Hi guys, welcome to the Fintech Coffee Break. I’m your host Isabelle Castro. This week I shared my coffee break with Jonathan Dixon, Director of Regulatory Affairs at Eventus.
This year, it has been difficult to ignore the mounting pressure on regulators regarding crypto. Whether it’s been stonewalled or embraced, the sector has been crying out for clear guidelines.
Earlier this year, Europe made history by passing the MICA law, one of the first comprehensive regulatory frameworks addressing digital assets. While it’s only a first step, it’s a major step for the industry.
Eventus focuses on trade surveillance on a global scale, an important part of regulatory compliance. So I sat down with Jonathan to talk about the implications MICA might have. We spoke about the European rules, the effect on businesses in Europe, and how businesses can remain.
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Isabelle Castro:
How are you today?
Johnathan Dixon: 1:00
I’m good. Hi,Isabella. It’s a good day. I’ve got the builders in. I’ve got some new decking going up in the garden. So today have big adventures and good stuff. So I’m, I’m really happy to be here.
Isabelle Castro: 1:10
All prepared for the summer. Perfect. I like that. So to begin with, I’m going to start with what gets you up in the morning?
Johnathan Dixon: 1:23
Well, two main things get me up in the morning, one, a very large amount of coffee. And to my dogs, I have three dogs that jump on the bed and are very excited to be fed at about630 every morning. So those two things, definitely get me up in terms of my work. It’s a question of what really inspires me and what do I love doing and I, for better or for worse, I love trade events, it genuinely excites me. I think it’s a really exciting place to be working in events as a company that keeps me on my toes and keeps me working hard. So in terms of giving up caffeine, caffeine and dogs in terms of inspiring me for work, definitely loving what I do.
Isabelle Castro: 2:03
Nice, nice. I’m excited to learn more about trade surveillance, especially with the micro regulations coming into effect. But before that, how about you start by just telling me a bit about your career journey to event us?
Johnathan Dixon: 2:19
Yeah, sure. So it falls into two parts. The first part was pre trade trades events.Why? What is a bit of sound as dealing with data and EMI for about eight years in the City of London. I then started working in trades event for a tier one bank in the city. I headed up their wealth trades event piece for about four or five years and also wasn’t there besides as well. And then I was impacted by some clever redundancies, I started working as consultancy.I did that for a short amount of time, I was headhunted to work at Kraken, Europe’s largest crypto exchange by volume, and one of the largest globally,where I headed up their trade events for three years before I then started working at events where I am now at the director of Regulatory Affairs for AMEA,and I’ve certainly enjoyed my journey thus far.
Isabelle Castro: 3:10
Yeah, it’s a really good journey and kind of takes into account everything that we’re probably going to be talking about the crypto industry as well. So, yeah,we’re gonna see MICA coming into effect at the end of 2024. But it’s just been kind of approved.And there’s also other regulatory regimes that are in the process. I think Britain is also looking at their approach.What do you think is going to be the effect on businesses already in the market? We’ll focus on MICA just because we know where we are with MiCA for Yeah, what’s going to be the effect of MiCA on businesses?
Johnathan Dixon: 3:53
I think there’s a couple of areas that there’s going to be a great import for businesses, I think the three ones that I’d really focus on are authorization, so ensuring that firms get themselves approved and signed up to working within the framework of MICA. Secondly, AML regulations,so ensuring that you do KYC, one standard customer base, and when it’s approved, whether that’s tiered verification or how they want to adopt it, I’m sure we’ll have some more clarification as it progresses, but essentially AML and the second key tenet,thirdly, you’re looking at trades, so you’re looking at making sure that companies are aware of potential manipulation cases that may occur. Platforms,though, have incited any cases that may occur on their platforms. And lastly, related to all of this sort of fourth key really record keeping understanding that you need to have detailed records of your transactions, the clients and understanding that you’re building out a greater regulatory capacity within your companies and I said this once before on another podcast, and that was if you don’t have the funds to be able to do proper KYC and do proper trade surveillance, you probably don’t have the funds to be operating.And it’s about ensuring that you are compliant and protect your customers because MICA is fundamentally about protecting retail. I think that’s where it really lies and we’re at strike this.
Isabelle Castro: 5:15
Yeah, it’s it’s a long time coming. Any kind of regulation like this in the crypto space is a long time coming. So a lot of people are seeing MiCA as a positive step and one for others to follow. Is this the case? Is this just the first step? Do you hope that people will kind of improve on it? What’s your opinion on MICA as it stands right now.
