“The hardships and challenges of spearheading the world’s digital asset market transformation”.

In his latest interview to Robert Schwertner (CryptoRobby), CEO of STASIS Gregory Klumov shares his thoughts regarding cryptomarket, regulations and many exciting insights of the path which he had chosen.

Robby Schwertner: Good day, Greg, it’s nice to have you here. My first question is — why did you and your partners choose Malta for your business ventures?

Gregory Klumov: The whole “Malta thing” is interesting because it started for my partner back in 2011, when he opened up a brokerage company there, got a broker-dealer license, and then created the world’s first Bitcoin fund a year later. Brokerage is my partner’s speciality, and asset management — is mine. So our journey with Malta started back then when we helped to educate local service providers — auditors and fund administrators. That experience helped to develop relationships with the local regulator MFSA and government top-officials like Prime Minister, Minister for Digital Innovation and even the President herself. It became obvious that there was ground for a legal framework because there were a lot of start-ups that wanted to experiment with blockchain technology and do something for the society with it. The Government officials and regulators from Malta asked us to contribute to the legal framework and we consulted them.

Robby Schwertner: I believe you had to operate in an environment, which was not ready for crypto assets…How did you manage it? Build everything from scratch?

Gregory Klumov: You are right. Originally, I was searching for a jurisdiction to get digital assets off the ground and into some sort of a legal shape and regulated form, and found there were none. Existing e-money regulation was looking to be disrupted by the blockchain, so I suggested to create a new set of licensing and rules for ventures like stablecoins to exist. Now that that’s in progress, I anticipate that in the future it will be called E-money 2.0 and that some legal framework will be established nationwide that supports the stablecoin business model at large.

Robby Schwertner: I guess you might have experienced severe challenges on this path, am I right?

Gregory Klumov: Local banks are still refusing to take business from companies associated with digital assets but the good thing is that this reaction had fueled the race and it brought attention to the problem — similar to the Libra demise. Many people from various global institutions had started to notice it, discussions reached governmental levels, and now it stated a race. The same happened with Malta: it was the first out of the Eurozone to draft something and to put on paper in terms of the legal framework for digital assets. Now there is an alliance called Mediterranean Seven where seven European countries like France and Italy have joined together to explore opportunities in creating a legal framework around digital assets, using the Maltese one as a kind of starting point.

Robby Schwertner: Are you following up on this STASIS venture?

Gregory Klumov: Yes, of course. That’s my full-time passion project.

Robby Schwertner: How did you finance this? From your own pocket or in other ways?

Gregory Klumov: We have a group of stakeholders, several licensed financial intermediate companies who supported us in the beginning. For example — a payment institution company out of the UK, and brokerage companies out of Cyprus, Hong Kong and Malta. They support us as stakeholders, plus we had accumulated 11 other financial intermediaries by this point — they have licenses all over the world and are interested in developing this infrastructure. And yeah, that’s what we do full-time.

Robby Schwertner: How would you see the progress now? How big is the interest? Would banks use that or who would be the first to use it?

Gregory Klumov: The first obvious market for us is the crypto industry. People who just trade digital assets on their own or semi-professionally, I would say — like professional traders or employees of some asset management companies, who understand what credit risk is. The ones who do not really trust something like Tether and would be willing to swap it for a more transparent and more legal alternative. The second option would be reaching out to professional traders and asset managers who have exposure to crypto.

For example, last year alone there were more than 100 + funds launched globally targeting the digital asset industry: 20 % of those were out of Europe or out of countries where the base currency is the Euro. And those are natural clients for this product, because it’s the perfect instrument to store money before reinvesting it.

Robby Schwertner: Interesting. What’s your real goal, Greg?

Gregory Klumov: We want to establish real competition with U.S. dollar, to change the global hegemony and the way the United States deals with everyone who is touching dollars, moving dollars, trading with dollars. I’ve mentioned that before, and it’s our long term vision.

Robby Schwertner: That’s quite a challenge. How can you bring corporations on board?

Gregory Klumov: The solution is to create a derivative on Euro like stablecoin. This is something that many companies are now exploring in terms of legality, integration costs, and benefits. This is a kind of solution that doesn’t intersect with the crypto world — using a blockchain for the corporate internal cost saving initiative. We can provide white label for crypto Euro using our set up with central bank to issue 24/7-accessible and convenient solution.

Robby Schwertner: The question is whether it falls under this anti-money laundering rules. The legal questions, I think, requires an army of lawyers, but not too much tech staff because the technology to build that is rather simple. The headache starts with transparency, yeah?

