Cryptocurrencies have a bad image. A decade ago, only Soylent-chugging tech bros seemed to put any stock in the technology, evangelising it with a mixture of utopian wishful thinking and neo-Libertarian zest. They believed blockchain money would pull power away from the centralised hubs that had caused the financial meltdown in 2008 and give it back to the people.
Organisations like WikiLeaks embraced the payment method because it enabled fans to support them anonymously, without being tracked. That was also one of the main reasons why criminals loved – and still love – bitcoin.
Most financial leaders just laughed. Whenever cryptocurrencies were brought up, they pointed at their volatility. Fast-forward to today and they aren’t chuckling anymore.
Instead, known bitcoin detractors like JP Morgan’s CEO Jamie Dimon and the former chair of Goldman Sachs have been dragged willy-nilly into the orbit of the reclusive bitcoin founder Satoshi Nakamoto as their organisations have introduced cryptocurrency services.
Julian Sawyer is not surprised. In fact, he believes the sector is just getting to the stage most neobanks were a few years ago. He should know. As the CEO of cryptocurrency exchange Bitstamp, and the former COO of UK digital lender Starling Bank, Sawyer has a unique perspective on the two sectors.
“If you go back five, seven or eight years ago when challenger banks were starting in the UK and in Europe, everyone said ‘They won’t last, they’re a fly-by-night thing,'” Sawyer tells Verdict. “And now you look and no one would say that about Revolut, Starling or N26.”
Drawing parallels between the two financial technology segments, the executive suggests that the same kind of early enterprising investors and incumbent leaders that bet on challenger banks in the last decade are now gearing up to do the same with bitcoin, ether and other blockchain-based digital dosh.
“What we’re seeing is a huge adoption by corporate and financial institutions coming into the market,” the Bitstamp CEO says. “We need to be part of this. If you look at Visa, almost every week they’re announcing that something in crypto is happening. You wouldn’t find that happening three years ago or four years ago.”
That doesn’t mean that the Bitstamp CEO has swallowed the whole bitcoin ideology.
“One of the challenges we have is that a lot of people are incredibly passionate about crypto, which is absolutely right;” he says, “but crypto is part of the financial services world and not a replacement to it.”
Sawyer does believe, however, that cryptocurrency advocates’ enthusiasm has helped persuade established financial service providers to introduce cryptocurrency services. With customers increasingly pushing big incumbent banks to put their money into cryptocurrency funds, big banks like JP Morgan and Goldman Sachs have had little choice but to give in.
“If they say,’well, we don’t do crypto,’ guess what [customers are] going to do? They’re going across the street, and they’re going to go to another bank that is offering that,” Sawyer says.
As the CEO of Bitstamp, Sawyer is arguably well-placed to ride this new wave of bitcoin enthusiasm. Some are already suggesting that he might take the cryptocurrency exchange public, following in the footsteps of rival Coinbase’s initial public offering (IPO) in 2021. When the topic is brought up, the Bitstamp CEO tells people to not hold their breath.
“I think IPOs can be a distraction,” he says. “Right now, for us, it would be a distraction.”
Sawyer says that his team already has a lot on its plate to introduce and improve new services for their customers and to build the platform.
“And I think if we went, ‘Oh, by the way, we’re doing all this stuff here, but now we want to do an IPO,’ that is a distraction,” he continues. “I’m sure it’ll happen at some point. But right now, we’re getting the basics right, getting the new products out.”
Bitstamp CEO in the making
The Bitstamp CEO may sound like a born fintech guru. However, getting to the point where he is leading – as he keeps telling Verdict – the world’s oldest cryptocurrency exchange has been a long time coming.
Following a brief internship at IBM and stints with consultancies like Accenture and EY, Sawyer first branched out on his own in 1999 when he launched Bluerock Consulting.
“If I could talk to my younger self, I wouldn’t have done it,” Sawyer quips, saying that he lacked the professional network that would have enabled him to grow the company in a steady way.
Despite his own admission that he launched the company “three or four years too early,” Sawyer did manage to build the business and his own reputation as a steady hand over the next decade.
