Hey guys, buckle up for a new edition of the Around the Block podcast, the only podcast to go behind the scenes to talk with the movers and shakers of the cryptocurrency world. Today we’re talking with Simon Grunfeld. Simon Grunfeld is a VP of Web3 at Cogni. He is a founder and entrepreneur and brings a wealth of global experience across a broad spectrum of industries, ranging from blockchain, fintech, and capital markets to his executive role. His start in the capital markets began as the founder of Gallant VPS and Gallant FX, a PaaS world leader in Forex trading technologies.
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Jefferson Nunn 0:49
Welcome to another edition of Around the block with Jefferson Nunn. And I’m here today with a very special guest, Simon Grunfeld, how’re you doing today?
Simon Grunfeld 0:59
I’m great, Jefferson, how are you doing?
Jefferson Nunn 1:01
Good, good. So, we were just talking about, you’re now working for a Neobank that’s getting into web3.0. Tell me more?
Simon Grunfeld 1:10
Well, you know, the thing is with banking, they’ve sort of already seen over the last few years how they have to start to transition into this new medium of crypto. And more and more banks where more financial institutions are now diving into this space and starting to offer all kinds of different products and services. And Cogni, which is a neobank essentially means its a, you know, mostly out of your mobile app takes a few minutes to sign up for an account and you’re off to the races. They’ve been around for about two years. Plus, I joined the company with the mandate to expand the web3.0 capabilities of cognate. What does that mean? Well, as a neobank, we’re dealing talking about we deal with USD deposits, withdrawals, gift card purchases, etc. Basically, what you know the kind of vanilla stuff you’re, your kind of expecting from your banking app. But now here we go into diving into the web3.0 universe. So that means that first step is we are integrating a noncustodial crypto solution for all Cogni users. And that means that in the next few months, anybody that has a Cogni user will be able to self-custody their own crypto using the app much like you would if you were running Metamask on your phone, or Coinbase wallet or any other ones out there. So that’s phase one. After that is done, we’re then going to allow users to buy sell swap crypto directly through the app, we already have all the relationships in place, it’s really a matter of just setting up all of these different bridges and connections to allow our users to basically interface and, and trade against counterparties. That’s phase two. Once that chapter is done, that’s when we can really begin to expand on the capabilities of Cagni as a web three provider, everything from bringing in marketplaces, NFTs platforms defy gaming metaverse. The list goes on and on and on. But fundamentally, we have to build that foundation, that foundation really begins and ends with the establishment and integration of a noncustodial solution.
Jefferson Nunn 3:18
Yeah, that sounds really, really interesting. And it’s sort of like what Gamestop is already done with just there NFT only wallet. Can you talk a little bit more about that? It looks like everybody, but a lot of people are really following that lunch.
Simon Grunfeld 3:33
Yeah. So, providing users with the ability to self-custody funds, that’s actually really not that big of a lift, you know, it’s not like we’re putting a person on the moon again, because the technology has already been out there. For many years, a lot of company’s institutions are doing this kind of stuff. I think that’s what separates us from some of the competitors out there. First off, anybody can set up a wallet and provide that well to their users. We’re taking it to the next step and saying, Okay, well, you already have a bank account with us, you already have deposited funds with us, how about now we just make that transition between crypto and Fiat as seamless as possible. So that was the number one objective, let’s try to make your transitioning between crypto and Fiat as seamless as possible. And let’s make it so that it’s a noncustodial solution so that we’re not questioning anybody’s funds as far as the digital assets are concerned. And we provide the user with all of the all the security levels that they require. And ultimately, it’s within their hands. That’s, that’s phase one. It’s really about everything that happens above and beyond that, letting our users buy sell on the open marketplace. Whatever crypto that we’re able to, to provide them with and there’s going to be a long shopping list of the different types of tokens that we’re going to be able to support on day one. Being cognizant effective. Yes, we are also catering to the NFT marketplace, the NFT community. So, we’re gonna see a lot of Ethereum, a lot of polygon loves Solana, a lot of Different variations from ERC-21. I’m sorry ERC-20 to ERC-21 to 1155, and so on and so forth. And we have a lot of innovation that’s going on behind the scene, that’s going to take everything I just mentioned and bring it to another level. And why is that. Well, we’re also very, very cognizant about how the Marketplace is shifting from a compliance perspective. And what that means is that we’re already putting the pieces in to position today, to be able to comply with new mandates that we are confident I am 100% confident that they’re going to come out this year or next year, that will pertain to our industry, how we have to comply with new KYC Know Your Customer Standards, how we’re supposed to clear people and not just us, but what kind of tools we’ll be able to provide third parties that want to use our stack to use our ecosystem, to also verify users in order to comply with these new mandates. So, there’s a lot of exciting stuff happening down the pipeline, both on the web3.0 and web2.0 front, but we’re seeing a lot of convergence here happening, specifically around regulatory.
