Startup creating an exchange for digital ‘tokens’

It was an eye-popping moment in fintech circles, when the cybercurrency exchange Coinbase debuted as a standalone company on the Nasdaq in April with a market capitalization roughly triple that of the stock exchange’s own value.

Michael McGuire is not suggesting his Greenwich startup Symbridge will match Coinbase or Nasdaq for sheer market heft — but he believes it will become a household name among investors and a significant Connecticut employer in time.

Symbridge describes itself as a digital-asset exchange — an online platform for people to buy and sell both the best-known cyber currencies such as bitcoin as well as “tokens” created by computer systems pegged to the value of physical commodities.

The company aims to go live with the exchange between October and December, depending on regulatory approvals. Symbridge will vet all assets traded on its exchange to ensure their legitimacy.

“This market is really new — and we think that cryptocurrency is not the end of it,” said McGuire, CEO of Symbridge. “Cryptocurrency is the beginning of it, when you look at ‘tokenizing’ different types of assets that can all trade on digital exchanges. That’s the really exciting part.”

Blockchain is the key underpinning for digital currencies such as bitcoin, allowing independent auditors to confirm the authenticity of transactions — and prevent the digital equivalent of counterfeiting that can torpedo trust in any monetary system.

“You’ll be able to see every single trade that happens, written on the blockchain in real time,” McGuire said. “For regulators that’s a great thing — they can identify market trading patterns that look like manipulation [and] it allows us to identify that. And it gives our clients a sense of confidence.”

Regulating millions of assets

McGuire said he was determined to differentiate Symbridge by placing it under the oversight of U.S. regulators, instead of an offshore jurisdiction as others have chosen.

“The regulatory posture of these places — it’s not nonexistent, it’s just a lower bar,” he said. “We took the opposite approach [saying], ‘Where’s the most regulated place in the world? The United States. OK, let’s set up this digital exchange in the United States.’”

Hundreds of exchanges exist for trading digital currencies and assets, with Coinbase perhaps the most familiar after its initial public offering of stock that valued the company at $86 billion — at that point $60 billion more than the Nasdaq exchange’s own market value as a company.

“They are going after predominantly the retail market — so the average size of the wallet is $300,” McGuire said. “We’re taking the opposite view: sort of ‘old-school broker meets 21st-century private banker’ where you can call us 24-7 and we can walk you through any questions.”

Coinbase is not oblivious to the larger market opportunities, CEO Brian Armstrong made clear during a conference call with investors.

“There’s more and more assets being created in the ‘crypto’ economy — I think it’s going to be something like apps in the App Store or on the iPhone, where there’s eventually millions of these assets created over time,” Armstrong said in May. “There’s no doubt that we need to accelerate the process by which we review assets and we add them to the site, because we’re quickly going to be in a world here where there’s so many that we’re not going to be able to keep up.”

‘Navigating the unknown’

McGuire chose Greenwich for Symbridge’s main office — it is across from the downtown MetroNorth train station — primarily due to proximity to New York City. The company has 30 employees working on a hybrid-remote schedule during the COVID-19 pandemic. As of Friday morning, Symbridge listed 15 job openings.

Greenwich is home to one major trading platform — Interactive Brokers, which entered this year with more than 2,000 employees. Founder Thomas Peterffy is listed by Forbes as Florida’s richest resident with an estimated net worth of $25 billion.

McGuire started his career with Manufacturers Hanover Trust, part of JPMorgan Chase today, after growing up in Wallingford and attending Babson College. His work took him into a focus on commodities and finance in Russia, creating Triple Trunk Capital in 2006 in Greenwich to structure deals.

On the side, McGuire is a lecturer at Columbia University’s business school, also working with a blockchain business “launchpad” run by Columbia and IBM.

Symbridge is waiting on the regulatory approvals needed for its own launch. Digital assets are new enough that a trade group called the Digital Asset Regulatory & Legal Alliance uses “navigating the unknown” as its slogan. One of DARLA’s co-founders worked in enforcement for the SEC and Commodities Futures Trading Association, and now runs a startup in New York City called Crosstower that has created a digital exchange.

McGuire says there will be many more, but promises Symbridge is positioned to succeed.

“We feel very confident that this is here to stay — not just for us but for everyone,” McGuire said. “Our best hope is that we create a lot of volume on this exchange, and start trading new and innovative products.”