CEO Jean-Marie Mognetti on building CoinShares

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1:25and longest-standing digital asset manager.

1:27Jean-Marie Mognetti:The credibility which has been associated with bigger names and concierge getting into this industry has been an extraordinary positive momentum for us. This is The Entrepreneurs with me, Tom Edwards.

1:50You're listening to The Entrepreneurs. Jean-Marie Monietti is the CEO and a co-founder of CoinShares, one of Europe's leading digital asset investment firms, helping institutions and investors gain access to financial products through regulated, transparent investment solutions. A former commodities hedge fund manager, Jean-Marie spotted an opportunity in Bitcoin early and has spent the last decade building CoinShares into a truly global player in digital assets. I caught up with Jean-Marie in Monocle's Paris studio to discuss building a category-defining company, the rapid adoption of digital assets and the growing use of crypto in business.

2:28He began by telling me about the evolution of CoinShares.

2:32Jean-Marie Mognetti:The premise is actually 2013 because we launched in 2014, but we start thinking in 2013. And the real story for us is that we're coming out of a very successful commodity hedge fund journey. The commodity cycle is coming to an end and we are asking ourselves, okay, what next for us? And the partners like each other have been working together for a while. So say, okay, there's no reason to split the team. So what do we do next? And doing a bit of, you know, sick analysis or deep thinking about who we are and where we come from, we realized that we were very far away from the Texan oil man avatar.

3:10Jean-Marie Mognetti:And we were really much more of a deep value investors. and these deep value investors stay with us and put on our road a different kind of option to deploy capital and one of these options ended up being bitcoin and when we discovered bitcoin it was very obvious that it was the one we wanted to spend our time and maybe not the next 12 years or 15 years but like at least it was kind of at that time very very obvious so we didn't know back then what kind of rabbit hole we were about to enter like alice but this rabbit hole is getting deeper and deeper as the euros keep going and i imagine that presumably at that point you couldn't really have understood the potential transformational impact that this whole idea whatever you want to call it of a more decentralized finance could have had or actually did you and your colleagues have an inkling about that no we didn't we were coming from an absolute trading background with a lot of engineering know-how and you know academic training and so we look at it first and foremost as a trading opportunity and we saw it very liquid very patchy very different marketplace and we said okay well that's like the oil in the 90s so we know how to trade that and that's when we start looking at it and having our capital committed to it that we started to do okay how do we mine a block and i realized that mining a block was extremely elegant how do we understand what blockchain is and what it's really doing and at the same time you know the evolution around blockchain start happening as the story developed and so we start understanding a bit better where it was going but if you had asked me in 2014 where we will be in 2024 or 2025 I would have been nowhere near the reality if you go back to 2013 there was previously some attempt like zcash and hash cash and plenty of like all the micro projects who were kind of failing so you know bitcoin was kind of an innovation on top of previous innovation and we thought it was very interesting but we didn't have any idea that it would be that successful it's interesting that successful and of course now to come zooming up to the present day the big institutional players they maybe a little late to the party but they start to come into your territory a little bit Do you see that as a threat to what you're trying to do?

5:30Or actually, it's a vindication of what you've been committed to, right? Because it shows its legitimacy. It shows that it has to be taken seriously by all players, from the biggest institutional ones to the smaller retail investors. How do you look at that journey onto your territory by those big players?

5:48Jean-Marie Mognetti:Well, this is a great question. But if I go back just to the point before, what made a difference in our success, despite when we started not being able to forecast exactly the future, was our capacity for resilience and our fortitude. And the fact that we were in this journey and dedicated to it and not trying to just be a little social butterfly doing a million stuff at the same time. And our kind of dedication to the craft, our dedication to the mission was very important to let us be where we are effectively that many years later. And yes, as you said, during these years, what used to be a very retail-driven narrative, because this is the first asset class, I will say, in the history of humanity where retail eat first and institution comes second.

