Safello’s Frank Schuil wants to build a safer, more compliant bitcoin exchange
Frank Schuil, founder and CEO of Safello is intent on creating a safer, more compliant bitcoin exchange for European crypto traders.
Interview from Blockchain Week London on 23 January 2018.
Read the transcript:
My name is Frank Schuil. I'm the co-founder and CEO of Safello, a company based out of Stockholm Sweden and a European bitcoin broker. We've been servicing all of the European market with an easy way into bitcoin – and also out of bitcoin – selling bitcoin with numerous payment methods like Visa, Mastercard and local payment methods.
I'm also the founder of a company called Rhino Ventures which is my investment firm through which I have invested in several ICOs as well as trade with crypto. I'm an advisor to a company called CG Blockchain that is creating a Bloomberg-style terminal for the cryptocurrency market.
Who is your customer?
I would say our customer is typically male and tech-savvy. I would say that's our early customer base and it's now evolving into basically anyone who's interested in investing. It's evolving quickly, so the age range is also evolving as well as the gender distribution.
You've been around for a while. How have you seen the storms that bitcoin has weathered over the last few years?
In 2013 when our company was founded, things were very, very volatile leading up to the collapse of Mt. Gox. Once the collapse of Mt. Gox happened [in 2014] it really froze the market and the willingness of financial institutions to work with crypto companies. Our company was founded on the basis of being a compliant trusted party, so we are registered with the financial inspectors in Sweden.
We're backed by the top four banks and we've been able to maintain those relationships and build the KYC with AML processes to serve as an example. Nevertheless, it has been really hard. We then went into a Techstars accelerator – the Barclays accelerator – where we were able to work with Barclays but still not get a bank account.
In 2015, that whole area shifted to the blockchain narrative so people stopped talking about cryptocurrencies and the focus was only on the underlying technology. Now in 2016/2017 obviously it has become all crypto, and the narrative is the ICO space. We're doing these initial coin offerings. So we've gone through quite a transition as well in approaching this market.
Who are your competitors?
They're typically local brokerages in their individual territories, and then there are some European ones – Bitstamp, Kraken. We only operate in Europe so those are the biggest ones.
And why are you better? What makes you special?
I think we're very much focused on the user experience and to really simplify it. Our customers really like that it's simple and that we have good support. In this volatile market what would typically happen is that you have long delays and nobody's responding. We actually have quite a strong support team to handle customer tickets quickly.
Of course, we probably haven't seen the same type of growth that a Bitstamp may have experienced. There's always that scalability problem you have when there's a human factor. But I do think that's a differentiating factor for Safello.
And can you give me some examples? You said you make it very simple to use.
So to give an example, if you're a Swedish customer you could verify with a mobile bank ID which is literally typing a verification in your mobile app. Then you're verified and you can buy with the local payment method, Swish, that most of the population in Sweden uses. No other company supports these payment and verification methods today.
It's by far the lowest threshold to get into crypto, where we're still following anti-money laundering legislation of KYCing your customer, which is the hurdle. Of course, there are companies that are not abiding by those rules which technically is simpler, but it doesn't provide the security to the end customer. And that's what we're seeing. People use our platform also because they get proper receipts for both the buying and selling side.
In your PDF, where you could go to your accountant, and it's a Swedish bank account and the money comes from the top four banks, those are quite unique things in our space, believe it or not. Just having a legitimate bank and getting a proper receipt – it sounds simple but you'd be surprised how often that is lacking.
You said that there are scalability issues, so what's your growth plan?
I can talk about the industry, and typically you have issues with scaling. The human factor is a variable that obviously you can start optimizing with FAQs, so people can be more self-reliant in their path to discovering crypto and buying their first bitcoin. But very often, for the first purchase, people still want to have a human touch and be able to contact a human and have a human respond to them and explain things.
So that is harder to scale, which is why you know cost-wise we're not the most competitive because we obviously need to be able to pay the people who are working for the company. But overall we work with companies that are specialized in this and are scalable, so that's not a problem. And technology-wise we don't have a scaling problem, no.
Can you explain to me how your technology is scalable?
Well, you typically don't talk about your technology stack from a security point of view. But we obviously have it, like the scaling of any IT company and any IT platform. We're not built on the blockchain. The platform itself is traditionally built with all the tools that you have, both on the server side as well as on the platform. How you code it, and there are standards – that's scalable if you just build it well.
Obviously you've had a very specific focus with bitcoin, but now there's a need for other cryptocurrencies in the market. Are you planning on expanding and looking elsewhere?
The reason why we haven't done that yet is particularly because we were seeking a non-custodial set-up. So the name, Safello, means being your "safe fellow" in the crypto economy. And actually, when you look into it, it's really hard to find those players where you can actually do that, which is why we were a little bit stuck with bitcoin. But we're now in the process of migrating some of our liquidity set-up in order to be able to support multiple cryptos. So it's not inherently that we're against different cryptocurrencies.