The Asia Tech Podcast recorded an energetic conversation with Cathal Donnellan, Co-founder and CEO of SnapEx. SnapEx is an application that provides the best trading experience to beginners and professional traders.
Some topics discussed by Cathal:
- The importance of going into the major Chinese developing economy
- How does Cathal improve efficiency by hopping from country to country
- Cathal’s fundamental steps of making things happen
- The breakdown of the different licences and choosing the right one
- The major issue with copy trading
- Cathal’s take on the most important and key thing to look out for
- SnapEx’s next very big thing in the near future
Some other titles we considered for this episode:
- Going Out There
- Make It Happen
- The Best That We Can
- Finding Your Place in the Market
This episode was produced by Stephanie Ng.
Read the best-effort transcript below (This technology is still not as good as they say it is…):
Michael Waitze 0:03
Hi, this is Michael Waitze and welcome back to the Asia Tech Podcast. I honestly don’t know what we’re gonna get today, but I’m sure we’ll get something great. Today we are joined by doing a Cathal, no, Donnellan
Cathal Donnellan 0:16
First time you got it right. Absolutely, Michael.
Michael Waitze 0:19
Okay, well, I’m never saying it again then. Anyway…
Cathal Donnellan 0:23
You got it on the first attempt. That’s a very good accomplishment right there.
Michael Waitze 0:28
Give myself eight and a half on a 10. I think anyway, and Co-founder and the CEO at SnapEx that I get that right as well.
Cathal Donnellan 0:34
That is correct. How’s everybody doing? And thanks so much for inviting me here. Michael.
Michael Waitze 0:39
I guess that’s my question to you. How are you doing?
Cathal Donnellan 0:41
Well, I’m doing absolutely great. I found myself relocating to Vietnam recently, and absolutely loving every moment.
Michael Waitze 0:49
Wish I can. So where are you from? Originally? I’m Irish. But are were you? Did you come from Ireland directly to Vietnam? Or was there something in between? No, I
Cathal Donnellan 0:57
mean, there were multiple trips in between. So I went from Ireland, to southern China. So between Shenzhen and Hong Kong, before eventually moving between Singapore and Vietnam.
Michael Waitze 1:11
What were you doing in China?
Cathal Donnellan 1:12
So we actually started the operations for one of the major exchanges in Southeast Asia. It’s one of Asia’s first central bank licence exchanges, it was called geo W global overseas workers. And basically what that meant was we basically started a remittance and virtual currency exchange. That was licenced by the Philippine central bank, the bank was central for the peanuts. So we basically started the technical operations and compliance operations, as well as doing quite a lot of overseas marketing. Because as you know, if you’re based in China, targeting Chinese customers is very high risk, and nobody wants to be in that position. Why were you
Michael Waitze 1:55
in China physically, though? In other words, if you weren’t going to be marketing to Chinese customers, what are you doing in China? And was it reflective? Or a reflexive? In other words, somebody invited you to go there? Or did you just say, Hey, man, I want to live in China and see what it’s like, because I’m from Ireland. And it’s completely different,
Cathal Donnellan 2:07
funny facts about me, I actually speak fluent Chinese. And the reason I do is because I went out there, and I decided, you want to know what I actually want to learn that that was by and large, the reason I went out there in the first place, got it, because China’s major developing economy. And you look at it, you see the scale of its growth, what’s happening, some of the innovations coming out to the market. And you’re thinking, I would love to be part of this, I would love to hear society, in a in a transformative state, as it moves from a developing economy to a middle class economy. So how can I avoid the middle income trap? These are all questions that must be interested me? And how does society reflect this? Yeah. And that was what I wanted to see firsthand.
Michael Waitze 2:50
So when did you get there?
Cathal Donnellan 2:53
So God I got there back in 2015, I was a bit of work when I was there. Initially, yeah, my background was legal and compliance, I was working with a number of different fintechs, helping them basically with their AML procedures, KYC procedures and a number of different things, before eventually moving into the operational aspect. And with the operational aspects, we need to look at quite a lot of different sides, including the day to day running of the organisation, the legal framework, the marketing, as well as internal structures. So how do you best manage your team? How do you motivate them and get them to work within a certain structure while allowing them to work together rather than in silos. So as you know, the mistake a lot of organisations make is that they tend to separate different departments. There’s no cross pollination, or cross communication. And that can be very problematic, especially when you want to take a holistic view of how this should work.
