CEX.IO: 7 Years of Navigating an Evolving Crypto Space

Few industries have been as dynamic as the crypto space in recent years. With innovative technology, a groundswell of new entrants, and record user base, the future of crypto is today.

Leading the way has been crypto exchange CEX.IO. Over the past seven years the company has grown in scope and influence to be a market leader.

In November 2020, the international cryptocurrency exchange CEX.IO turned 7 years old. Finance Magnates spoke with Oleksandr Lutskevych, Founder and CEO at CEX.IO for his perspective on the company’s trajectory and outlook.

CEX.IO has been in business for over seven years. What have been your biggest reasons for success and how can you continue this momentum?

Since the very moment we came to the industry, we meant to grow it and grow together with it.

We saw a huge potential in cryptocurrency, which could transform the financial life of many, of everyone basically.

For that, crypto had to “go out of the woods” and become a recognized and accepted payment method on governmental levels globally.

Implemented KYC/AML policies and procedures from day one. At the dawn of Cryptocurrencies , crypto businesses were just focused on earning. We knew crypto was more than meets the eye. Barely traceable, decentralized, anonymous — it was and still is an attractive way to hide the way where money floats from. And we realized what impact it can have on every participant of the cryptomarket. By developing and implementing our KYC/AML procedures and tools, we become that filter that separates the wheat from the chaff — unlawfully gained money from the clean one.
Built strong relations with banks. We were the first to introduce crypto purchases with bank cards. It’s like making it so accessible that you can buy it in the same way as you buy a ticket for a train. You want to get Bitcoin. You got a Visa or Mastercard? Then you can become a Bitcoin owner in a few minutes. That’s how we brought it closer to the wide audience. It’s not rocket science anymore.
Helped giving crypto a regulatory status. CEX.IO was a founding member of CryptoUK. That’s an association created with the aim to build cooperation between the crypto market players and regulatory authorities in the UK. It was focused on developing a proper operating framework for cryptocurrency businesses. We wanted to make crypto businesses sit on the same bench with the banks and other financial institutions. We’re all in the same “game”: we make money — traditional (fiat) or digital (crypto) — move. There are certain rules that banks and other financial institutions keep to. The rules are called KYC/AML policy. If a bank breaks the rules, the judge (regulator) gives them the card - yellow or red. The same goes for crypto businesses. In the wide prospect, it’s the same “game”. So, there should be similar if not the same rules. And of course, the regulator who’d make sure everyone follows the rules. We believe this is the only way to give cryptocurrency a regulatory status.
We kept our customer’s needs at the heart of our business. That means not only making the best and newest features and products, but also caring for safety of clients’ funds and developing trust relationships.

CEX.IO has been vigorously looking for obtaining licenses and registrations in every possible jurisdiction.

We were at the vanguard of defining a regulatory framework in cryptocurrency. CEX.IO team has a deep expertise and solid experience in it and rightfully can be the ones who set those industry standards.

How has the crypto industry changed over the past few years, namely since CEX.IO’s inception?

if you compare the pace of how traditional finance markets change with the speed of changes in cryptocurrency — it's a huge difference.

Can you recall the changes in traditional finance (fiat) during the last 10 years? In the crypto industry — those 10 years have made an entire era of transformations.

To start, let’s briefly speak of the “why’s”.

First, it’s because of the nature of the asset — the cryptocurrency market is one of the most dynamic.

Second, it’s borderless, which means no physical obstacles for developing and expanding.

Third, it gives you freedom and comfort in managing your financial life.

When something helps make your life easier, it gets more popular. Simple as that.

Even if it’s not at the level or buying a cup of coffee with crypto yet, it's already a convenience of fast international transactions and instant swap between crypto and US dollars (or another fiat currency). That’s huge.

Now to what has changed. If we go back to the origin of CEX.IO, first it was Bitcoin mining providing service — GHash.IO.

We’re the first service to accumulate enough power to be able to control the Blockchain - to initiate a “51% attack”.

But, of course, we made a decision not to do that, as it would destroy the industry, while we wanted to develop it.

Then we became CEX.IO — a cryptocurrency trading platform. Over time, many crypto projects developed and trading coins became more popular and profitable.

The concept of spot markets — buy cheaper and sell more expensive, powered by the high crypto volatility, turned many to trading crypto as a way of earning.

The interest of traditional (forex) market participants prompted the evolution of cryptocurrency trading bringing in derivatives — futures, options, contracts for difference (CFDs), and the like.

Catching up with that evolution curve, CEX.IO introduced CEX.IO Broker — a cryptocurrency margin trading platform.

Over time the blockchain consensus algorithms changed that resulted in a bigger variety of cryptocurrencies with new opportunities, which they offered.

It’s smart contracts, a Proof-of-Stake algorithm, and more.

Thus, more ways to earn with crypto appeared. Namely, cryptocurrency staking and decentralized finance (DeFi).

Staking is a way of participating in blockchain governance and maintaining network functionality.

It’s only available for the Proof-of-Stake consensus-based blockchains.