Johnathan Dixon: 5:42
I’d be very wary about saying improve personally, because I don’t want to say then we could be doing better than our glorious European brand than the match to do thus far. I would say that the HMT consultation paper we’ve seen in the UK shows that the UK is trying to catch up pretty rapidly where mica is going. I think that’s a positive thing. I also think we’re where you lead the world will follow where one of the largest trading bloc’s in the world, I think if crypto can find a safe and secure place for companies to operate, and that bears fruit, it behoves the rest of the world to fight and to go where Europe is leaving, I would say that it’s not what’s the is groundbreaking and novel in terms of being the first dessert. In terms of what it’s doing. It’s nothing that we haven’t seen covered by method two, when it comes to record keeping. Nothing we haven’t seen when it comes to MMA when it comes to trade surveillance in terms of what you’re looking for in terms of market peace. It’s probably not anything too original when it comes to AML and KYC regulations and people know what they need to be doing.So we’re not looking at staff being trained up to learn a new skill, what we’re looking at the staff and the components while being trained up to learn an existing skill in the new industry. I think that that means that we’re your leads the world will fall on can follow.It’s a matter of just getting people over the line, I think,some of the political difficulties in the US. I mean,it’s harder to get some of these things over the line. I think the way the political system works in the UK means a bit easier. I think we’ve already seen in some locations like Hong Kong, for example, legislation already been put in place. And you look at the UAE there’s already a regulation that poster as well. So I think it’s the largest trading bloc to implement serious reform. I don’t think it’s going to be technically the first when it comes to trading events. And nor will it be the last.
Isabelle Castro: 7:38
I’m glad that you brought up the US. I mean,you can’t really talk about crypto regulation without mentioning the US right now.Obviously, like right now, the US is kind of taking this stance of there’s already enough regulation. People just need to be compliant. I mean, AML and KYC. And those kinds of thing,that kind of aspect of mica,there are already things in place, right, that people can be compliant with in the US and inventors works within the US.How would you advise companies within the US space right now to kind of maintain a certain level of compliance where they can?
Johnathan Dixon: 8:27
I think the difficulty is in the US lie the what we’re seeing, especially in trade surveillance, is regulation var enforcement and regulation for enforcement and you don’t know what you’ve done wrong until you told you that you’ve done it wrong. Right. So you’re having cases come up when people go away? No, well, these are securities, we’ve decided they’re securities. Therefore,any trading activity that we deem to be manipulative or insider related to them is now going to be under our purview.And that that’s difficult for clients without regulatory certainty and the definition of crypto assets will certainly help. When it comes to sanctions. We’ve seen fines levied in the US for breaches of sanctions activity. These are ubiquitous, they are known firms know what they need to do they need to cover their bases when it comes to ensuring that they have adequate sanction screening processes in place, I would say it’s very similar for AML Rules as well. I know having worked for a tier one exchange that there are close workings with the law enforcement bodies. And from my experience in those places, they’re very, very, very much on top of maintaining good relationships with the regulatory with, with the law enforcement side of things specifically, I don’t think that will change I think that will carry on. I think generally speaking, rather than talking about specifics of where I’ve worked, it’s important to note that firms need to genuinely stay on top of things and be proactive about where these risks may occur. So yes, you might argue as to what The extent of which the SEC should have the right to enforce market manipulation cases when it comes to crypto. But it could be argued that what should be in place is understanding a risk in terms of market manipulation. So what do I think the rest of my platform? How can I get there quicker? How can I ensure I have a company like events, for example, that understand these risks and work with us and show that we are protecting our platform and our clients from the effects of malfeasance? I think that’s where companies really need to get to in terms of understanding their risk,getting to it quicker, and making sure they’re protecting themselves in a proactive fashion. Rather than waiting for fines. It’s always cheaper to build our team than it is to pay$100 million. Fine. Just, it just is.
Isabelle Castro: 10:50
No, that’s definitely logical. I can imagine that these kinds of regulations, though, are going to be difficult for regulators to implement and kind of police,especially in the early days, it is such a kind of nascent technology. What do you think some of the biggest challenges may be for regulators going forward, for example, with MICA.