Michael Waitze 3:49
So have you ever worked in like a big company? Or has it always been small startups or companies for you?
Cathal Donnellan 3:54
So actually, after graduating, I was on a graduate programme with one of the major consultancies out there, we want to be able which one, but
Michael Waitze 4:04
I guess they’re only for them, maybe?
Cathal Donnellan 4:07
Well, four plus one will say four plus one. And then afterwards, kind of realised that I’d spent all my life in Ireland, I’d never moved out. I’ve never lived overseas, really now being Irish. It’s actually such a major advantage. neutral country, still European Union English speaking. And of course, I was lucky enough to grow up in a tourist town so the tourist tell I had so many different nationalities coming in all the time I worked between towns it was a town called Lahinch la h i n ch never heard Oh, very well, surfing all these different things. Okay, so grew up as a bit of a surfer dude actually had the long hair and the board the old way. Unbelievable. I don’t know, the tragic circumstances involving involving the hair, that’s for certain.
Michael Waitze 4:55
Yeah, I mean, I feel bad. I’m way older than you are. And I still have my hair. It’s one of the things I’m most proud of actually.
Cathal Donnellan 4:59
Ah well not going to not going to play and I mean didn’t do the right gets a good look.
Michael Waitze 5:07
Yeah if your Vin Diesel in the rock for sure. Um I got that bill. So do you speak any other language except for Mandarin? Or was that just like your first shot at this and you nailed it.
Cathal Donnellan 5:17
So I grew up bilingual the actually so I grew up speaking Irish and English so my mother is from the Irish speaking part of Ireland. Wow. And I was very fortunate to actually have an Irish speaking household so it meant that I was able to grow up bilingually. Now people often ask me are Irish and English the same language, they couldn’t be further apart. You know, now that was very fortunate because it meant that I could also learn German in my teenage years. Afterwards, after giving Mandarin a shot, I actually found wasn’t as difficult as people thought,
Michael Waitze 5:50
yeah, it’s just a language. I mean, to be fair, it’s like, what’s harder to learn like JavaScript or Ruby on Rails? I mean, languages. You don’t even like language to me, like I speak a bunch of different languages as well, my Japanese fluently, don’t you? Yeah, my best second language is Japanese. But I mean, I speak some French and I speak a few other languages, too. And the thing for me is that once you have a methodology for learning language, and frankly, for learning anything, it just ain’t that hard, right? The way I look at is if if a five year old boy can speak Japanese, why can’t I?
Cathal Donnellan 6:20
That’s the overall thing. And it’s something that people tend to make excuses for. Yeah, they look at themselves and say, Well, I’m not a kid. I’m not like a sponge. Well, of course, it’s going to be more problematic. But I mean, people are able to learn these things and acquire new skills later on in life. You just need to be able to get yourself into the right mindset, find a structure devote time, little by little every day, and you’ll get there. Yeah, it’s it
Michael Waitze 6:43
almost sounds like building your own company. What got you to move from Hong Kong and from China, to Vietnam? Like what was the trigger for that? Well,
Cathal Donnellan 6:52
that’s an interesting one. So basically, Hong Kong was where we did a lot of our company fundraising. And it was a great place to be, especially when you had all the international crowd there. Hong Kong was the best city in the world for that, I still maintain, it’s one of the best places to be, if you go to Hong Kong, you will have a great time. But the issue is that the COVID restrictions remained in place. Now I know people will say to me, but look how they’ve removed the hotel quarantine entirely. Whereas I’d say to them, well, for the first three days, you can’t do any indoor catering, you can’t go to restaurants, because it means you still have like an orange code instead of a green code. Because you just arrived in Hong Kong, you still need to wear masks, everywhere you go. And international travellers are going to think, well, I’ve got too much trouble, I’m just going to the airport instead. And it’s a real shame because Hong Kong has such a talented workforce. It’s got such major advantages from a business point of view, but it’s being undermined by a few policy errors like that. So I’m
Michael Waitze 7:58
gonna go into my mind. So like, I’ve been going back and forth between Singapore and Hong Kong since 1990. So I’ve seen a lot of it. And there was a competition kind of at the beginning of my time in Asia between like, which one of those countries was going to be visible, small, right populations about the same, they had their own sort of autonomous governments as well. But just bit by bit by bit in my mind, Singapore is just kind of surpassed Hong Kong, for a bunch of different reasons we can talk about, but we don’t have to get into that here. I was in Singapore for like, this year, I was there for almost two months, if not more. And it confirmed a lot of the things that I thought about it there. But we can argue Hong Kong obviously is an amazing place, for sure. So did you leave? Did you leave during the pandemic and then go to Vietnam? I left actually in June of this year. Okay. So Julie, you’re new in Vietnam? When did you start building snapbacks?