6:30Jean-Marie Mognetti:Normally, institution comes first and gives a little crumbs to the retail, as you can see with Spatech IPO. So it's kind of like a very interesting inverse pyramid, effectively, which is unrolling in front of you. And when we created CoinShare back in 2017, the name CoinShare was crafted in 2017. It was a credit to one of my American business partners who was saying, well BlackRock has iShare for everything in traditional finance so we're going to create coinshare and back in the day there was an article from Bloomberg saying the BlackRock of crypto is born welcome coinshare and so as you can see just by the naming we had at the time or the branding we decided to go with at the time we had it was exactly not on our bingo card that big player will come that quickly and to our benefit because they're effectively creating a very positive draft for the whole industry.

7:20Jean-Marie Mognetti:They came in with regulation, they came in with political will associated with it. The US administration unlocking a lot of political will behind it has been a very strong push. And so we benefited from it. The credibility which has been associated with bigger names and coinshare getting into this industry has been an extraordinary positive momentum for us. We'll talk about regulation and those other frameworks in a second but just I guess it speaks to what you're saying. Your recent listing on NASA Was that just last month, the month before? It was in April, is that right? First of April, not an April Fool, but it was first of April.

7:51Well, it's funny. And interesting timing. Look, a pretty tumultuous, what, six months or so for the asset class. Lots of analysis. And everyone had a comment about, you know, the SPACs and how people were listing. Talk to me about navigating that, because presumably you understand some of the wariness or skepticism from the public. But at the same time, it's a really critical moment. And I know the US is critical to unlocking not just scale, but to deliver for the business more broadly. How did you navigate that? How did you and your co-founders weigh up? Was the timing right? Did you have to shut out the white noise of commentary in the markets?

8:30Tell me about that, because it must have been an amazing moment.

8:33Jean-Marie Mognetti:We listed the company in 2021, originally. So five years later, day for day, pretty much, we leave the company in Sweden five years later. and 10 days later released it in the US. And so the timing was kind of incredible because we didn't forecast the timing at all, but the dates lined up perfectly. It was five years from the first day of trading to the last day and then releasing in the US on the 1st of April, which was another sign, which was like, it really is a good day. But anyway, then the question which comes from that is how do you do that? It's very difficult to effectively take a company private and release it right away in one transaction.

9:09Jean-Marie Mognetti:So we effectively bundle two transactions in one, which to a lot of private equity people who watched us along our journey were like we will never deliver on this transaction it's way too complicated so execution is like far too complicated and never been done before but again the odds and speed of our coin share journey we managed to deliver and execute the question then is like why do we do it this way and not do a secondary listing a secondary listing would have keep us listed in sweden which is not what we wanted we I want it to be absolutely a primary listing in the US, clean and simple. And then the next question is like, why do you do a SPAC?

9:43Jean-Marie Mognetti:Because we're really down to financial engineering. We could have do a reverse takeover in any other shale, but that comes with like legal risk associated with previous management of the business. And we said, well, actually, we just want a clean shale with or without cash. And that's basically called a SPAC. So we just use a financial wrapper, which, to be fair, doesn't have always the best press in the US. but we just used it as a financial engineering tool to get us to the angle which was to listen to us and you know through our capital market activity on our own stock during our listing journey it ended up being very not so much agility for our shareholders it was a very well-executed transaction and then your final question in the many many question which was there was a question about the timing and the timing is always a good question because people are asking us you know oh what did you do with this timing and so on and so first of all we did the SPAC and CoinShare was a perfect anti-SPAC or the perfect non-SPAC client because you know out of all the SPAC happening in 2024 I think only two companies had you know an EBITDA more than 25 million so it was a perfect kind of non-SPAC client and so when it comes to timing again we're going to do things in the CoinShare way whereby people always try to effectively time the market and we say well we are ready the company is ready the processes are ready transaction is priced already we don't need to worry too much about that why should we wait let's go to the market and you know the track record will speak for itself so i would say hide company go public when the timing is right you know resilient company and well-written company go public whenever they are ready and we were ready resilience we may come back to that sense later just tell me a little bit about culturally though i'm interested in this and lots of the entrepreneurs that I talk about say, you know, it's great starting a business in Europe.