By 2015, his name caught the eye of Anne Boden, the CEO and founder of Starling. Sawyer didn’t know this at the time. Instead, he had reached out to Mark Winlow, who he knew from his time at EY and who served as a non-executive director with Starling until October 2021, to see if there was any work for him with the challenger bank.
“I was expecting I might run some payment pieces or some card pieces,” the Bitstamp CEO says.
Instead, Sawyer found himself in what he describes as a “meeting of minds of two people who had heard of each other and had respect for each other.”
At the end of that initial meeting, they decided that Sawyer would come in for four weeks and help out at Starling. Those four weeks were then extended by another four and then another four until he ended up as the COO of the company for four years, something he attributes to Boden
“I’m a technologist at heart and her vision was very compelling,” he says. “At that time, in 2015, there really wasn’t that much technology in financial services, in retail services at least. Bank websites were just digital versions of application forms. It was very archaic.”
Joining Starling Bank
He joined at the time when Boden was just in the process of salvaging what she could from what she has described as a failed “coup” and subsequent exodus of Blomfield and many of her original team.
According to Boden’s book Banking On It, Blomfield left Starling to form Monzo after he and other members of the team had tried to go their own way and raise a funding round with Passion Capital behind Boden’s back.
However, the attempt to overturn the neobank’s leadership ended with Blomfield and his group leaving to form Monzo, and with Starling staffless, in debt and seemingly uninvestable.
“This was Starling’s near-death experience. At the time, I had no way of knowing if it was one stage further than that. Whichever way I looked at it, I was effectively back at square one,” Boden wrote in her autobiography.
Some people involved have questioned the accuracy of the book. Passion Capital investor Eileen Burbridge tweeted when the book came out: “Asking for a friend: how much of book has to be true for it to be categorised as non-fiction?”
asking for a friend: how much of a book has to be true for it to be categorised as non-fiction? 🤔🙃
— Eileen Burbidge (@eileentso) October 24, 2020
Blomfield himself has denied that he tried to lead a coup and that he pulled staff from Starling to form Monzo. Instead he suggests that there were tension between him and Boden, that she had fired him twice in six months, and that he was “never paid”.
“And after six months, I just thought ‘I can’t work with this person – it’s really damaging to me and my mental health’ and so I resigned,” he explained in an episode of the Diary of a CEO podcast. “And the response to that resignation, she called an all-hands meeting and fired the entire company.”
Whatever the true version of events is, Sawyer says his time working with Boden was very different.
“I think, without a doubt, Anne had gone through a terrible time,” he says. “She is incredibly resilient and got back on her feet and said, ‘I’m going to do this.’ And you can see that passion and that passion is still there today, which is amazing.”
When talking about the employees who left with Blomfield to form Monzo and the team that Sawyer built later, he says: “I have to be careful how I say this, but [the second team had] a degree of maturity, of experience, of age. I’ve launched lots of card projects, I know how banking works. I know how payments work. I know what a regulator looks like and what they expect. I know what to say in meetings when it gets difficult. I know how to talk to investors.
“And I think one of the successes of that period of time was having more grownups in the room having more grownup conversations about how to do things. And I think that set up Starling really well.”
Blomfield declined to comment on Sawyer’s remarks for this article.
Sawyer claims there was no animosity between himself and Boden when he left the company in 2019, despite speculation at the time regarding an exodus of a number of top executives at the challenger bank.
“I think there were a few journalists who wanted to make story that didn’t exist,” the Bitstamp CEO says. “And if I think that if you read the book – I’m super touched with what she wrote about me and my contribution.”
He adds that Boden and himself have remained on friendly terms and that they are still frequently in touch.
“People will move on and that’s part of a healthy business and environment, and people want different things to go into in the future, but I think there was a lot of hot air or noise that didn’t actually exist,” Sawyer says.
“There’s a huge amount of change going on within the industry. And what we need to do is make sure we’re playing the right roles, the relevant roles within our space.”
Becoming the big boss at Bitstamp
Sawyer never thought he’d end up at Bitstamp. Following his departure from Starling, he was happy running digital asset exchange Gemini as its European managing director and as advisor to the board of Australian challenger bank Volt Bank, something that he is still doing.
