If you want to work in finance, then you’ve probably got your sights set on institutions like Citibank or Deutsche Bank. Those are the kind of places where, once you’ve got a foot in the door, you’re not going to leave without a good reason (cue “One does not simply walk from a job at Citibank” meme).
That’s what makes the story of BitMEX co-founder and CEO Arthur Hayes interesting. After graduation from Wharton Business School in 2008, Hayes moved to Hong Kong to work in both Deutsche Bank and Citi. But he left the big banking world in mid-2013 to devote his time and energy into what he thinks will be the future of finance: Bitcoin.
Specifically, Bitcoin financial products. It’s one thing to swap out some USD for the digital currency and use it to buy items online, but it’s quite another to use Bitcoin to play the stock market or get into derivatives. Building a platform to facilitate that type of transaction – and getting people to trust it – is no light undertaking. But Arthur, along with his co-founders Samuel Reed and Ben Delo, decided they were the right team for the job.
From an idea to $5 million per day
BitMEX – or “Bitcoin Mercantile Exchange” – was first devised by the three co-founders over some beers in early 2014. Within six months, Samuel – the company’s CTO, with a background in creating complex real-time web interfaces – had a beta off the ground. By the beginning of this year, the site was live.
BitMEX is a real-time Bitcoin-based trading platform. As of publication, the service is still limited to currency futures trading, but programs for stock derivatives and other financial products are in the works. For now, BitMEX’s main use is as a Bitcoin-based platform to speculate on the future values of digital currencies.
Even in its early iteration, though, BitMEX has not gone unnoticed. Since launching in early 2015, it has garnered 3,400 registered users. That’s not a huge number, but that small pool of users has traded upwards of US$250 million worth of financial products since the site launched. BitMEX is now trading an average of US$5 million each day, and Arthur says they’re aiming for US$50 million per day by this time next year.
BitMEX charges a commision on each trade – the rate varies – and has already become profitable.
The program has a particular appeal to Chinese users, who are both Bitcoin-savvy and eager for access to international markets.
“A Chinese investor cannot invest in Chinese firms like Tencent or Alibaba that are listed on foreign stock markets,” Arthur says. Currently, most Chinese citizens are cut off from global financial markets. Currency speculation, derivatives trading, and buying non-Chinese stocks are off limits to all but the wealthiest and best-connected Chinese investors.
“China has the most users and traders of Bitcoin globally,” says Arthur. Despite Chinese regulators’ occasional unease with the cryptocurrency, Bitcoin has seen a boom in the Mainland. “Chinese Bitcoiners are hungry for more trading products using Bitcoin, and BitMEX aims to serve them.”
Asia, land of Bitcoin
Due to government regulations, BitMEX is not allowed to operate in the United States. That provides even further incentive to get it right in Asia. The company began its Asia push in mid-2015 through the Chinaccelerator program, an intensive startup accelerator based in Shanghai.
“From the program, we have learned more about how to crack the Chinese market as foreigners,” says Arthur. Within the region, BitMEX also has its sights set on South Korea and Japan. Along with China, Arthur describes the countries as the biggest retail trading markets in the world.
The BitMEX team has also gone on a trust-building mission among potential users: in addition to attending many meet-and-greets among Asian Bitcoin fans, Arthur, Samuel, and Ben have made themselves publically available on social media for prospective users’ questions.
After an initial fundraising round of US$180,000 – a combination of contributions from friends, family, and the VC arm of Chinaccelerator – the company is now aiming to raise US$2 million in growth capital to expand its offerings and scope.
In the future, Arthur hopes BitMEX can become a fully-featured trading platform, with offerings including stocks, bonds, commodities, and currency trading. He says, “BitMEX is the Goldman Sachs of Bitcoin.”
So maybe this hasn’t been that big a shift away from the world of Citi and Deutsche Bank after all.