B2Broker’s Arthur Azizov: ‘Finteсh Startups Do Not Need to Reinvent the Wheel’

The emergence of the Internet age has brought with it a new wave of projects and increased competition in the fintech and crytocurrency industries. The regulatory landscape at the level of individual jurisdictions has only just started developing and as yet, there is no international regulation for working with cryptocurrencies.
What is also not clear is how some providers of Fintech solutions have managed to succeed in the market while others have been left behind.
To clarify the situation, Arthur Azizov, founder and CEO of , a liquidity provider and IT solutions for brokers and exchanges has answered several questions about the key problems of the cryptocurrency market and approaches to the creation of cryptocurrency startups.
First of all, tell us about yourself. How did you become interested in fintech and cryptocurrencies?
Artur Azizov: In 2006, I became interested in Forex for the first time and began to trade in different companies while studying the topic. I gradually started working in the field of Forex and have since worked my way up from a development manager to a director.
During this period, I started to take an interest in the technical side of working with Forex and attended many specialized conferences – mainly fintech where forex brokers, prime brokers, liquidity providers and technology suppliers for brokerage companies gather. I also began attending conferences focused on payment systems where financial institutions, payment systems and acquiring banks all crossed paths.
In 2014, I founded my own company and started providing services for forex brokers, i.e. the provision of technology services that require specific knowledge and technical solutions. At that time, we started creating solutions for forex brokers but had a fairly limited list of products.
These included , a bridge to liquidity providers and a white label of the MetaTrader4 and MetaTrader5 trading platforms. We also helped to deal with legal issues and connect different payment systems.
In fact, when someone wanted to launch their forex broker or strengthen a particular aspect of their existing business, we helped to adjust the entire infrastructure. We are doing this to this very day, but now our services are much broader, and we offer far more advanced products.
Regarding cryptocurrency, at the beginning of 2015 we had one client who was a forex broker from Malaysia. As it later turned out, they were also miners! In early 2015 they started paying us in bitcoins, and then we started accepting cryptocurrency for our wallet, but did not go into detailed aspects of the technology itself.
In fact, we had nothing to do with cryptocurrency. In November 2016, when bitcoin reached the $800 mark, we started to watch exchanges and study the industry. While paying attention to crypto-exchanges, we began to take on board forex brokers’ requests to add cryptocurrencies to their trading terminals so that their clients could trade not only forex, indices, metals and other but also cryptocurrencies.
So, to sum up, February 2014 saw the startup of B2Broker while November 2016 was when our work with cryptocurrencies began.
What motivated you to create B2Broker? What major industry problems does your project solve?
Artur Azizov: Whilst visiting exhibitions back in 2013, I noticed that some brokers achieved significant results such as a broad customer base, advanced interfaces or multi-functional traders’ rooms.
However, some other brokers become ‘outsiders’. I wondered at that point why some companies were right at the point of attack while others got left so far behind. As far as I could see it, apart from the service, legal issues, licenses and financing, one of the significant problems seemed to be the problem of the broker’s infrastructure.
It seemed that being a broker, especially in technology markets like forex, CFD and cryptocurrency was not easy since brokers should really have some serious background.
Quite often, forex brokers, crypto-brokers, CFD-brokers, stock brokers, cryptocurrency exchanges and other similar institutions are created by former high-level managers of these companies, people who have found an investor and want to invest in this type of business, but they do not have a comprehensive understanding of how it all works.
These factors influenced me to set up B2Broker, a company that solves one of the most crucial issues – the infrastructure problem. There are many big problems that we are able to solve. One of them is the problem of .
For brokers, especially for beginners and mid-level brokers, it is an expensive and painful process to connect to many banks and liquidity providers and it is not easy to aggregate this liquidity. In coming to us, they gain the advantage of the whole market and all the experience we have accumulated.
They do not need to think about logistical solutions and instead, take a ready-made solution from us, saving a huge amount of time and money. In return, they receive our expertise which we have accumulated for over 10 years as well as expert advice for business development.
Why did you choose such a wide range of offers, but decided not to include your own brokerage services in it?
Artur Azizov: From the early days of our work, we focused on the B2B segment. Despite the numerous proposals to create a joint broker, we did not want to compete with our customers and create a conflict of interests.
As a result, we do not have many products: B2Broker with liquidity and infrastructural IT products, B2BinPay payment system and B2BX cryptocurrency exchange.
Our main company is B2B Broker. It has only two main types of work: the first is the aggregation and distribution of liquidity through various trading systems, and the second is writing, support and development of infrastructure products for brokers (trader’s room, several trading platforms including an exchange platform with internal matching, ICO platform, investment platform for brokers and white label trading platforms).
