A year ago, market maker Flowdesk made a contrarian bet by expanding its U.S. presence during the chill of crypto winter.
That bet paid off, as winter became spring then summer, and a favorable market environment and improving regulations means Flowdesk is well positioned in the country.
Guilhem Chaumont, CEO of market maker Flowdesk, is prepared to follow his convictions even when the general outlook might indicate against them.
Back in 2023, days before the U.S. Securities and Exchange Commission (SEC) began a second all-out assault on the crypto industry, suing Binance and a number of protocols, Chaumont said he planned to expand the Paris-based market maker's New York office. The size and sophistication of the U.S. capital markets were a worthwhile trade-off for dealing with its regulatory regime, he said.
At the time, it was a contrarian move. A few months earlier, CoinDesk ran a rare editorial piece, observing that conspiracy theories that the U.S. government was trying to kill crypto didn't seem too far off. The editorial argued that the government was intentionally suppressing the industry through punitive regulatory enforcement actions and a lack of willingness to build workable rules.
"The philosophy of the company has always been the same. We have a huge conviction about where the market is going," Chaumont said this week in an interview. "Building a company, particularly in crypto, is always about making contrarian bets and seeing what others didn't see. We are not very sensitive to short-term macro events. That's why we have always been very enthusiastic about the U.S. for crypto innovation. It's a land of innovation and a huge market for everyone."
Since Chaumont's comments at Consensus 2023, the price of bitcoin has climbed almost 150%, according to CoinDesk Indices data, and the U.S. regulatory environment has improved with the SEC approving the introduction of bitcoin ETFs and set to agree to ether ETFs as well.
First mover advantage
Expanding U.S. headcount in 2023 when things looked bleak meant Flowdesk had a first-mover advantage when the market picked up.
"Now we are grabbing significant market share, and our company is in better conditions than ever – profitable with a huge increase in volumes and revenues," he said. "Fueled by the ETF approval earlier this year, we started to see more positive news, and we were like, 'Okay, our bet is probably going to pay off.'"
The situation may have vastly improved, but there's still some work to be done even as the Financial Innovation and Technology for the 21st Century Act (FIT21) – which has been praised by some industry stakeholders as a step in the right direction – goes to the Senate with bipartisan support.
For instance, Flowdesk cannot yet compete with U.S. counterparties; there are still operational limitations in the market.
Another headache is custody. Chaumont argued that the U.S. needs a simplified and globally harmonized regulatory framework for custody, which, if done right, could unlock massive business potential.
Many problems could be solved with harmonization, and Chaumont points to the European Union's MiCA regulations as an instance where that works well. There are lessons to be learned from the EU's approach, he said, which rules out the need for multiple licenses from individual states. That's the situation that persists in the U.S.
"In Europe, you do not need to get multiple registrations," he said. "Once you are registered in one country, you can operate across the entire region."
A lot has happened in the U.S. in the past year and, who knows, maybe such harmonization will be on the agenda when it's time for Consensus 2025.
"If there were not these bottlenecks and uncertainties, we could have grown three times faster, like we did in France," Chaumont said.
