 Hey guys, how you doing? This is your boy Rich from Rich TV Live and you too can join the club at richpicksdaily.com where you can learn how to win and trade. Hi, how's everybody doing today? I'm your host, Rich. Here we have a Rich TV Live with our very special guest, the Chief Compliance Officer of WonderFight Technologies, Torstein Bratton. How you doing today, Torstein? Doing great, thank you for having me on. Pleasure, very excited to have you on the show and learn more about you and WonderFight Technologies. Torstein, can you tell us a little bit about yourself on what made you want to join the crypto industry? All right, well, I've been in compliance for about 30 years in the traditional finance area, working in capital markets, supporting trading deaths. And through that time, I got exposed to running two different alternative trading systems. So that's doing a bit of a fintech-like work, bringing new product to market, balancing the compliance side with the business side. And during that time, I learned about blockchain technology, I learned about crypto. And I thought to myself, this is something new, that's going to grow into something bigger. This is back in 2012, 2013. So it was still early stages and there wasn't much trading going on. But as time goes on, you really start getting interest. You see the different projects. So as I followed the media, I followed the coins, I wasn't ready to jump in myself from an investment point of view. Maybe it was a little too early for me, but definitely found the whole blockchain ecosystem extremely fascinating and open my eyes to the idea that when all these projects start kicking off, there is definitely an opportunity to be part of it. So running marketplace and exchange in the past and supporting the deaths, I figured I could take those traditional finance tools and bring it to the crypto space. So I got lucky, a friend of mine called me up and said, one day we're getting regulated. I need someone that has experience with regulation. I had experience getting a marketplace is approved and product approved in a regulated environment. So it definitely seemed like the adventure for me. So I switched over, you could say late in my career, but I'm still early, early thinker and definitely excited about watching this grow. You and me both. And I believe that we are still very, very early. Torstein, do you believe that the crypto space still needs more regulatory framework set up in order to draw more institutional investment into assets like Bitcoin and Ethereum? I have to say yes. There's a bit of a framework now where we've gotten an idea of how to get firms regulated in Canada, but there's still a lot more to be done in the US, Europe. They have the first stage, which is really a money services business model focused on AML. But we need to understand more about how the trading will work, how institutions can buy and sell, where they're going to customize their crypto, how they're gonna measure it, how they can be comfortable that there's rules and surveillance around the trading. All of those concepts are well known in the equity, forex, derivatives world. But in the crypto world, there's still a lot of work to be done to normalize the information so you can compare across markets. You can feel comfortable that everyone is participating and playing by similar rule sets or conduct. So as the regulators set, the basic framework is get the entities registered. This is in Canada. We're leading the pack globally. You have other jurisdictions that have announced and that provided frameworks for registration. Next is now you're registered. How do you monitor the conduct of all these parties? And you have to make sure that the ones that are not playing by the rules or bad behavior are scrutinized and put to the side and that the regulated entities that are actually playing by the proper rules and controls to make sure that the investors are experiencing confidence in putting their cash fiat into the platform and then that the crypto or assets they purchase will be safe, secure and available for them to trade. So that's where we are right now. We're moving to the second stage. A lot of people don't like regulation, but from my perspective, it is a framework that you can work with as long as you follow it and then you educate the regulators and they usually have an open mind. So over time, you nudge them into the right direction and they're all in a better spot. What are some of the biggest challenges you believe you will face as compliance officer for BitBy? So it's always about trying to get new product out to the clients. We as a FinTech first want to get product in the hands of our clients immediately. Well, then the compliance department has to be very careful to make sure it's done appropriately and the regulators are going to put guardrails on everything. So you can't get outside those guardrails. So you're constantly trying to make sure that you don't do something that will have to be unwound. I think the idea that I always bring up is you have to ask permission instead of forgiveness. What we're seeing in the current regulatory environment in some other countries, they're doing regulation by enforcement. So they come in and say that you've done something wrong and they're working on a fine to deliver you versus a business that comes in and says, I want to play by the rules. I want to get permission first. So I ensure that when my customer buys the product, they will be able to hold on to it and I keep it for the long-term or short-term, whatever they want. But they should have the confidence that it's just not going to be pulled away because the regulator suddenly steps in and says they don't like the way you set it up. Product may be still fine. They just may have an issue with how you've disclosed your risk, how you set up the process. So that's really important and it's always a challenge for compliance because business wants to run really fast. We want to keep up, but we don't want them to stick their necks out to the point where they are going to get themselves in trouble when we want to make sure that they can have a good business. Now, some big news has come up recently. Coinbase CEO has come out and said that if they go bankrupt, clients' assets would not be protected from creditors, which has shocked a lot of investors, a lot of people. How does Bit by plan to protect