Gregory Klumov: For us, it was quite a challenge to find a reputable auditor like a Top-5 company to audit our reserves. It sounds simple, right? Here is the cash, here are the tokens — it’s very secure. However, it took us almost a year to secure the auditor who first had to face all the internal compliance procedures. So now we can provide it as a package with assets on a balance sheet and liabilities on the proof-of-work blockchain.

Robby: What about the legality of this digital version of euro?

Gregory Klumov: We have four legal opinions from USA, Germany, UK and Malta.

Robby Schwertner: This is very interesting. What use case do you also see fit here?

Gregory Klumov: Well, another obvious use case that we are now actively exploring is crypto lending, which has grown significantly last year alone for several reasons. One of which is this “HODLing” mentality: the fact is, people always need some short-term funding, but also have this digital asset, say, exposure which they don’t want to sell, to liquidate.

Robby Schwertner: True. I have another question: I’m working with a mobility infrastructure company — they provide mobility as a service, produce apps for mobility companies like railways, metros, and buses… How would EURS make sense here? Have you ever explored such a use case in mobility?

Gregory Klumov: No, honestly not. I think there’s still a scaling challenge — for micropayments especially. We’re working on a product that will allow instant swap between, say, Ethereum and Stellar. The system is still not ready for a really massive-scale adoption. It will make sense to transfer, say, less than 50 or 100 euro worth of tokens over Ethereum — so generally it’s for higher, let’s say, checks.

By the way, we’ve recently announced this sell back functionality. You can check our website — by pressing the sell back button you will be able to sell up to 250 EURS worth of tokens without any KYC! However, if the amount exceeds that sum you will obviously have to pass it. That will be a natural market-making incentive to step in and accumulate EURS if its value differentiates from the pair.

Robby Schwertner: I will give it a try. Have you recently been at the conference in Malta? What is the mood there?

Gregory Klumov: Yes, there was that DELTA summit, a government-backed conference. It brought a decent number of stakeholders and regulators from other European countries. Because of the downtrend in the digital asset prices taking place as well as the delay associated with the licensing of Maltese startups according to this new legal framework, the conference was not as well attended as it was last year. But still, what is happening clearly is that some illicit actors, some SCAM projects or people who had been in the industry for some fast cash gains, are capitulating and exiting.

Robby Schwertner: Oh, that’s good! The overall quality of projects is rising, it is true.

Gregory Klumov: Yes. It is obvious that clean up is happening and only people with longer-term capital commitment and with longer vision and better business models are continuing to fight.

Robby Schwertner: Yes, and the overall quality of the projects itself gets better. Meanwhile, what do you think about the perspectives for digital assets market? What’s the forthcoming trend is about?

Gregory Klumov: First of all, there are products that have started coming online, targeted to institutional investors and they are really solid- which means more adoption, more capital, more exploration, and experiments. Speaking of perspectives: at the end of the day, it will mean more funding for new startups and more liquidity for overall markets. So, I see it as a big trend for more years to come and the fact that digital assets now stand at 200+ billion dollars and the alternative market space is about trillions of dollars, it just makes a lot of sense for this kind of difference to rebalance in favor of digital assets. I totally see them trading at trillion or a couple of trillions combined.

Robby Schwertner: And who will win at the end of the day?

Gregory Klumov: Now, if you ask me who the winners will be inside the digital asset marketplace, that’s a kind of 1 trillion question. I’ll use the Internet as an example: I got the Internet very early when I was a kid. I always thought that it’s something that would change the world radically, and I wanted to be a part of it. In fact, my first business was an Internet service provider which I created when I was 15 years old. That was the time when people accessed the Internet over a telephone line. I created a higher speed solution shared among multiple neighbors. And there were solutions to, say, stream video over the Internet even back then. In fact, the company still exists, it’s called Real Networks — it rolled out its product for live video streaming in 1995–1996. It didn’t get much adoption because the Internet was not ready back then, just the customers. But this is exactly where the crypto industry is today, right?

Robby Schwertner: Yes, I truly agree. How can we impose this historical example and to modern crypto industry?

Gregory Klumov: This space is considered as a place for nerds, drug dealers and people like that, but about 30 years ago the same sort of guys — who had the power of media under their fingertips back then — were saying the Internet is irrelevant. Nowadays some YouTube channels have more viewers than most of the major TV channels, but the point is that it’s really hard to tell which company will win. Why? Because YouTube was not there in 1994 or 1996, Google was not the first search engine, YouTube wasn’t the first video content company, and Amazon was just selling books at some point of its development. So there hadn’t been any commerce powerhouse, but I’m convinced of the direction and the potential size of the market. I’m just not sure who will benefit.

Robby Schwertner: It’s a new life form, but we haven’t realized it yet. It will be very independent one day. The way I see that, we’ve underestimated it enormously — it’s just the tip of the iceberg. It was very nice talking to you.

Gregory Klumov: Likewise.