Jefferson Nunn 6:09
So, for example, the tornado cash issue that you may have seen in recent weeks, you would already be in compliance, so you just wouldn’t have to worry about that. Right.
Simon Grunfeld 6:21
So, a lot of firms are taking that. Yeah, that forward stance or trying to lean into regulatory compliance. Now, there’s there are two types of players in this marketplace, those that know how to do it, and those that don’t. And unfortunately, most of the players just don’t know how to do it. Just from a little bit of a side note, I come from a regulated background. So, I used to be a reg, a registered commodity trading advisor, I rolled up to the NFA, which is a self-regulated organization that ultimately rolls up to the CFTC. So, when I heard this year that the Biden ministration might be mandating that the CFTC actually man actually cover all digital assets and crypto. That was just music to my ears. Because first off, it means that it’s taken out of the hands of FINRA and the SEC, fantastic, okay, we don’t have to worry about these things being classified as securities. That’s number one. But number two, I know the world of commodities very, very well. And it’s extremely easy to comply provided you just have the right real guards in place. So, what are we doing? We are number one, we’re already complying with various standards right now within the banking industry. But with our intended launch of our wallet of our intended exchange capabilities, and all the other products and services we want to build on top of that. We’re cognizant about the fact that the industry as a whole still does not understand how to comply. So, then we got this idea. Well, why don’t we just build a developer toolkit provided to these third-party platforms that can then use cognitive infrastructure to simply comply both on the outside and on the compliance side and the KYC, KYP, AML. We can handle all that for all these third parties, anybody dealing in DeFi, NFT, marketplaces, etc. All the guys I just mentioned, they don’t know how to do it, but we do. So, this is where we’re kind of like heading in that direction by being that technology loss compliance provider to the web three, market as a whole.
Jefferson Nunn 8:30
And I think that will open up a whole another realm of opportunities that especially as we get into Metaverse, you know, looking toward the future. I know a lot of people are thinking it’s gonna be Facebook’s Metaverse, but I think it’s actually going to be more real than that. We were talking with HTC in the past week, and they’re really ramping up for large Metaverse adoption. And of course, Apple is slated to introduce their headset. So, do you think within that Brown, there’ll be a lot more opportunities for new businesses, new transaction types, new ways of connecting between players?
Simon Grunfeld 9:12
Yeah. So, the challenge that marketplaces or the challenge, I guess any web 3.0 platforms having is not the tech, and the challenge will be you know, building their community marketing and sales, making sure that they’re actually providing some sort of utility to the users. But I think the big challenge that they just don’t know I don’t understand really is around the regulatory compliance part of this. Why is that? Well, you know, again, look at who are the participants here, they’re all engineering background. They’re all sales and marketing background, okay. None of them come from any kind of legal compliance background. In every conference you go to. Nowadays, they have dedicated spots for people to come on stage and talk about the next wave of regulatory compliance. So how to comply with certain things. I know me personally, every time I go to a convention, I get attacked by people who are saying, well, I have this doubt, how do I comply here in the US? Or I want to do a token offering? How do I do that here in the US compliantly. So, I’m optimistic on a number of different thoughts, I’m optimistic knowing that. Finally, I think the US is coming to terms with that digital assets are not going away, they’re only gonna get bigger. And they require hand holding from the Federal rallies, as opposed to just state by state. Because crypto doesn’t care about the status. Crypto is borderless, frictionless, you know, we can transact from here to the moon if we wanted to. So, I’m excited about that. And I’m excited about some of the information that has been shared thus far. Allowing us to really, you know, dig our heels in and really position cogni to be a major contributor to the industry. For those looking to comply and scale, those that have not been able to do so till now. Their biggest fear is, well, what if I jump into this and then a few months later, were very, very successful. And they’re fearing that they’re fearing the fact that they might be so successful that all of a sudden, they’ll get a cease and desist by the SEC. And nobody wants to deal with that. So how do you quelch that concern? Well, if they could start working with us immediately on day one, and be compliant across the board, on day one, we’ve resolved all that anxiety, all that just goes right out the window, and they can just focus on sales, marketing, scaling their product, their services, and we can handle everything else on the back end.
Jefferson Nunn 11:38
Yeah, sounds like it’s gonna be a great platform for new product launches and new businesses and that sort of thing. So, to that end, what do you think your crypto product might be?
Simon Grunfeld 11:56
Well, can you can you maybe explain a little bit like, as far as crypto? So, what do you mean?
Jefferson Nunn 12:03
In terms of, for example, working with the metaverse or, you know, Axie infinity, they have played a win. So, you’ve been looking at all the different opportunities that are out there. What do you think might be that next big of the major attraction for, for consumers?