Cathal Donnellan 8:50
So I was part of the team that took over snapbacks. That was in 21. It was June 2021. Go ahead. snapbacks have been operating since 2018. Now it basically started as a very simple contract for differences trading platform, meaning what Meaning? Meaning that basically if meaning you’re trading contracts instead of the underlying
Michael Waitze 9:11
asset, so okay, we call CFTC.
Cathal Donnellan 9:13
The FDA, that’s exactly what it is. So you’re familiar with trading, you know exactly how it is. And as you know, one of the major advantages with that is there’s a low barrier to entry. That’s one of the key things that you have high leverage, high leverage low barrier to entry. But the problem is when you talk about high leverage, what’s the other issue? Well, high risk? Yeah, exactly. So that’s why we always encourage people look, know what you’re getting yourselves into. It’s a very good form of trading. But be careful. Make sure that you’re not trading with more than you can afford to lose. Because people can often find themselves in those positions. So that’s why we always say, do your research, get your practising, get a demo account and practice with that. Once you’re confident enough. Have to go on your own. Make it happen.
Michael Waitze 10:02
Yeah. What’s your background in trading? In other words, what got you involved in this? Because before you said, you’re doing remittances and payments and stuff like that trading is totally different animal. Yeah, United
Cathal Donnellan 10:11
should be quite surprised. But I’ve been trading since 2015 2016. And actually, when we launched the exchange back in 2017, we were actually mainly looking at, well, look, how can we offer a virtual currency exchange that’s completely licenced, completely compliant? And there was a lot of cross pollination there. And it was a matter of how do you actually deliver the best service? You can? That was the first thing we actually started looking at? How can you offer the best service, you can gain a platform that is totally licenced totally regulated, and totally compliant with all the relevant laws with all the relevant jurisdictions without crossing any red lines. And that was one of our big things there. So when you’re looking at that, and this is something that surprises people about licencing in particular, yeah, go ahead. It’s actually even though a company might have a licence, it actually still there’s actually still a limitation on what you can do. If you deal with crypto or blockchain. That’s the major
Michael Waitze 11:12
issue. Here’s the thing, though, is what kind of licence Do you have? And then I would ask, who’s the regulator that issues that licence for you? Because you’re right, right? Like if you go to the financial service regulators globally, they will have different degrees and different types of licences. You can be licenced for x. But if you do Y, you’re not licenced for that. Right? So I’m curious, what kind of licencing do you have and who issued those licences to you and each country or in each domain?
Cathal Donnellan 11:33
Absolutely, absolutely. So we’ll look at our current company first. And then we’ll actually go back in time and actually look at the Philippines licence. So the first sites is that we have is an MSP licence that’s provided by FINTRAC caliphate. So basically, what that does is it enables you to do a number of different things. But the most important one is it brings you up to tier one regulatory standards. That’s one of the big things an MSB licence with Canada enables you to do so that’s one of the first things to point out there. The other type of licence that we have, it’s a securities dealership licence, the securities dealership licence basically enables you to trade securities both as an agent as well as a principal. So those are the two things that’s provided by Mauritius. And for its securities dealership licences on a transnational level. You’ve basically got three major regulators there. Seychelles. eToro, for example, has their licence there. You got Mauritius. And you also have Vanuatu, which is a Pacific island nation. Now Vanuatu is actually quite a good place to have a licence operates on a common law system, former British colony, it’s a very good place to actually be licenced, as well.
Michael Waitze 12:51
Does that give you the right to operate in Vietnam? Or to have us clients or to have clients in Japan or, you know, or Korea where most of the trading takes place?