There are several sub-projects too. B2BinPay is our payment system, a cryptocurrency gateway that allows merchants to accept crypto-payments and expand their customer base. Another project is our . B2BX is available to everyone, but we usually focus on institutional clients.
We offer white label B2BX for all customers who want to run a crypto-exchange as well as the listing of some promising coins and tokens. At the same time, we conduct a very tough KYC of these projects because the tokens that we list on the stock exchange subsequently fall into the pool of margin liquidity.
This means that if a token makes it to our exchange, it will most likely it later get into the pool of our margin liquidity, and the token will appear for all brokers connected to our pool.
B2Broker offers access to a pool of liquidity for fiat currency, cryptocurrency and CFDs. Can you explain in plain language how this system works?
Artur Azizov: We work on the prime-of-prime model which gives us the opportunity to aggregate the liquidity provided by different suppliers such as banks, non-banking providers of liquidity and aggregators, and bring it to a single pool of margin-based forex liquidity.
Thus, by connecting to us, a counterparty or a broker receives a trade blotter (order-book) with big volumes at good prices and minimum commission and spreads. We reserve the technology of aggregation and distribution, routing of these orders for different suppliers.
The same thing happens for CFD instruments such as indices, metals, commodities and stocks. We have several prime brokers who unite more than 80 stock markets where about 10 thousand trading instruments are traded. Accordingly, we aggregate liquidity through different prime-brokers and create such derivatives which are then broadcasted to all brokers.
We have implemented the same prime-of-prime model for stock exchanges, brokers and other market participants that require cryptocurrency liquidity. In fact, we took several top-level exchanges, our stock exchange and aggregated liquidity. In other words, we aggregated the order-books or blotters from these exchanges into a single pool.
On the basis of this aggregated liquidity including our B2BX exchange, we made a pool of marginal, that is cryptocurrency, , and a liquidity SPOT pool (sometimes called cash liquidity).
In general, the system works quite simply: we aggregate liquidity and through a single margin account and distribute this liquidity to different sites, brokers, exchanges through such systems as MetaTrader 4, MetaTrader 5, PrimeXM (big aggregator-ecosystem), OneZero (another large aggregator-ecosystem) or our platform on the exchange through the professional protocol FIX API or standard Socket API.
Customers can acquire access to this liquidity either through our platform or directly through the FIX API pool. We act as prime-of-prime, hence, a broker does not need to conclude separate contracts for the supply of liquidity for forex, CFD and crypto-currencies and combine it into a single pool.
In our case, a broker approaches us, opens one account, concludes one contract, introduces a single margin security and we carry out routing on all prime-brokers and liquidity providers. In fact, we have already completed 90% of the work so the broker only has to make a single integration with us and get 7 kinds of assets with minimal (close to zero) spreads and low commission.
How big is the team needed to handle this range of tasks?
Artur Azizov: In 2014 we started the company with 5 employees. Now the company employs 70+ people, with more than a half of them being technical employees. Basically, they are developers with each project having its own development team, developer team-leads and several design engineers.
There is also a department of system administrators, a technical support department of the first and second level (the third level is already the backend developers), as well as project managers, technical writers and a small sales team which is small because customers themselves usually come to us.
We serve clients from the top-10 forex brokers of the world, and most often through “word of mouth” other potential customers get to hear about us. In addition, we have a large department of product managers, who are responsible for their products and directions. There is a legal department, as well as a department for risk management and a dealing desk which allows us to manage all this.
With 70+ people employed in our company, we are actively looking for more developers, competent product managers, technical specialists for support, engineers and marketing specialists. To develop the company, we need more people and we are planning to reach the 150 mark by the end of 2019.
How difficult is it to make such a solution work internationally in terms of legislation?
Artur Azizov: We work as a group of IT-companies, where one of the companies develops software and all intellectual property belongs to it while local companies of the group sell software under the distribution agreement in their regions.
The great part of the business is development and distribution of software that does not require any special licenses or permits in most jurisdictions. In the markets where it is regulated, we possess the required licenses.
To align our activities with national law, we open offices in the specific regions: a company in Cyprus serves customers from Europe, North and South America. A Hong Kong-based company serves customers from Asia while our Russian company works in the post-Soviet area. In addition, recently we have recently established a company in Japan.
At the moment we do not experience problems in terms of legislation. If we were a retail broker, things would be different, but at the end of the day, we are an IT company.
Are large financial market players ready to work with cryptocurrencies on a level with other instruments?
Arthur Azizov: For now, most large brokers and banks that participate in trading and liquidity distribution are ready and want to work with cryptocurrencies. Some of them have already launched their own cryptocurrency products within the regulatory sandboxes.
I think that the next step is the implementation of cryptocurrency solutions into some basic products of retail financial institutions that will distribute it onwards to retail customers. The main difficulty here is that in a lot of countries there are still no clear regulatory norms.