Simon Grunfeld 12:24
Well, I think that as far as consumers are concerned, they just want utility, you know, there have been a lot of brand plays. If you look at crypto punk, well, one of the crypto punk other than just a brand, you know, so they’re just basically selling you like something that’s sort of valuables, supreme and stable. Okay. So, it’s basically along those lines, if you look at board, eight, there are all these elements around real world, entertainment, inward or real-world activities that holders have access to, I think the utility aspect of non-fungible tokens is only going to increase and I think we’re gonna start seeing them represent things more like car titles, and Shane replacing certain aspects of the DMV, or replacing aspects of how homes are registered and how they’re bought and sold. You know, avoiding all of the administration that goes into a closing, you know, so if anybody who’s ever bought a home or bought or sold or refinance their mortgage, for example, the you know, the administrative headaches that goes into all that could be resolved, and just really narrowed down to 1% of what people are accustomed to simply by using non fungible tokens. So, I think that the utility plays are going to only increase we’re going to find more and more utility or applicant or use cases within real world applications. And that it’s up to the engineers, it’s up to the innovators to find ways to conform, non-fungible token platforms to meet the demand of the current marketplace as it exists outside of NFTs.
Jefferson Nunn 14:03
Yeah, I think you’re quite right. You hear about the one the guy ended up owning like a huge real estate development because the title company made a mistake and just granted him the land deeds to a hollow fact so that was just crazy.
Simon Grunfeld 14:20
I’ve heard a lot of I’ve heard of a lot of fraud stories back in the day. So, when it comes to specifically, we stayed in No, I didn’t hear about that one. But I have heard I actually worked for about a week-long time ago form a lifetime. But I was asked to come on board to consult for a week to help a team here in New York City that was looking to revamp the way that title management when it came to real estate was done. And the person I was interfacing with was doing it in cooperation with law enforcement because he himself was caught trying to scam some owner and real estate investors. And his plea deal involved him basically showing what he was doing. And then trying to expand on that we didn’t find any kind of solution back then. But granted, this was early 2000s, 2004 2005. So yeah, and if the tech blockchain didn’t really, you know, exist almost that at that time. So, you know, fast forward to now 2022. Yes, you can use blockchain to mitigate a lot of those concerns, and circumvent a lot of the ill intended actors that are still preying on people in this market.
Jefferson Nunn 15:36
And then, of course, there’s that other heartbreaking story where a county what he called County Registrar building just burned to the ground, and all the files are lost. And then it’s like, well, who owns the land? We don’t know.
Simon Grunfeld 15:52
Yeah, so I mean, you know, one of the benefits of blockchain is that anytime you have some sort of disaster recovery scenario, or business continuity requirement, you know, you don’t have to really be too concerned about it, because the information is always going to be on blockchain. Okay, unless if they’re in, goes belly up or medicals metal, or Solana or any of these chains just stop working, you really don’t have to worry too much about it. Take it to the next level, if you’re doing it in for if you’re actually doing a transaction on chain, or you’re trying to use the blockchain to record information or house data. There’s nothing that prevents you from duplicating that on different chains. Okay, so now you’re you have perfect redundancy. If there’s a transaction that were recorded on more than one chain this way, doesn’t really matter what everything is, it was going to be there till the end of my life. So yeah.
Jefferson Nunn 16:43
Post merge, I think we’re gonna see that, Ethereum has slated several other merges. Everyone allowed for that kind of a charting scenario to where you can keep it on your own chain. And you can also record it to the master chain. So, you have already a backup already in place. So, I really think it’s gonna be a lot of great future that is just switching gears for a moment. Your I know, we covered it before, but just to some of our new listeners, you know, how did you get your start in crypto? I mean, he’s such an obscure industry, and you’re not gonna give out the title industry. So how do you go from your regulatory background to now this?
Simon Grunfeld 17:24
Well, I started my career really in information technology. 2001 or 2002 was kind of when I started in it. And I did that for a few years. And I kind of fell into capital markets, because of one particular client that I was dealing with. And this one particular client was running a black box system, which I found really, really interesting, understanding his algorithms, understanding how we can, how we came to actually formulate what he was doing. And I kind of got bid for the bug. So, I became a registry, commodity trading advisor series three. And then I started doing helping and consulting for people who wanted to get into commodities and one thing led to another and then before I knew it, I was a partner in the firm, actually two firms, one that was doing platforms as a service, specifically for retail foreign exchange. And the other one that was just offering liquidity to retail and institutional Adult Frank Bill kind of put that to rest, its kind of kibosh the effects industry in the US. But, you know, when blockchain and Bitcoin specifically Bitcoin really started to become more and more dominant, one of them 1320 1415, you know, my background in it, I really understood it very, very well. And my background when it came to retail, and institutional trading and trading platforms, and launching trading platforms just made sense for me to make that transition. So, it was a very easy transition for me to make. Didn’t really have to reinvent the wheel too much. It made a lot of sense. And yeah, I was, I was fortunate to be, I guess, you know, just the right time to launch another company where we white label on a platform that we built, and white labeled it for different companies that were looking to launch their own custom exchange. So, if you wanted to have a white label of our platform, we would just customize it and then launch it. And that went pretty okay, launched about 10 exchanges globally. And then it was acquired by family office, and I had to switch positions from time to time there was some other companies in between, but yeah, I know that since that’s exactly what happened, you know, with the background and information, tech, and within the background in a regulatory compliant commodities marketplace, it was very easy to make that transition. So, it wasn’t Yeah, I didn’t have to kind of reinvent myself or anything like that.