Johnathan Dixon: 11:25
In terms of how it’s going to be regulated and implemented, I think there will inevitably be a little bit of a time lag between when regulation goes blind or when firms are meant to be compliant. And then enforcement action, simply because it takes time to build up evidence of malfeasance, it takes time to build up evidence of shortcomings and processes,may take time to start an enforcement action. I think personally, they’ll be some test cases, they’ll pick on probably some of the larger players. And where they see a breakdown and processes communication traits,advanced plans and risk assessments or risk assessments for AML. They will probably take an example for the player and push to see a fine levied where that would go we don’t know yet,because we haven’t seen it go live. We haven’t seen any breakdown in performance. We haven’t seen any, any malfeasance occur yet post regulation. But it’s not about saying that market manipulation can’t occur. For example, it’s about saying if it does occur,you have to have a process in place to capture it, report on it, and deal with it. So we’re never going to stop people from trying to launder money, we’re never going to stop people from abusing the market. What we are trying to do is ensure that where this occurs, there is a process for dealing with these people. There’s a team in Europe or individual individual member states states to deal with these escalations, alerts. And they’ll be aware of enforcing actions against them. I think that’s the key thing to take away. It’s not about saying this can’t occur.It’s about ensuring that when it does occur, there is an enforcement process in place to deal with it. Does that make sense?
Isabelle Castro: 13:13
Yeah, yeah,absolutely. Do you think they have the capacity to do that? Or do you think I’ve talked to some people and they’ve started talking about reg tech regulation technology? Is there a need for this? Or are the financial systems a regulator,are they currently robust enough to be able to take on such regulations like MiCA.
Johnathan Dixon: 13:39
I think the bigger players will generally have systems and processes in place because it makes economic sense to do it. Because if you’re going to have are going to operate in multiple jurisdictions, they’ll probably be some jurisdictions that are acquired. So you might as well roll it up for everything, it’s just more cost effective to do that, rather than do one country at a time look at one system at a time when one sort of regulations at a time, if you can do so now globally, it makes more sense to them. Rather than go we’ll just do one country and then this country then add on another country, and well depends where base where’s the IP address coming? It makes sense just to go we will tear verification, like I tried to vent and make sense to go, we will do surveillance, it tends to make it a little bit more sense. I think where you might find difficulties, the smaller past who maybe don’t have the economic imperative yet to have to do it until now. They don’t have the imperative from a regulatory perspective to have to do it now. And where that changes when it really comes to the forefront. We’ll see.
To my mind personally, maybe a consolidation of players in the digital asset space and you might find some of them in both types and grouping together some some way of ensuring they have them sources to deal with a problem. As I said, photometric,if you don’t have the resources to deal with it, you don’t have the resources to be a player in the market. I think retail class will naturally navigate towards those places that are compliant as well. You want to ensure your funds are safe, you want to ensure you trust your platform.And I always argued this before about trade events for crypto and digital assets. When it wasn’t a regulatory requirement,you want your customers to feel safe, whether whether placing their money, it takes 20 years to 20 years, 10 years in the digital asset market to build up your name. And it can take 10minutes to run it. If people think they can’t trust the process that you’re being quoting. If they can’t trust their funds are safe, if they can’t trust that you have a way of ensuring their accounts are safe, they’re probably not going to place the money with you. So I think those those reasons mean that we’ve probably faced a degree of companies doing the right thing, the bigger companies do the right thing for a while they should be ready.Small companies might struggle.But they’ll either do it and thrive and survive and grow as adaptation increases, or they’ll all by the wayside.Unfortunately, it’s my personal opinion.
Isabelle Castro: 16:13
But it sounds like it would make for a safer system.
Johnathan Dixon: 16:19
agreed, I think the real focus of MICA has always been retail. And that’s been a real key driver, people that look after money, people that hold client money. That’s where the effort and the focus is. And that means that you have to have systems and processes in place, and regtech solutions in place like event us to make sure that people are protected.
Isabelle Castro: 16:40
So now focusing on trade surveillance, with the trade surveillance tools that event US has, how are you approaching these upcoming? How do they work? How are you approaching the upcoming mica roles? And how are companies kind of engaging with you to do this?