investors' assets so that they can feel safe keeping their assets on the platform, even if the company has to face hardship in the future? So I think the first thing we focus on at Bit by is making sure that we have the supervision of the regulators. They can have a view on our capital. So you know there's a third party watching over us as a company. We also have public disclosure to our parent, Wunderfai. You have your quarterly. You can look at any exposure of the overall company group. Bit by itself can't provide margin to customers. We can't provide leverage. So there's no need for us to have any leverage within our actual platform, our regulated entity. We also have to have insurance. We get insurance on your traditional insurance, but we also get additional crypto insurance on our hot wallets or cold wallets. Then our custodian, which is a third party, Bitco has insurance as well. So as we look at all our partners, we ensure that we do good due diligence on any vendor and that when we move coin into cold storage, it is segregated from Bit by itself. Now the whole comment about bankruptcy is there is a general corporate issue out there that if you don't have something like government, sponsored insurance like CDIC for fiat currencies or a Canadian Investment Protection Fund, which IROC dealers have, we will become an IROC dealer soon. That's our goal. Hopefully those other third party insurance coverage for the industry will extend to crypto. Right now we have to rely on providing the controls, have the supervision, be a regulated entity, have as much insurance as possible, look at proof reserves to give our customers comfort that we're taking care of monitoring and then also being very prudent about not having leverage. Leverage is the first step to a problem. And then the final thing is ensuring our customers assets from their cash to their crypto are segregated from our own business assets so that you can look through and see very quickly if there's any risk at all. And the idea there should be no risk. Now, over time, these things will get better and better. We're still in the stages where we're trying to work with those, I guess, third party insurance providers from before the industry, those funds that we gather and then we'll be providing that other protection if there is a bankruptcy. And that will come into course. But really the best thing to look back is our financials. You can go through the report and see that we have plenty of cash. We don't have leverage. So, and we have people watching us. That's fantastic, great to hear. And recently there's been some serious events that have happened in the crypto space specifically with Luna and a lot of exchanges having to list them and then de-list them. How does bit by plan on vetting projects before listing them on the exchange for clients to trade? So we have a committee that reviews all the coins that we add. It's fairly slow because of going through the regulatory process. We want to take our time and limit our product until we are ready and we got regulated last year. And then we started listing a few more coins, a few more coins. The idea is you have to look at all aspects of it. Is the project a viable project? Is there liquidity for the coin? Is there history? In the case of Luna, this was a match to a stable coin, which is UST. And you would really be looking at both. I think the industry was mostly looking at them as kind of two separate projects that was linked in an unfortunate way that caused the incident, like let's call it an incident or the death spiral if you really want to get into it. But the important thing for us as an industry is we have to acknowledge that there are times where there could be a run and we have to be very careful to identify those risks, warn our customers. Because a lot of customers still wanted to trade Luna even as it was going down. And it's difficult as a non-advice platform to tell a customer you don't want to do this. What we got to do is educate them, make them aware and ensure that when we list something that it's a viable product that can trade, we can support it from the technology as well as from the liquidity and be there with our customers, even if it goes up. Because everyone remembers one that went down to almost zero. They don't talk about the one that goes through the moon. They keep it quiet or they have this bragging story about, oh, I made a lot of money. But it's a balance. You're going to have the winners, you're going to have the losers. We have to be very careful that we can't pick the winners and losers. We just have to pick the coins that are appropriate to be able to trade to give people access to risks they want to get access to. And you have to always step back and say, this is an element of giving people access to a category of investment that will have high, medium and low risk depending on which coins you choose. Dorstein, can you tell us what are some of the biggest compliance differences between traditional bank trade desks and trading in the crypto space? So I think there's two major differences. One is the obvious one. We're not sure exactly how to categorize it. We treat it very much like an equity, looks like a security, it trades like a security, but it also acts like a currency and it feels a little bit like a commodity. And it's all between the different coins. When you go to a crypto platform, you're limited to coins. And so it's not like if you go on a trading platform, you can have access all of the different securities in North America. You are limited in a way and each one is a different structure. So in equity, there's a basic structure. You know, there's a balance sheet, you know, there's information, you can look at the financials. In crypto, it's very different because you don't have the same view of information about the project. So you have to do your research. So in crypto trading, that is obviously a big difference of trying to get your head around how to look at the investment, how to make a decision on when to buy and sell. So the other thing is about settlement. Is crypto is assumed to be settled immediately? When you wanna buy, you have to have cash in your account. When you sell, you have to have coin in your account, which makes it obviously easy for retail because that's how they trade. They'll put their cash in, they'll buy, they'll only sell what they have. There's no short selling