Cathal Donnellan 13:00
One of the big things when you’re talking about CFD, don’t touch us clients. Actually, one of the big things, they’re still
Michael Waitze 13:07
doing CFD is only you’re not doing you’re not trading. Yep.
Cathal Donnellan 13:11
So we’re looking into options. CBBC has a number of different assets. Right now. We’re mainly focusing on c f d, we may look at doing
Michael Waitze 13:20
in the future. Is this like bitmex? In a way
Cathal Donnellan 13:22
similarities? Yes, definitely similarities there, I would say that we’re much closer to kind of a combination between eToro and FTX, in terms in terms of how we want to see it. So basically, we often joke around if eToro and FTX had a baby, you basically have snapbacks. And that’s where we like to put it there.
Michael Waitze 13:41
What did you tell me? What do you mean when you say, so what have you taken from eToro? What have you taken from what did you call it F TX
Cathal Donnellan 13:47
FTX? Well, in terms of FTX, you have a number of different things in terms of what FTX does. It’s not just the exchange, but you’ve also got an ecosystem being built around his platform token, the FTT. Yeah, with eToro, what you actually have is a CFD platform. But alongside the CFD trading platform, you also have a social trading element. Now what we want to do is actually build upon the social trading element, and actually add more features, which are more akin to tick tock, as opposed to eToro. And one of the major issues and I’m sure that you’ve come across as to copy trading, as it exists as at present. It’s been around for years now, I believe, since 2010, you know, back when I was in university, and the major issue with copy trading, there’s been very little innovation over the last number of years over the last seven years. Now that can be problematic, because it meant that the industry remained as it was,
Michael Waitze 14:41
is that the only problem with copy trading in other words, again, I don’t know how this works, right? Because I would not do copy trading myself. But again, I know it’s a gigantic thing. And it’s a whole part of the social trading ecosystem. But let’s just say I buy a certain CFD, which gives me the expectation of a specific outcome. Theoretically, I want everybody to copy me because the more people they copy even more than market moves in the direction that I wanted to depending on the liquidity factors that are associated with my position, because people are following me, right? I mean, this has happened, frankly, to Warren Buffett right. In Berkshire Hathaway, there are a bunch of different funds out there that copy him. So the stuff that he buys, when they figured out they buy more, it goes up. Like, I’m just wondering if this is the right way to trade.
Cathal Donnellan 15:19
So once Warren Buffett or Berkshire Hathaway executes a trade, are you instantly going to copy that within one second?
Michael Waitze 15:25
No. And maybe you shouldn’t? Maybe you shouldn’t? Right? Because his buying is going to move the market? He’s not buying $25,000 for the stock, he’s buying $2 billion worth of stock so likely. Okay, about Yeah, for sure. Well, I mean, mostly US markets is where he’s buying, right? So
Cathal Donnellan 15:40
but it also depends, is he buying it spot futures, anything like that? If he was doing it on CFD, it wouldn’t move the market?
Michael Waitze 15:45
Well, he would if somebody was hedging the other side of that trade and then doing some delta hedging, right? Sure. No doubt about that. Or some gamma hedging. So I’m just trying to figure out how this works in the crypto is different, because the liquidity considerations are different as well. Right? Correct. Okay.
Cathal Donnellan 15:59
And that’s the main thing, it’s a matter of how you actually branch out from crypto as well. Because if you’re focusing on purely crypto, you’re actually limiting the possibilities that are available to customers. And that’s a very big thing. So how do you actually branch out from crypto and how do you actually provide much more? Are you able to price indices commodities are what are you able to provide? Are you able to do Forex? That’s also the other issue at hand. Now, when I
Michael Waitze 16:23
see you’re doing this the other way, you’re starting with crypto and and saying if we’re doing CFDs, we can do Contracts for Difference on anything, really. So you’re going to move into CFDs for other products besides Kryptos? Oh, you’ve already done that.
Cathal Donnellan 16:33
Absolutely. It’s something that we’ve made inroads on. So we’re actually doing X AUD USD t. So gold as well as euro to USD. So the reason why euro is particularly good currency to trade at this moment in time, is because of the volatility factor there
Michael Waitze 16:48
do you want explain to people that don’t understand what volatility is why it’s so good for trading?