Johnathan Dixon: 17:01
Yeah, that’s a really good question. Thank you.So we’re focusing on it the way we would focus working with any of our clients, which is understanding their risk, and getting to the risk as quickly as we can. And that means understanding what do they trade? How do they trade it?What do their clients look like?And by understanding all the components of their business,you can better understand the solution into put in place to deal with the risks and the products offering as well. And the example I always give is,it’s gonna be very hard to spoof Tesla stock, I mean, your bucket turned out to be super deep,you’d have to have a very large risk. Read read very large ability to absorb risk to try and move it by x percentage and make enough money. And the same way, it’s going to be quite hard to spoof the price of Bitcoin even trades across multiple exchanges, your pockets have to be very deep, you have to intercept a large amount of risks to do so. But if you want to spoof Jonathan Coyne with full disclosure is my main belief, personal client, they want to quote coins actively golfing. And that trades at $10a coin and there’s only $30,000traded volume a day or week,your pockets don’t need to be deep, to make an impact on the price. And if you have a lot of low cap coins, or low cap digital assets, and that’s where most of your volume is, we’re not saying they’re being manipulated, but the capacity for people to do it will be greater.
So you might not be aware of all the manipulations strategies. If you’re not trading any lower cap coins are not just trading, whether you’re trading Bitcoin, you’re trading eath just trading things out really highly traded. I’m not saying that any clients do this,give me a hypothetical example.Well, then you might be more interested in washe trading, you might be interested in cross trading, or strategies that give the impression of high liquidity at certain price points, high liquidity in your order book,when that may or may not be the case. So naturally, most exchanges will surveil the same sorts of effects and most banks will change will monitor the same sorts of things is the nature of the beast, you’re all looking out for the same activity. But in terms of the strategy for implementation,what you go first how you go about doing it depends on the business depends on understanding the risk for the business really covers and looks for. I would say that’s one of our strengths. We have some great tools, some great people that are super knowledgeable about events, whether that’s me whether it’s the sales team,whether that’s the client support specialists, they really understand what you need to do to get to risk quicker and that’s that’s the key thing,understand the risks, get quicker and protect the business.
Isabelle Castro: 19:47
Do you think that kind of general view your clients are definitely ready for MICA and the trades at the level of trade surveillance needed for the compliance with mica but in a general kind Have view? Do you think other companies within the space are ready for this level of trade surveillance?Basically?
Johnathan Dixon: 20:14
Yeah, no, I guess, I guess, I would say they’re aware of what they need to do. If they’re not aware they shouldn’t be in business. But I’d say most of what they need to do. Or they they’re probably not all of them. But do they need to be there? No, they’ve got time to get ready to implement the plan, prepare. Do I think they’re on that journey?I would say most if they’re not doing it now that plan to get on board that that train that you’re starting in the not too distant future. I would say that’s the key takeaway that they don’t have to be reading,now they just have to be preparing for it, they have to be on that journey to ensure that they’re going to be there by the time they need to be in2024. And it goes back to one of the points I’ve been saying a few times. So apologies for repeating myself, if you can’t afford to do the solution, to use of answers to competities RegTech solutions to ensure you have a surveillance platform in place. You can’t afford to be in business. I think companies will be aware of that, and they will do it. And that’s always been the case with high frequency traders in Europe, for example,and some are gone. The prop shops have said, well, yeah, we do do a lot of trading, but we can’t afford to do surveillance,it’s too expensive for us. And the FCA and other regulators are gone. Okay, then you can’t afford to train. So you can go now that that’s it. So you found some of these prop shops going back to their original original guys, they imploded and five years ago, yeah, Can Can we can we join again? Can we be original members of your high frequency trading company. And that’s probably where trade by trade demands will go with some of the less able, and less sophisticated exchanges in Europe, they will join together will be my solution.Isabelle Castro: 21:58
What piece of advice would you give to these businesses? I feel like you you would say, again, the if you can’t afford to do trade surveillance, then you can’t afford to run. But would you give any other advice?