11:28There's lots of great talent here. The appetite for innovation is pretty good here. But they hit a point where, whether it's ambition or the pace and scale of growth that they are seeking, they need to look to the United States. Now, funny moment for the US in soft power terms, politically, of course, at the moment. But tell me a bit about why it had to be the US and what that does unlock for you in terms of realizing the bigger goals that you, your co-founders and coin shares as a business has?

11:59Jean-Marie Mognetti:So if you look just simply in terms of the depth of the capital market pool, you're talking cheese and chalk. You know, it's like it's not at all the same story. You know, Europe has a very diminishing availability of capital. The liquidity on the LSE or any kind of main market in Europe is effectively at the low point historically. And so that's kind of impact price discovery. The impact of price discovery is impacting valuations, impacting the valuation impacts capital rates. So all this kind of shareholder value transmission is being impacted by the quality of the listing, making a lot of European companies a perfect target for well-valued or over-valued American companies.

12:38Jean-Marie Mognetti:So not seeking at all an over-valuation, we're just seeking a fair valuation for the company where price discovery is happening the right way. And so it couldn't happen in Europe. And the first point is that we were not even able to list our company originally in London, despite being a British company because back in 2021, the UK were closed for crypto. So we're very kindly hosted by our friend at Nasdaq in Sweden who said, come to us, we'll be happy to get you. They're very friendly, the Swedes, aren't they? They have some very, very nice experience there and you need to go there and have a crayfish party with the Swedish and I guarantee you will never leave.

13:11I'm going there very soon. Okay, let's change tack a little bit. We talked already a little bit about the big institutional players And I'm interested in the institutionalization of digital assets more broadly, JM. What I find interesting, I've been hearing this a lot, actually, with conversations I've had, whether it's from ultra high net worth portfolio construction, even talking about family office allocation. There's a definite shift in appetite, not at a huge scale. Maybe it's one percent, but it seems a really decisive change. And this is perhaps only in the last two to three years. Do you agree with that reading?

13:49And what does that mean for these products as an asset class?

13:53Jean-Marie Mognetti:So if you go back just a couple of years ago, like before 2024, it was a real risk for your career to invest in digital assets as a portfolio manager or as a family office manager or simply as a banker doing some advisory. Actually, most of the advisory functions in Europe are not allowing to advise on digital assets. So it's execution only where the client picks up the phone and says, I want to buy that. The banker will stop himself at saying which product. Fast forward to today, it is becoming a carry risk not to be able to have any game in digital assets as an advisor. Because this kind of segment of the institutional stack is getting a lot of attention.

14:37Jean-Marie Mognetti:You have the biggest generational wealth transfer in the history of the world, which is happening over the next 20 years. this transition is coming with new generation challenging the old one at the dinner table saying i make money on x or y or z why did your superstar banker didn't advise you on that and put family in kind of this discontent situation around thanksgiving dinner or around christmas dinner or any kind of family gathering around the world and so institution has to react to stay on track. And so that's really what happened post-2024, where we see the narrative shifting, the advisory function to interact, okay, how do we increase our presence?

15:22Jean-Marie Mognetti:And the research coming not only from crypto-native asset management like us, because despite our background in traditional finance before, people will always see the associates with a bit more of a crypto flair than a traditional player. And so the research and kind of the validation coming from a more traditional house is helping elevating the narrative. And that's interesting about the different demands that that next generation are making. And I wonder, they maybe have a slightly different risk appetite. They certainly have a different appetite to innovate and to change things up. But they also, I'm generalizing, they seem to be more interested in greater transparency and in trust.

16:04They want to know the provenance of products they buy, of financial products that they're invested in. How much of a challenge is that? Because obviously this is a sector generally that's had a mix of press. And there's an issue, has been an issue around trust. If you are positioning yourself as the trusted brand that's made money year on year and that is in it for the long term, How do you do that against the backdrop of skepticism, cynicism from many people around the sector, which is a sector they view with understandably or not some suspicion? How do you balance that? Because it's a balancing act.

