pass a cryptographically verifiable proof-of-reserves audit, and one of the first exchanges to offer leveraged bitcoin margin trading.

We spoke to Evelien van den Arend, Managing Director Strategic Initiatives, Europe at Kraken, to find out what the biggest challenges and opportunities are in the industry right now.

What has been your biggest learning curve over the past 12 months?

Within crypto, the environment changes so quickly, so to use the analogy of a ‘rollercoaster’ you realise that everything is subject to change at very short notice. For me, the biggest learning curve has been to change the way I approach and deal with this.

Crypto never sleeps and that is a fundamental difference from more traditional markets where there is a concept of a ‘close of day’, where overnight there are not huge swings. In our world, it is not just continuous, it’s throughout the year, so that has been the biggest challenge to adapt to. Being constantly on the lookout for things that are happening and adapting quickly in order to make it work.

What do you see as the biggest opportunities within crypto right now?

Despite what many termed as the end of the “bubble” or “bull market”, we feel that the future of crypto is looking bright, supported by many themes we have seen within the last 12 months. With the more institutionalised and mainstream adoption of crypto, we have seen a shift towards organisations announcing that they have or are planning on investing in bitcoin or getting otherwise involved. The permeation of wide-spread crypto is really exciting and the more it spreads, the more we can look at mid and longer-term developments, revolving around themes of convergence, consolidation and eventually a more seamless adoption and integration into individual lives.

We are excited to be in a position to develop and innovate as we go along and become one of the ecosystems. With the pandemic, people have been paying more attention to alternative investments for their savings in order to diversify their portfolios. The world as we knew it changed dramatically overnight, and this has opened opportunities for people to think beyond the traditional investment options that are out there.

What are you most excited about and what has been the most exciting development for you?

I was personally slightly worried that the institutional adoption wouldn’t happen as when I first joined there was less momentum and more hesitation, but we seem to have gone past that now. I am excited about NFTs and the innovation within a new area, showing potential for doing things better in some cases. It follows the wider trend within the cycle of innovation and development which we’re just at the start of.

From a legal and regulatory standpoint, what do you see as the biggest challenges within the crypto industry?

The issue we all face in the industry is the fragmentation of the frameworks, as there is a variety of ways that countries have been considering crypto. These range from a potential outright ban to nothing at all, with a whole set of measures in-between. We are trying to work with authorities and regulatory bodies globally as we believe that putting in place smart frameworks will be beneficial to the industry as a whole.

I come from a traditional finance background, so I understand the prescriptive rules and constraints that client institutions face when they want to start including Kraken’s products into their own offerings and the need for them to have clear and aligned regulatory and risk frameworks. There is room for improvement, so if we can bring some of these frameworks into place, hopefully, it will lead to a harmonized approach which is lacking today.

How would you describe crypto culture?

What makes the space so interesting is its diverse nature which provides an alternative to mainstream status quo, and creates a less moulded approach to how you should be doing things. Quite often, it is synonymous with a lifestyle and wider philosophical concepts such as having something which is truly global and borderless. Crypto aims to allow for more freedom, inclusion, and accessibility.

What can be done to encourage a more diverse crypto user base?

The problem is the lack of awareness of what crypto really is, so what we are trying to do is produce materials that are accessible to everyone that explain the basic concepts. We believe the starting point for diverse adoption is education. Our team focuses on this, so we don’t publish materials behind paywalls but have it out there so you can understand what each new token is and the relevant terminology that is used. We also have a security team who run sessions on how to keep yourself safe in the digital space, as this is something that could potentially deter people from getting involved. The idea that crypto is a scheme to get rich overnight needs to be revisited because that’s not how it works!

What role do you think more diverse teams within crypto companies themselves might play within the diversity of the crypto user base?

I don’t necessarily see a correlation between what happens within the company and the user base. We’re conducting work to try and understand different behaviours, especially within generations and cultures, in their approaches to savings and investments. There is a perception that crypto is more male-orientated or has an age group that is more prone to investing, however, I think that it’s just the tip of the iceberg. Hopefully thanks to our efforts on making this world accessible we will see more engagement that will allow us to reach some of the users that are more hesitant.

What are some of the challenges you face when recruiting for talent in this industry?

Right now, I’d say that it’s not too much of a challenge, but that was not true 2 years ago! I think back to my own personal journey as I spent a lot of time thinking about the move, but it has entirely shifted since then. For any role that we have, we see the number of applicants has doubled or tripled depending on the opportunity, with more Wall Street Banks and big trading firm names applying for roles. As we are remote, we have the luxury of being able to look for a single role globally. With this, we can find the best person for the role without any geographical constraints.

What are your thoughts on 100% remote working and the pros/cons of this?

Remote working is not for everyone, yet with many being forced to work at home in some way, shape or form for the past year, it’s becoming more of a norm.  We’ve noticed people are recognising the true benefits it may entail and it’s rewarding as an organisation to offer this flexibility. We have found that remoteness allows for much better inclusion, with those who might have discounted going back to work, able to be fully involved in a global organisation.

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