Cathal Donnellan 16:52
Absolutely. So in trading, especially the type of trading that my platform does, which is CFD trading, it means that the prices go up and down, there’s a lot of fluctuation in prices, so they go up and down. So those price movements are very good. Actually, when a market moves in one direction, and things are going up, it’s not necessarily good for a brokerage, that’s one of the most important things, but when things are kind of going sideways, they tend to be quite good for a brokerage. Now, if you have volatility, so prices going up and down, it’s actually very beneficial for you as a trader, meaning means that you can actually profit on both sides. Yeah, if this is go up, or things go down, it depends on the position that you take. If you think things are going to go up, that means you take a long position, you play some margin, select the leverage, and then you move forward from there. If you believe things are going to go down, you simply take a short position, put down your margin, select your leverage, it can be anything from 1x to 150x. And you’re able to proceed accordingly. In that way, it’s always recommended that you set both the take profit, as well as the stop loss to prevent you from losing too much.
Michael Waitze 18:03
So can you do that on an automated basis on SnapEx?
Cathal Donnellan 18:05
You need to input that actually, you can do it that right? In other words, if I knew absolutely, absolutely. So that’s what we always get asked,
Michael Waitze 18:13
Can I ask you this, though? Because things get really interesting when you have these platforms, right? Let’s say I start trading, like I opened up an account, Michael Waitze, starts trading CFDs on snapbacks, is there a way to like have you build analytical tools there so that I can see what the impact is of my trading during specific market conditions, then I can make a better understanding, or get a better understanding of when I personally should and shouldn’t be trading, particularly if I’m not doing social following? Does that make sense? And if you haven’t built those analytics, is it something that’s on the roadmap as well? Because we’re
Cathal Donnellan 18:43
actually looking into quite a lot of these different factors, right? Yep. There are quite a lot of analytical tools that are there at this moment in time. All right. So in terms of basically everything you need, it’s all actually there on the platform, right? You’re able to basically put down a trendline, pitchfork, you’re able to input texts, x A b, x ABCD patterns, etc. There’s a lot that you are actually able to do. Yeah. Now in terms of what you’re doing in terms of when you shouldn’t be trading and whatnot, that simply down to your own discretion.
Michael Waitze 19:13
So I can’t do back testing on my own stuff. I can’t go back and say over the past five years, I’ve made money here. I’ve lost money. You I need to download that information, put it in a spreadsheet and do my own analysis. Yeah. Now it
Cathal Donnellan 19:23
would be really cool if you were able to add over five years on snapbacks. You know what I mean? Oh, absolutely.
Michael Waitze 19:30
So if volatility is good for trading, which fair enough, I’ll give you that for sure. Can I do CFDs on the VIX,
Cathal Donnellan 19:38
so if you’re talking about the ft on the VIX, Can you just elaborate a bit more
Michael Waitze 19:42
so the VIX is the volatility index. It’s actually trading vol on vol. So it’s actually kind of a really interesting way to trade because what it allows you to do it says, I think volatility is going to increase. And I want to be long that exposure to volatility or I think it’s going to decrease I want to be short that volatility there’s an index called the VIX, which is short for volatility index that allows you to do that that would just be something super cool. You could trade.
Cathal Donnellan 20:05
I mean, absolutely. There’s no question about that. And once again, especially when you’re talking about futures or any type of trading format like that, absolutely awesome to do.