16:41Jean-Marie Mognetti:So it's very interesting because there was a very well-known house started the most successful Bitcoin ETF in 2024. there was a ton of negative press on Twitter or X now which was about yeah they don't have the Bitcoin we don't believe they have it or they're just faking it and so on and CoinShare to some degree has been very very focused on this transparency in 2017 we were doing the custody ourselves basically and in 2017 when the market first rallied to$1 ,300 per Bitcoin we realized is that okay one, custody needs to be done properly and as a result we created a joint venture with Nomura, Ledger, the French cyber security giant and Coinshare to just be able to create a regulated custody solution not a black box something transparent and second of all we was the first one to install a proof of asset effectively in real time which has been seen then copied by every single exchange.

17:42Jean-Marie Mognetti:So every single exchange that's giving you proof of assets saying that's balance sheet and our asset and liability. Currentsheet has been doing it since 2017. We've like at the beginning we've been able to have almost quasi live reporting because it was a new technology which was allowing to do it. And so we did this transparency exercise from the beginning. Then there's another example of that which was when we did staking. We were the first one to bring staking to the market as a part of our offering in some of our products but most of our competitors would kind of say oh yeah we'll give you some staking something like this it was kind of very kind of non-transparent at all, Coinshia won companies, otherwise say okay we're going to give you a fee holiday and we're going to share the stocking reward with you and here is how we're going to share the stocking reward.

18:24Jean-Marie Mognetti:So it was mathematically proven and it was very transparent for the client to know that we're not trying to do anything shitty. And that has been kind of our journey since the very very beginning and this kind of journey we have also extends to our relationship with auditors, our relationship with regulators, where we try as much as possible to have an open book policy with them to say okay look we know it is frontier pushing the border but anything you want to know we're here also to help you understand what we're doing so it is this kind of like public private partnership we are instigating to try to push further and be helpful to the overall community well you've kind of done it there a bit but in terms of that public governance that regulatory framework give me an actual example give me a sort of a use case that shows that progress and maybe shows the reward of having valued that since, as you say, 2017.

19:16Because I think there's still, again, a feeling, maybe the media perpetuates it, that it's a new Wild West out there and we lack these frameworks. And in the US, there's greater risk appetite than there is in Europe or in APAC or whatever. Give me a use case that demonstrates that there is sufficient robustness and where you've seen your business benefit from that and indeed help to support that regulatory rigour.

19:38Jean-Marie Mognetti:Well, we can look at the not so glorious time in our history, you know, when Luna happened, which was a big hack, or when FTX happened, we were the first one to communicate to the market in all transparency, where our counterparty were like kind of hiding behind the fact we're a private company and nothing to see here. We weren't absolutely transparent and say, OK, this is our export, this is how we're managing it, this is what's happening. Thank you very much. and actually kind of reassure the market to know that we were on top of it and not just kind of hiding behind kind of lovely paintings the kind of nature of the evolution because effectively this industry is moving very fast sometimes break things and the question is as everything in finance is about survivability so it's about your risk management and so we did that very well another example in that way it's like there is plenty of businesses we could have done over the years which would have been, I would say, questionable from a securities mindset.

20:32Jean-Marie Mognetti:And we always put that into scale to say, okay, we have a moral compass here. We know we have been regulated for most of our career. What would be the look of a regulator on that if it was regulated tomorrow? And that has been kind of the way we look at every single business development we were doing. So, here's an example. We are very involved today in how asset management is transforming, how asset management is moving on chain, which is changing the way people are consuming asset management tomorrow, but also the way we distribute it, the way we are effectively ensure stewardship of asset and the administration of asset.

21:07Jean-Marie Mognetti:And all these kind of things is reinventing the model of asset management. The same way we reinvent the model of prime brokerage and other things along the way. But as we look at it, there is this kind of big elephant in the room. We say, okay, well, we can do it in a way where we will break every single rules and forget about everything we learn from a securities law perspective or an AML perspective or we just try to figure out a way which blend the two approach make a convergence of the two approach create a kind of a merger of the two approach it was okay maybe the whole approach is a bit too stiff it needs to be improved but the approach of there is nothing to be done is not also the right approach so how do you create this conversion between the two and we've been championing that from the beginning.