Unlike mining, where miners solve equations to create a block and confirm a transaction, staking needs “stakes” for doing that.

Those “stakes” are the coins of the specific blockchain. If you put your coins at “stake”, you support network operations and receive rewards for doing that.

The rewards are the coins issued by this given blockchain. Usually, those “staked” coins are “locked” for the staking period.

The technical side of the staking process is quite complex — it requires a deep understanding of how blockchain works, certain expenses, and time, of course.

We wanted our users to benefit from staking too and launched CEX.IO Staking.

We made it different — extremely simple and flexible. The users’ funds are not locked for the staking period - they can trade or withdraw them at any time.

And staking is absolutely automatic - you just hold the stake-able crypto on your account and receive staking rewards for that.

Decentralized Finance or DeFi has been all the buzz term recently.

DeFi is an umbrella name for many different financial applications in cryptocurrency or blockchain geared toward disrupting financial intermediaries.

For example, when you buy your coffee with your card, there is a middleman - financial institution (payment provider) - between you and the receiver of the money.

This middleman controls the transaction - can check it, slow it down, reject it, and so on. In DeFi, transactions are not controlled by some single source.

What’s more, DeFi expands the use of blockchain from simple value transfer to more complex financial use cases.

Loans, insurance, crowdfunding, derivatives, betting, and more are also available with DeFi.

Cutting out middlemen from all kinds of transactions is one of the advantages of DeFi. It also brought such concepts as yield farming, liquidity mining, and the like.

For many, they are attractive ways to earn but imply some risks, which have their price.

All in all, it is quite easy to see that there have been many innovations that took place in the crypto field in a rather short span of time.

And there will likely be more changes in the future. CEX.IO’s team intends to stand at the forefront of these advances and help set the mark for all the players in the market to strive towards.

Can you describe the UK crypto market and how this space has evolved and where you think it is heading?

The UK crypto market is definitely developing. We see evolving regulation and growing interest from both retail and institutional investors.

For example, recently London stock exchange-listed Mode Global Holdings PLC spent 10% of its corporate capital to buy Bitcoin.

Speaking of where the crypto market in the UK is heading, we’ll most likely see even wider adoption among the various market participants, who’ll see greater long-term appreciation potential in cryptocurrencies than fiat funds.

With the increasing number of both retail and institutional investors, cryptocurrencies will undeniably have a solid presence in the UK financial markets in the future.

2020 has been a challenging year for the industry. What goals has CEX.IO accomplished in spite of the unique circumstances this year?

2020 has been indeed challenging but it also brought new opportunities to the market and we’re trying to provide our customers with the services and instruments to benefit from these opportunities.

Opened CEX.IO Broker for customers. After staying in closed beta for a while, the cryptocurrency margin trading platform CEX.IO Broker became available for the public. The service allowed forex market participants to trade cryptocurrencies with familiar instruments. While crypto traders got new tools to maximize the cryptocurrency trading potential.
Launched CEX.IO Staking. In early 2020, CEX.IO presented a new service that allowed customers to engage with the crypto economy on a new level and benefit from it. We applied our own approach to developing this service with the primary aim to simplify users’ interaction with it. CEX.IO Staking is a simple way to receive passive income for our customers.
Introduced CEX.IO Loan. Cryptocurrency-backed loan service CEX.IO Loan extended the range of products in the CEX.IO ecosystem. The service is meant to be a quick and efficient solution for both retail investors and entrepreneurs who need capital to pursue their goals but don’t want to give up on the potential appreciation of their crypto assets.
Offered new services - Instant Sell, Instant Exchange in CEX.IO Mobile app. Instant Sell, Instant Exchange present another myriad of fast and efficient solutions for CEX.IO customers. We’re the first to introduce the instant sell of cryptocurrencies with an immediate withdrawal of the fiat funds to the payment card. It can be a life-savior in situations when you need cash quickly. Instant Exchange is a service for a quick swap between different crypto and fiat currencies. It comes in handy when you don’t have a chance or don’t want to place trading orders but need to convert one currency to another.
Continued geographical expansion by obtaining licenses in new jurisdictions. In 2020 CEX.IO kept following the regulatory path and continued US expansion. We’ve received Money Transmitter Licenses in different US states. Currently, we have pending applications in only three states. Also, we started the expansion of the Asian market by applying for a regulated crypto license with the Monetary Authority of Singapore (MAS).
Received “A” grade and made it to the top 10 exchanges by CryptoCompare. It’s always nice to receive recognition for your work, especially when you don’t expect it as primarily you don’t pursue it. That’s what happened to us. CEX.IO made it to the top 10 exchanges by CryptoCompare with the overall “A” grade.

Can you give me some insight into the future outlook for CEX.IO? Where do you see the company in 3-5 years and what is in store for 2021?

It is our strategy to provide the tools that allow participating in the open finance that the cryptocurrency industry offers in a secure and effective way, in line with our customers’ expectations.

CEX.IO will expand its ecosystem with more products and services to meet the needs of various crypto market players — be it individual investors, entrepreneurs, or financial institutions. It’s probably too early to share everything we got in store.