Michael Waitze 20:14
Yeah. So have you been funded? Or is this been bootstrapped the whole way? No, we
Cathal Donnellan 20:18
actually did a token, right. So we actually raised a good amount. And we actually got a certain amount of investment back in 2021. So we’ve been doing quite doing okay, on that front as to what’s
Michael Waitze 20:33
a token race, like, what is it called? In the old days? The old days, it’s like five years ago? Is it an Ico an IR like what
Cathal Donnellan 20:39
was an Ico it was an Ico all the way. So it basically you’re issuing a utility token utility token being something with the courts and underlying use case. That’s one of the key things to point out there. Yeah. Now, if you’re talking about the actual Epping and security, you’d be running into all sorts of regulatory issues,
Michael Waitze 20:59
I get it, I get it. So what kind of utility does the token have? What kind of benefits do I get if I buy one. So
Cathal Donnellan 21:06
one of the benefits that we are onboarding in the next couple of weeks actually, is the integration of the token in order to pay for it, because as you know, what the brokerage, you have trading fees, so in our case is 0.1%, as well as overnight fees, right? Overnight fees are fees that are charged if an order stays open past a certain time. Now, of course, beyond that, you also have spread, and you also have slippage. Now, of course, one of the big work internal workings is with basically a brokerage or a CFD trading platform, it’s quite a lot of the time, you often have high slippage, low spread or low spreads. Very rarely do they achieve a suitable balance there as well. And the other thing is, the other thing we are doing is, of course moving beyond that, because we’re also talking about the actual copy trades. So could you use a token to pay for or get discounts on the copy trade fees? And beyond that, would you be able to use the tokens to for example, pay for non fungible tokens? Should they be issued by the platform itself? Right, and a variety of other things? So for example, for quant trading, would you be able to use a token to pay for your script feeds just as an example there? Yeah. So there’s quite a lot of possibilities out there. But most important thing and the core fundamental, is making sure that basically, you’re able to use the token to pay for trading fees. That’s always the key thing there who
Michael Waitze 22:30
underwrites the CFD, like do you take a proprietary position in some of these trades? Or are you matching me against you? And if I can’t find a match, then I don’t have a trade.
Cathal Donnellan 22:41
There’s always one big thing there. And that’s the main thing we pointed out proprietary, but that also means there’s counterparty risk. So it’s a matter of how do you overcome that counterparty risk? Well, naturally, you need to hedge. Yep, that’s, of course, one of the big things you always need to be able to do, it’s a responsible thing to do as a platform. And you always need to make sure you have a suitable system in place as well. So what is that? So in terms of our hedging system? Well, that will be a bit on the confidential side, the picture that is protected?
Michael Waitze 23:06
Yeah, but I guess the real question for me is this is that like, nobody succeeds alone, right. So and I don’t know how big SnapEx is, but I doubt it’s running a billion dollar balance sheet if it is good for you. But if it’s not, you’re gonna have to go off platform for some liquidity, right? Because if I really want to trade a CFD on, pick any sort of thing, I want to trade a CFD, and that’s fine. But in some cases, that hedge is either hedging yourself in what the underlying is we talked about that a little bit, right. But on the other side, it’s just laying it off on somebody else. So do you lay these trades off on other people on other exchanges that are trading the same kind of contracts where somebody wants to sell it? And somebody here wants to buy it? Or are you doing it all yourself?
Cathal Donnellan 23:46
On third party exchanges? That’s always one of the big things that you do there. Now, with the underlying mechanism, that’s something that we would keep somewhat confidential. But in terms of third party interest, we actually work with them with regards a
Michael Waitze 23:57
hedging system. That’s what I want to know. So is there a reason for you to be in Vietnam, or it’s just a lifestyle choice that you made.
Cathal Donnellan 24:03
So in terms of the move to Vietnam, now, one of the things that you’ll see is that it’s a place that’s absolutely phenomenal in terms of tech talent. Yeah. And some of the people you can find out here are sensational. Yeah. Now, we mentioned FTX, earlier today, and we were able to find the former tech lead of FTX, Vietnam and actually get him to work with us, which is where we consider ourselves incredibly fortunate to actually work with him. So we’re actually in a very good position there at this moment in time, but as well is that we were also hiring Java developers, flutter developers, front end developers, all these different sides. And we were very fortunate there to actually have a very good talent pool and actually worked with them directly.
Michael Waitze 24:45
What does the future look like for you guys? Like what’s the long term goal? Do you want to compete with the biggest trading exchanges in the world? Are you are you doing something different than other people like what is the long term goal?
Cathal Donnellan 24:57
Our goal is to be the best that we can within the contract trading space, that’s the big thing. If you think about futures, if you think about spot, you’re going against 5g, you’re talking about competing with binance, Kx, all these major platforms. Now really, one of the big things there is you don’t want to compete against these industry stalwarts. And naturally as a platform, you want to find your place in the market, that’s always the main thing that we point out, you need to have your place within the market, that basically you’re able to work with these major platforms as opposed to against them. Now, we’re very lucky because actually, in those cases, we’ve carved out our own niche. And we’ve got 260,000 users globally at this moment in time, doesn’t mean it’s the biggest platform in the world. But it’s got its place in the market. And our overall goal is to be able to be up there with eToro with IG and be mentioned in that vein, and how far away are you from that? Oh, it’s a never ending process to continue building. That’s always the main thing. If you ever stopped building, that’s when you fail, you got to keep going,
Michael Waitze 26:04
that I cannot agree with you more. That’s it. So did you always think you were going to be an entrepreneur? Or is all this stuff new to you.