Johnathan Dixon: 22:16
If you use Eventus and you will be fine. I understand could your risk and understand your business. That’s what I would say that really make an effort to understand where the risk lies for your business. I think events is a wonderful company I think that’s a very good piece of advice for anyone, not even offers a great solution. But it might be it might be that you could offer an enhanced solution. Given the nature of your business, given the nature of how you trade, you could build something that covers your risk, I’m not suggesting I’m not advocating it. But until you understand the nature of your risk and how your business works, and do a risk assessment,you don’t know what you need to do. Now, I would say a vast majority of firms will need a reg tech solution, a vast, vast majority will do. But it might be done sometime. But until you do that assessment until you understand your risk, do you hire a consultant, a trade event specialist or trade advance manager to go through your business to understand it to know where the risks lie, where the manipulation strategies might impact you were the inside of the dealing risks. You’re gonna fall foul the regulation.So I wouldn’t say I said too many times gonna burn you in my terribly boring. soliloquy is about understanding your risk.But I would say just do the risk assessment, do the risks,understand your risk and take it from that.just people with in regards to these regulations, but in general, people should take care of their risk and understand it.So on a more, I’m going to the closing questions now. So on a personal note, what’s your favourite quote.now, because I’m going to repeat that I’ve been using throughout the interview, but understand the risk, get your risk quicker comes from about us and essentially my manager, I thought it was so good. I’ve stolen it and used it as my every single interview I’ve that I’ve done that event. So understand your risk and get to risk quicker. I think it’s a marvellous quotation, because you just said, If you don’t understand what your business is doing and where your risk lies,you’re exposing yourself and you can get to that risk quicker with a reg tech solution when that fire hiring a specialist to the or to build out a solid compliance function and an attitude you’re gonna be at risk. So yeah, I’m sorry, risk actually risk quicker.
Isabelle Castro: 24:52
Nice. I like this. I like how it runs through like the whole of the interviews. So I’m quite happy with With that, and now your curveball question, who do you admire most? And why?
Johnathan Dixon: 25:07
Is Easy my dad?I got asked this in my interview event and my manager again. So do you talk about your? Why is that? Well, there’s a great quotation from Oscar Wilde. And this might be a little bit incorrect by him, go for it. So there are two great problems in life. And that’s that every man grows up wanting to be like his father, and invariably never is.And every woman grows up not wanting to be like a mother. But invariably, it’s I thought that was a marvellous quotation from us. Well, very funny, very witty guy, obviously. But my father is a very successful life. He was a number eight for London, Irish at the age of 17. He played against New Zealand, to Africa.He’s been a financial director,he’s raised 201, very good child, that’d be my sister. And when average child and me at least had a very loving,successful, happy marriage, and he’s a thoroughly generous 30.Nice guy. And one of the things he said to me was, always be nice to people on the way up,you never know when you might meet them on the way down, see,all the good quotes are coming out.
Isabelle Castro: 26:20
And it was great, I get three for the price of one.
Johnathan Dixon: 26:24
I’m not only a very nice guy, and a very successful guy. He’s also someone all give always give him his time. And he’s gotten older and is not as fit and able as he was, and he’s still hitting the gym in his early 70s. Now he can’t. But I’m very, very, very appreciative of everything. He’s given me all the opportunities he’s given me. And the love he’s given me, led me to where I am.So my father has passed and I would put on that pedestal and probably Allah, Oscar Wilde never quite achieve everything he has. But if I can get close,I’ll be a happy man.
Isabelle Castro: 26:56
Yeah, he sounds amazing. I would love to meet him. Bring him on the podcast next time as well. We can we can bring your
Johnathan Dixon: 27:04
wife loves my father, probably more than I do.And all for the ex girlfriends. Listen to the past of all. I love your dad. Got it?
Isabelle Castro: 27:15
Okay, so that was the last question. How can people get a hold of you or follow you? Or anything?
Johnathan Dixon: 27:25
I’m not giving up my mobile number. after all.On LinkedIn, I’m Jonathan Dixon.I don’t try and give away my company my address, but me on LinkedIn. If anyone has any questions, I’m sure this podcast will reach them. I’m always happy to take them. I think my contact details might be the events website as well. So if they are available on the website, you can reach out to me I’m always happy to answer the questions. I do get the odd interested email from vendors.I’m sure it is available on the on the events website. Just hit me up with any questions. Always happy to chat.
Isabelle Castro: 28:00
Okay, cool.Thank you so much for coming on.I’ve really enjoyed talking to you. And yeah, have a really good rest of your day.
Johnathan Dixon: 28:09
Thank you as well been a pleasure.
Isabelle Castro: 28:12
As always, you can reach out and chat with me on my personal LinkedIn or Twitter @IZYCastrowrites. But for access to great daily content, check out Fintech Nexus on LinkedIn,Twitter, Facebook, or Instagram.You can also sign up for our daily newsletter brand new structure inbox. For more Fintech podcast fun, check out the website, where you can find more fascinating conversations posted by Peter Renton and Todd Anderson. That’s it from me.Until next time, enjoy your downtime.