unless you start to go offshore, then you get into derivatives and margin leverage. Institutions typically will only enter an order. They won't put their cash or coin in the account. They'll wait for the orders to execute. So that's where we're trying to figure out the settlement process to bring institutions into this area. And they're going to either join the method that retail or the regulators are gonna have to adopt the rules to allow institutions to maybe settle at the end of day or to have some credit risk associated with institutional trading. So that's another area that it's very difficult because you know, even if you're trading currencies, the banks will extend credit to their large counterparties if they're trading say $100 million of CAD US, they will settle that at the end of the day. They don't settle it instantaneously at the moment of the trade. So as we evolve this product, it seems to be mostly focused on the retail area which we know, institutions are getting involved. They're just not at the level that we need to be. And I think focusing on the settlement process and focusing on the way we can work with institutions and the regulators will bring us there. Is there anything else you would like to talk to potential investors about that are watching today before we close off this interview? So every time I think about crypto, I think about how I have gone through my life from in the beginning when I had paper tickets and we started electronic trading and the internet was around. It just started up sending emails. We watched a revolution of companies and growth and wealth come out of the internet. Then we went to the second stage, we call it web two, which is social media and we watched an explosion with the dot com and the growth of how people can interact. Instead of just reading what's on the internet, you can contribute to the internet. So as I think about the next evolution from that, we call it web three now is you get to own things on the internet. You get to own your data. You get to own real estate on a virtual world. You get to buy non-fungible tokens. You can buy crypto. You can move crypto around the world without trusting the person. You can buy products and services potentially from someone and transact in crypto, not worrying about foreign exchange and which currency they want to hold. So that makes me believe this next explosion is going to be even bigger than we've seen before. And I could parallel that in my experience of watching equities and bonds and currency trade actively and then go to derivatives and how the whole derivative world exploded and there's multiples of the equity or spot world. And then you have over-the-counter derivatives. That's a third evolution, which is multiples bigger than the regular options in futures world. So I see web three in that kind of over-the-counter relative to what we see are derivatives relative to what we see are underlying spots. So you can see the exponential growth and then finally, this is global. It is not just limited to each country containing it within their own borders and then having to manage your investments to limited to say Canadian then exposing yourself maybe a little American, expose yourself a little to Europe. How many people buy say Japanese stocks? Now when you're doing crypto, you can in an instant buying a project anywhere around the world and then transact with any one indirectly, directly depending how the platform is set up. So this is a, today it's still restrictive. We're dipping our toes into this world. We're the first or second inning of the baseball game. I think we can see there's so much more. And if people really start to think about the possibilities it's just take some patience to see the same thing that happened when we watched the last two revolutions of the web. What is the best way for potential investors or current shareholders to get in contact with the company if they have any questions? So there's the WonderFi website, wonder.fi. You can go there and look at the investor deck. There's also invest at wonder.fi to get in touch with someone to get more information. You can go on the public disclosures, see to see the financials and all the press releases. So all of this is transparent, it's available and then you can also contact the company. If you want to get an idea of what one of their marquee products which is bit by the marketplace that, so we have an exchange, a regulated exchange and the regulated dealer, you can go on there and look at the products they're offering, how they trade. You can look at the method of trading. You can see the order book and understand that this is more like a traditional side but it has two aspects. There's the onboarding, on-ramp to crypto. So that gets you into the asset class but you can also learn how to trade it and you can learn a lot about crypto and then you can take what you're traded and move it off to DeFi. So going to the websites, exploring the websites, understanding what those two companies are and then reading about the revenues and reading about the expenses and understanding these are very well capitalized enterprises and that going forward, you know there's transparency and there's a way to connect with them just simply through signing up, getting email alerts or just talking to them. Thank you so much for your time today. The chief compliance officer of Wonderfide Technologies, Torstein Bratton. Thank you for joining us today, Torstein. Thank you very much. I look forward to talking to you again. Always a pleasure. I must remind everyone that Rich TV Live is strictly for information and education purposes. Please do your due diligence, do your research before you invest in anything we talk about or discuss here on Rich TV Live. In saying that, we believe that Wonderfide has a great future. The symbol in Canada is WNDR. The symbol in America is W-O-N-D-F. And if you go to richtv.io, it's a platform built by investors, for investors. We've created a community chat for Wonderfide Technologies where you can go there and chat with other members from all over the world. Thank you for watching, everybody. If you're not winning, you're probably not watching. We bring you the winners and we bring them to you first. Thank you for joining us today, Torstein. Thank you, Richard. Always a pleasure. And thank you for watching, everybody. Have a great day. We'll see you soon.