Cathal Donnellan 26:11
So I mean, believe it or not, I, my father was a small business owner, my mother, of course, being a secondary school principal. So I kind of grew up with the best of both worlds, the entrepreneur side and the more stable side as well. But at the same time, when you’re growing up, you know how it is you’ve got kind of like the education side, and you’ve also got the more entrepreneurial side. And it brings the best of both worlds one side being kind of like the risk taking entrepreneurial side, and the other side being a bit more rigid and structured. And when you’re looking at management, it actually brings a certain advantage doesn’t fray. And that, of course, you have to think outside the box, you have to be creative. But you also have to do it in a way where you’re able to establish a suitable framework and routine in terms of being able to execute on a set of predefined goal.
Michael Waitze 27:03
Yeah. So out of these 260,000 users to you know, I don’t want to know the exact breakdown, but just some sense of is it emerging markets? Is it mostly in Southeast Asia? Are there a tonne of people in Europe doing this? Like, what does it look like? And if they’re mostly, you know, within a five hour flight of here, essentially, because Vietnam and Thailand are pretty good. But if that’s the case, right, is there a financial literacy thing here as well, where you can actually benefit from teaching people how to do this, as opposed to just letting them do it?
Cathal Donnellan 27:28
salutely? And I think that actually, you’ve hit on a few key points here. So actually, to break down that question in terms of the market, and in terms of where the volume comes from. Yep. Actually, in terms of registered users, Vietnam isn’t even on our biggest market. But if you look at volume, Vietnam is a very big market. Well, our biggest. Now the reason for that is because actually, there are a number of different things. You’ve got a number of fantastic crypto blockchain and trading initiatives that are happening at and within Vietnam. That’s one very big thing there. The other side is, you’re also able to ask yourself, Okay, well, what are the other Americans that are starting to be built up? Well, on one side, you see Indonesia, you also see India. But of course, you will see the Philippines. Now, I know a lot of people might point out in the Philippines, that it seems though a lot of the population own crypto, but it’s not quite as sizable as you might think.
Michael Waitze 28:27
No, it’s not. It’s highly concentrated. Yeah,
Cathal Donnellan 28:29
exactly. And the other thing is, in order to build quite a sustainable business, shall we say, you need to have a middle class. That’s a very big thing with emerging economies, you need to look at that stage, you need to look at how big is middle class? And how big are we able to scale this up to being that’s the other side you need to look at as a platform or any type of business looking at any market. The other thing we’re doing is looking at India, we’re working with some of the big communities. And we are actually in the process of signing a number of understanding. So that is something that we’re working towards right now. And we’re in a very fortunate position there. What is it
Michael Waitze 29:08
like in India, though, where the government seems to go back and forth on its desire to allow crypto currency at all? Do you know what I mean?
Cathal Donnellan 29:17
Absolutely. And that’s an idea. It’s also the 30% tax on crypto profits. But of course, the thing is with crypto, it’s just like, if you have noncustodial wallets in particular, what does that mean? You’re able to do means you’re able to bypass these regulations provided in the off ramps, your you’re able to keep things off the off run, shall we say? I mean, it’s very easy to avoid those taxes. It’s a matter of how do you incentivize people to actually settle their crypto locally and report their taxes accurately, as opposed to using it as a channel? For tax evasion? It’s actually a very interesting point.
Michael Waitze 29:52
Yeah, I get really nervous when people start talking about tax evasion because anybody Oh, you know what I mean?
Cathal Donnellan 29:59
And but that’s the issue, it’s a matter of how do you best, but the best sort of regulatory and taxation framework in place that enables proper reporting of their taxes and allows people, traders, communities exchanges to flourish within an existing ecosystem.
Michael Waitze 30:18
Yeah, when you built this, did you ever consider building it as a distributed autonomous organisation? Or was it always more of a centralised idea for you?