Jefferson Nunn 19:46
That’s awesome. So, if we’re newer entrepreneurs, you know, people that are just now reading learning about, I mean, I talked with one, you know, off the record, you know, a couple of weeks ago you know, we were just saying, you know, it just seems so overwhelming. Now the amount of information that fair weather, right, you can begin with crypto. So, but he’s a very successful business person, you know. So what would you say to somebody like that?
Simon Grunfeld 20:17
If they want to get started in crypto, or like in blockchain well.
Jefferson Nunn 20:21
Crypto blockchain business, all that.
Simon Grunfeld 20:24
Yeah. So, let me what would be the reason that first off, like, I try to understand what the use case like everything else, okay, I want to do something well, okay, well, what’s your use case? You think because it’s all shiny. And literally, that’s what you want to do. I don’t know if I can help you too much. But if you’re coming to me, and you say, well, I have this use case, I’m an engineer, or I have this use case, and I’m in real estate or I have something like that, where I need to work on maybe a new process. Or maybe I figured out a way to solve something that has been overlooked for many, many years. So, let’s start with that. I would say okay, well, if that’s the objective, let me try to understand what that looks like. The tech, and this is, this is really, what’s really fantastic about blockchain, the tech is constantly evolving and getting better. And so, every year their new standards being designed to help facilitate the way information is managed. So maybe that tech exists already. Maybe it doesn’t, maybe the challenge is, hey, how do we build that tech? Okay, so that’s the first thing we try to try to understand. Then ultimately, things kind of come around to regulatory well, how, how much overlap? Is there going to be on the regulatory side? Or how much concern should there be on the regulatory side? But that’s how I would go about trying to understand what the use case is for this person? What are they trying? What problem are they trying to solve? Or again, maybe they’re just like, hey, I just want to spec into crypto, right? How much Solana should I buy? How much Ethereum should I buy? I’m not going to ask, I’m really not the person to do that. But I can explain the differences between those blockchains, I can explain why they have different, different values to but for me, from my perspective, I look for value, I look for value plays. And the way I find value is very simple. It’s just what, what problem are we solving? And how scalable is our solution?
Jefferson Nunn 22:24
So, I think they’re both very fair questions. So, I, well, do you have any final thoughts for our listeners, or any suggestions?
Simon Grunfeld 22:34
Well, I would say this, you know, we are probably Cogni is probably the only platform to date, that is doing all of the above, you know, we’re about to launch a wallet about the launch the exchange capabilities, which a lot of a lot of other players in the market are doing. But we’re doing it also with the, with the notion that we’re gonna be, we’re gonna be handing out a lot of free software to a lot of participants in this market. And if you are, and I’ll just go through the list, again, if you’re in the metaverse or DeFi or gaming or NFT marketplace, or just any kind of crypto exchange, and you want to comply with us regulatory, and you also want a means to on ramp and off ramp Fiat, we are going to be offering a very seamless and fantastic solution to these problems very, very soon. And, again, the reason being is because there are so there are on ramp off ramp on Fiat. But we are we’re adding a little bit of a cherry on top when it comes to making sure that you comply 100% with US regulatory so I’m not gonna say too much about it. I’ve already said a little too much, perhaps, but this will be something that’s coming down 2023, which is definitely going to be disruptive.
Jefferson Nunn 23:56
It’s gonna be amazing. And to get to the website, just go to the links at the top of the show page and follow along for more updates. So, thank you so much for being on the show. Simon. It was great to have you.
Simon Grunfeld 24:13
Thanks, Jefferson. appreciate it as always.
Jefferson Nunn 24:15
This concludes today’s episode of the Around the Block podcast, the only podcast to go behind the scenes to talk with the movers and shakers of the cryptocurrency world.
This podcast is produced by Crypto News
Our host is Jefferson Nunn
Managed by Urooj Fatima
Edited by Muhammad Wasay
Voiceovers by Daniel Rubin
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