As cryptocurrencies slump, Coinsquare doubles down on growth
The “great crypto crash.” A “rout.” A “meltdown.” That’s how the business press described the drop in cryptocurrency values last month — just as Coinsquare listed two new ETFs on the Toronto Stock Exchange.
But that doesn’t seem to ruffle CEO Cole Diamond. In fact, he says the Canadian company has further plans for expansion, including its cryptocurrency mining operations. According to a February report from Coherent Market Insights, that alone is set to be a US$38-billion global market by 2025.
Diamond believes the gap between traditional finance and cryptocurrency, already closing fast, will disappear. He says cryptocurrencies will become a platform for all assets, from equities to land rights. If anything, he’s worried Coinsquare isn’t moving fast enough. “We are planning everything that a financial institution does, everything that a stock exchange does, and everything that we can possibly participate in with the overall management of assets,” he says.
But Diamond understands that building trust in cryptocurrency remains a big part of the equation. His own first encounter with Coinsquare, in 2016, was a face-to-face meeting with founder Virgile Rostand — to make sure the company ’s back-end was solid before making a hefty purchase of digital coins.
He was so impressed by what Rostand had built, however, and so confident in the company’s potential, that he became an investor and joined as CEO the following year. Since then, he’s helped Coinsquare evolve from what he calls “a website that was really dark and scary looking” to a digital asset management company with $60 million in funding. It has also secured an official relationship with a big five Canadian bank — reportedly BMO — and completed an audit with an accounting firm.
For wary retail investors, Coinsquare’s ETFs may also offer the chance to spread risk across related assets. Created in partnership with Deutsche Börse Group’s index provider STOXX, its Yewno Developed Markets Blockchain Index includes firms that have based their products and services on blockchain technology. Another, called “B.R.AI.N,” covers companies engaged in biotech, robotics, artificial intelligence and nanotechnology.
The launch is just one in a series of aggressive moves by Coinsquare. The company is targeting institutional investors (including banks) through its subsidiary Coinsquare Capital Markets, which offers pricing, buying and selling tools similar to what professionals use for foreign exchange or equity trades.
By the end of this year, the company plans an expansion into Europe, eventually targeting every country in the trading bloc aside from the United Kingdom, which remains in turmoil over Brexit.
“Given the size of the union, which is collectively 12 times Canada’s GDP, we have an enormous marketing opportunity to expand our geographic base,” says Diamond.
Comfort with regulatory frameworks in Europe helped steer the firm’s expansion there. Cryptocurrencies are governed by complex anti-money laundering and securities trading rules, says Diamond, but Coinsquare plans to tackle each country’s laws separately.
Coinsquare is also licensing its software for use in foreign markets. In July, Vancouver-based blockchain investment bank DLTα 21 signed on to launch a cryptocurrency exchange in Japan using the company’s platform.
Mining still more cryptocurrency is critical to Coinsquare’s long game. The company has signed an agreement with an as-yet unnamed power utility and plans to build its own facility outside of the province.
Rather than just mining its own cryptocurrencies, it will lease space in the new facility to customers with their own computers. It has one large anchor customer already lined up to take the lion’s share of that capacity, says Diamond.
Coinsquare plans to launch an international mining pool as well, an electronic club that allows independent parties to combine mining power and split the proceeds.