Cathal Donnellan 30:26
So for scft platform, it’s inherently going to be centralised because you’re the broker. Now, what we need to do in the near future, and this is another very big thing is actually, when you have the token, do you have a certain degree of voting rights within an organisation? Right? That’s a very big thing that we want to be able to point out there. Because if you have issued a token, Well, naturally, you want to have people have a certain degree of authority within the platform itself. That’s a very big thing. And it’s like a coop in that basically, you want people to have a certain, say, in the running of how exactly it works.
Michael Waitze 31:03
Can I ask you this, if a token itself is just like a kind of a sandbox piece of software, right, that is mimicked across every token that somebody buys? If it’s a utility token, can it be reprogrammed, so that you can add more utility to it? Or is it just what it is, and that’s
Cathal Donnellan 31:22
able to add more utility, but it all depends on the standard cases. Now, in order for a token to appreciate in value, you effectively need to have a certain degree of buying pressure, buying pressure related also to the actual total supply. That’s one of the big things that you need to look at right now. You’re able to add more use cases, if there are spent cases. So even if you look at the decentralised autonomous organisation, one of the main things there is that even though it’s not currently there, it can be there. And these are additional sides. Now it will take development, and it will take much more than that. But of course, it can be added. That’s when you’ve also got third party organisation. Yeah, that’s the other side. So what So for example, with a third party organisation, except your token as a spent case, now, these are all things that are theoretically possible. It’s more a matter of execution all the way. And execution is always going to be the key word
Michael Waitze 32:17
for everything. Do you look at interoperability when it comes to the token usage so that people that own the token for snapbacks can then use it to trade somewhere else?
Cathal Donnellan 32:25
One of the main things that we’re always looking into and this is a big thing is and I love that you mentioned interoperability, it’s how do you make it interoperable with other applications that are out there? Yeah. And especially when you’re talking about now, if you look at where our pricing data comes from, if you set your own price, and you’re a broker, now, there’s conflict of interest there a little bit. Exactly. Because you’re able to set it up in order for people to lose. That’s not what you want, especially if you’re interested in a fair playing field. Yeah, what you want to be able to do in effect is actually get your data and aggregated from a number of different platforms. Sure. Therefore, if somebody ever wanted to query you on your pricing data, you’re able to demonstrate to them right away. Now, I’ll give you an example, please, there’s a CFD platform out there, I won’t name names, they set their own price by virtue of the fact that they have an LP licence in a particular jurisdiction right now, that licence should never have been issued. But nevertheless, they have it. Yeah. And a major conflict of interest, because they’re able to set it up for people to lose.
Michael Waitze 33:24
Yeah, that’s not what the trading markets are meant to be. I know, this is not a dark pool in the classic sense of the word. But if you’re putting your proprietary prices in to your pooling, you are creating a conflict of interest.
Cathal Donnellan 33:37
So let’s look at it in terms of actually where we get our data from. That’s one of the key things there. So we got depending on the coin, alright, but for the most case, we actually get those from free exchanges. Those are binance. Kobe, okay, x. Now, normally, what you could do, if you’re only extracting your data from one market being the spotter of the futures market, you could manipulate the market in one exchange, then go over to the CFD. And then of course, when your position. If you’re getting it from three separate platforms, however, it prevents the actual target. Exactly. Now, it doesn’t make it impossible, no, but significantly reduces the risk.
Michael Waitze 34:15
Yeah, you’ve looked, I’ll let you go after this. But you’ve got to create a situation where there’s enough liquidity so that those sort of time in location arbitrage just don’t exist, right? Because if the price is different on finance, and it is on Hobi. And if there’s a time lag between the time that those prices get served, then there’s an arbitrage opportunity that’s available. Absolutely. Yeah. So that creates a little bit of a conflict of interest. But we’ll see. I think as this develops, and more people start to trade, I think that type of stuff is going to disappear. But in the interim, I think it’s still something that traders have to look out for. Okay.
Cathal Donnellan 34:45
And I mean, you’ve been involved in this for a long time. I mean, you’ve been involved in Portfolio trading, proprietary trading, you move this market inside and out. Do you know exactly how it works?
Michael Waitze 34:56
I feel like I have a good feel for this. Look, I want to thank you for doing that. I’m gonna give it another shot Cathal Donnellan, Co-founder and CEO of SnapEx. Thank you so much for doing this today
Cathal Donnellan 35:07
Anytime Michael It’s my pleasure and thank you so much absolute pleasure to be here
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