21:51Do you know what strikes me as really interesting, Gemma, is you keep coming back to this idea, it's a little bit of where others zig you zag and being true to those foundational values of the business, shutting out the white noise. But it's really important to communicate that to people. And yet, at the same time, you also have this sort of commitment to quiet authority. You don't constantly make pronouncements, you're not always broadcasting your virtues. And when you do do it, it's with some subtlety and thought. It's funny, I have here this beautiful magazine, which is a lovely expression in print, which obviously at Monocle we like, of some of your values.

22:27But again, it's about storytelling. There's a subtlety to it, which I admire. But to be blunt, in the world of business and success and customer acquisition, you need to build that brand. You need to grab the trust and make your services essential. how have you made it sustainable to be subtle and thoughtful and not bash people over the head with your brand but keep on building because i'm sure lots of marketeers would say to you come on you've got to do this and this you've got to blast all these messages out there is it actually demonstrates that it can pay to just be a bit quieter a bit more confident take your time i think it's down

23:09Jean-Marie Mognetti:to being truthful to your own value to start with and not try to be something you're not. It's also down to the people you surround yourself with and you know we surrounded ourselves with a marketing team which was not coming from a retail financial franchise, they were not coming from finance at all, they were coming from technology and maybe you know b2b or b2b2c you know from background and agency background so having this fantastic marketing team around us who helped us redesign the brand keep the name but like reinvent the brand do some stuff completely different think out of the box effectively a little bit and kind of be a bit orthogonal to everything does in finance help us differentiate ourselves you know like there is a a sea of seamlessness in finance where everybody has the same color the same logo the same whatever and so we come here it's a bit trying to say okay how i'll make ourselves a little bit different you know we don't want to be a retail brand like a Revolut or a SoFi in the US, that's not our game, but like what's keeping our pedigree of an institutional focused brand do we keep effectively embracing and invading more and more people on our journey?

24:14Jean-Marie Mognetti:And so that's kind of two things, truthful to you, truthful to your value, surround yourself as the right people and then you know make sure as a third point make sure the success make it so noise, you know like at some point you know the the Americans are very good at proning, you know, fake it till you make it, you know. I think it's a great motto, which works well in some industry, in finance, where fiduciary duty is a key fundamental. It is something at CoinShare we take very seriously. And so we really focus on saying what we do, doing what we say, and keeping doing it in a kind of a subtle way.

24:48Subtlety. It's important, right? A few marketeers should maybe listen to that advice. Nice. And has it surprised you, not just in terms, we talked about that generational shift, what about in terms of emerging markets, the appetite to talk to you, to engage with digital assets more broadly? Or maybe that doesn't surprise you because I guess it's intuitive, but that must be an exciting potential next expression or part of the growth story for coin shows to look at EMs maybe in a different way. Do you recognize that?

25:18Jean-Marie Mognetti:It is definitely recognized. What is very critical to understand, probably, is like the same way people in Russia, for instance, jump from no phone to a cell phone. Or people in Africa jump from effectively no water to air conditioning in the house because there was a kind of a productivity gap and a technology gap, which gives them to accelerate massively. The question is like, how does emerging country going to start embracing asset management at scale? And so are they going to embrace it in the old fashioned way with like wrappers, which are kind of like 30 years old, with kind of like institution and kind of technology, which are, you know, electronification of the financial market in Europe is Euroclear.

26:00Jean-Marie Mognetti:It's 1970. It's not exactly super new and super technology savvy. It has done a great job so far, but it's not going to power the next way of acceleration. And so if we want to go there and if we want to be able to address their demand, how do we make sure we are meeting them effectively where the demand is and through the canal of distribution, which are the new canal of distribution? There's plenty of examples. There is a kind of a Nordic institution about our human rights foundation who do a lot of work around the value of Bitcoins in Africa, the value of Bitcoin in Afghanistan and what has happened.