Matthias Baccino (Trade Republic): "Traditional investors' interest in cryptos continues to grow"

‍What were you waiting for to launch?

We were waiting for our digital asset custody service (Trade Republic Custody) to be registered with the Austrian authorities. This is now the case, and we can offer our customers the opportunity to invest in 50 different crypto-currencies.

This service was already available in Germany, Spain and Italy, and as of this week it is available in nine other European countries: France, Belgium, Austria, Ireland, Lithuania, Latvia, Portugal, Slovakia and Slovenia. Others are to follow.

What lessons have you learned from your initial tests in Germany, Spain and Italy?

We launched in partnership with Bitgo for the preservation of digital assets, but ultimately preferred to develop our own solution for optimum security.

Why did you choose Austria to register your custody structure?

Waiting for MiCA (the future European regulation that will come into force in 2024, editor's note), Austrian regulation is the most interesting for developing in Europe. It's both stable and fairly detailed, so it's reassuring. The short registration times have also worked in Austria's favour.

Are the cryptos that customers buy 'real' cryptos? Many traditional players offer synthetic products...

Yes, they are not synthetic products. We buy and sell 'real' cryptos to our customers.

Why don't you offer crypto deposit/withdrawal via external wallets?

This is a very big challenge in terms of the fight against money laundering and terrorist financing. Such a system requires major IT developments and a harmonised European market. This is also the aim of MiCA.

We will be working on this solution next year so that it is available as soon as possible. We want to enable these transfers while maintaining our level of requirements as a regulated financial entity.

On which institutional exchange platform do you buy your cryptos?

We work with Bankhaus Scheich Wertpapierspezialist AG, which is the biggest German player. As with equities and ETFs (Trade Republic works with HSBC, editor's note), we have chosen those we consider to be the best.

How do you intend to distinguish yourself from Bitpanda and Revolut, which also offer crypto investment alongside other more traditional investments (equities, precious metals, etc.)?

Bitpanda is not really a competitor insofar as they do not sell real equities. And as far as Revolut is concerned, we like to highlight the fact that we are regulated in Germany (the British bank is registered in Lithuania for its European customers, editor's note).

How do you ensure the security of cryptos?

We have chosen the Fireblocks software solution, which is a benchmark in the ecosystem (we'll talk to you about it again very soon in The Big Whale 👀 ). This is very reassuring for customers, as neither Fireblocks nor Trade Republic are able to touch your cryptos.

FTX used to say the same thing... How do you prove this to users?

As soon as we have sufficient reserves on Trade Republic Custody, we will publish audits of our accounts. Our advantage is that we belong to centralised finance and we also work with trusted third parties: the German Central Bank and our auditors, who guarantee our funds.

You can't get more secure than a European bank. That's the whole point of a hybrid model like ours, which we believe brings together the best of both worlds.

What do you think of the concept of "proof of reserve", proposed in particular by Binance?

I'm convinced by the power offered by the transparency of blockchain technologies. However, I am a banker and I believe that we need systemic trust, which is why the future European MiCA regulation is so important. Regulators and their supervisory powers can also be part of the solution.