Some had, however, questioned why Sawyer had joined Gemini to build up its operations when everything was going so well with Starling.
“You go and join a crypto company and people go, ‘You’re stupid doing that,'” he shrugs.
However, what had attracted him to the role was precisely that it was a new sector and a new company at the beginning of their journeys, Sawyer explains. There weren’t hundreds of employees. If he wanted something done, he’d have to roll up his own shirtsleeves.
And he was happy doing that. So when Bitstamp first gave him a call, asking if he’d be interested to lead the cryptocurrency exchange, he turned it down. Still he decided that he could be helpful and asked the headhunter what they were looking for, which was basically someone with fintech and banking experience and who understood cryptocurrencies. Eventually, Sawyer says they only ended up with one name: his.
“That was the moment and really to have the opportunity of being the CEO of the oldest exchange in the world, with all the history that we have, is amazing,” he says.
So, in October 2020, he left Gemini, and did six months of gardening leave before joining Bitstamp as the company’s new CEO.
In year with Bitstamp, Sawyer has brought in a new management team, expanded the number of digital assets traded on the platform from 10 to 54, and grew the staff headcount from 220 to about 500.
Why does the Bitstamp CEO dislike memecoins?
Founded in 2011, Bitstamp has a lot of legacy, with Sawyer saying he’s met people who told him they bought their first bitcoin with the exchange. But it’s not just the age that separates it from other cryptocurrencies like Coinbase and Kraken. For instance, while they may allow trade with low-value memecoins like dogecoin, Bitstamp doesn’t.
“We believe we have an obligation to our customers, which is to ensure that the assets that we list are stable, are based on something that’s material, that isn’t dominated by a subset of people or one billionaire tweeting on something, that it has the right liquidity and that there is a market,” he says. “If those factors are not there, then you could be putting some money into one of those assets and the price fundamentally shifts. And we don’t think that’s right. So we need to get that careful balance.”
However, this hasn’t stopped Bitstamp from listing bitcoin as one of its assets, despite it having lost 50% of its value over the past two months and Tesla founder Elon Musk having repeatedly proven his ability to affect its price.
“I think this is part of a journey,” Sawyer replies. “I think the implications of one person doing something will diminish over time as more new services and more opinions come in that every time someone knocks Bitcoin, there’s other people stepping in going, but it’s amazing, this has got a future. Maybe a few eccentrics can move the dial a bit at the moment.”
Regulations and the future
The future of cryptocurrencies is seemingly in flux at the moment. Following news that the Federal Reserve may change macroeconomic stance and regulators around the world increasingly clamping down on digital assets, some analysts have started to warn that a cryptocurrency winter is coming. However, Sawyer is bullish about the future and welcomes moves to bring the rule of law to the Wild West of digital coins.
“We think regulation is good,” he says. “We would like to have a level playing field where everybody is running on the same set of regulations and compliance. And then we’re super happy to be there. We’re disappointed that there are some actors who are able to operate in a different way than others.
“Flipping that to the other side, you’ve got to feel sorry for the regulators. And that’s not a thought that you often you often hear, but this is an incredibly technically complex set of products and the risks and the opportunities are not fully understood by the market, let alone the regulators. And they’re trying to work out how to regulate. And we spent quite a bit of time with the regulators globally, talking to them, educating them, talking about what this means, why you can’t do this, but you could do that.”
He compared the push for more cryptocurrency rules by the likes of the US Securities and Exchange Commission, South Korea’s Financial Services Commission and others to the time when regulators started to reel in credit cards, saying that the legal protection many consumers take for granted today have not always been in place.
“Credit cards [were regulated in the UK] with the Consumer Credit Act of 1974,” Sawyer points out, “but credits cards came back in the 1960s.”
To him, more regulations doesn’t mean the end for cryptocurrencies, only that the playing field will be levelled. With that in mind, the Bitstamp CEO plans to spend 2022 expanding the number of digital assets his exchange has on offer and is gearing up to open a new Amsterdam office in March.
“Really just growing that post-Covid global business and changing what we do and how we are perceived in the market,” he concludes.