However, there are countries where the cryptocurrency market is actually regulated and where there is a clear procedure for obtaining licenses to work with cryptocurrencies i.e. the United States and Japan.
The difference between a Japanese and an American license is that there are 400-500 pages of regulations in Japan from which you can not deviate. In the US you make your own rules, the regulator checks it, and if your regulation is suitable for basic requirements, you are given permission.
I think once regulation becomes a settled issue for large players, a large number of large financial institutions will enter the cryptocurrency market.
How do you characterize the openness of the Russian market to the cryptocurrencies and the state of the crypto industry in Russia?
Artur Azizov: There is currently an unregulated market in Russia and no one is really sure what to do about it. The Central Bank adheres to its cautious position, and in State Duma none of the bills submitted are based on international practice.
If this was the case, many IT companies would leave their development offices in Russia and conduct all business activities from other jurisdictions where it is easier to obtain a license. Therefore, right now, the Russian market is one of the most incomprehensible ones in existence for cryptocurrency projects that wish to work legally on the Russian market.
We need to try to help Russian associations and they, in their turn, need to try to explain to State Duma and the committees how it really works. The indicator here is very clear: the market can be considered really as open as soon as the foreign players start coming to Russia and establishing their businesses here.
Does B2Broker use ready-made solutions for KYC or provide its own? How do you feel about the solutions for KYC based on blockchain?
Artur Azizov: Yes, we use ready-made KYC solutions. We work with recognized programs such as Isignthis and IdentityMind. For the exchange, we have an outsourcing solution that allows us to analyze every blockchain transaction; its source and connections to criminal activities. Also, we see no benefit in writing such systems ourselves.
Taking into account the cost of connecting to such systems, it is much cheaper to use a ready-made solution than to try to reinvent the wheel again.
Regarding KYC systems on blockchain, I think that there are certain advantages in it but as yet I have not seen a single company with KYC on blockchain, which would capture the market and become popular. If such a company emerges, we will gladly take their solution to our KYC pool.
What is B2BinPay cryptocurrency gateway? What distinguishes your offering from the others on the market?
Artur Azizov:  allows merchants to accept cryptocurrency and tokens as payment for their goods and services. There are two models of the work of our payment gateway: crypto-crypto and crypto-fiat. In the first case, as payment for their goods the seller receives cryptocurrency.
In the second case, the received cryptocurrency is automatically exchanged for fiat money or stable coins which are sent to the seller’s wallet in order to avoid undesirable volatility.
We have already integrated all the most popular blockchains: Bitcoin, Bitcoin Cash, Litecoin, Ethereum, NEO, NEM, Tezor, etc. After ICO, the projects can also use our payment gateway and offer their customers and partners integration with their own token for increasing turnover and liquidity.
Thus, any merchant who wants to expand the audience can give his clients an opportunity to pay with cryptocurrencies. These are the main advantages to our gateway against competitors as BitGo, BitPay and Bitcoin Pay. Some of the competitors serve only bitcoin-transactions, while some serve a limited number of cryptocurrencies.
Others only work on the crypto-crypto system or only crypto-fiat but we have combined all these advantages into one gateway which is simple to integrate.
To cryptocurrency exchanges and instant exchangers, we offer our payment gateway as an infrastructure solution as many exchanges face problems of deploying and servicing the blockchain node. We undertake these aspects and guarantee the security and stability of transactions.
We also solve the issue of integrating APIs of different blockchains with our gateway. Instead of adapting the code to the API of each individual blockchain, the client makes a single integration with our API, and works with different blockchains and any tokens on them via a single connection.
The exchange or the other merchant who chooses such a model needs only to solve the issue with cold wallets, where all funds are automatically transferred to through the transactions of its users.
Is there a simple mechanism for adding new cryptocurrency to your payment gateway?
Artur Azizov: Of course. If this is a token based on NEO, NEM or Ethereum, adding a token takes about two minutes. In terms of cryptocurrencies, we try to add only the most popular ones.
We also consider requests from merchants to add the ability of paying with specific cryptocurrency, even if it is not very popular. The main requirement is the “adequacy” of the API and the source code of the blockchain.
How many merchants already use your gateway in the world and, in particular, in the post-Soviet area?
Artur Azizov: We do not have a single merchant in the post-Soviet area. In Russia, we don’t offer B2BinPay because Russian merchants only have the right to accept Russian rubles. For example, payment systems like Qiwi or Yandex.Money operate as digital money operators, but all their calculations are in rubles.
In Asia, Europe and other regions the conditions are much more favorable. Merchants have no problems with the introduction of new payment methods and can sign a contract with any payment system.
The total number of merchants that use our payment gateway can be measured by the dozen. It should be noted that most of them still use the gateway as an IT solution and make calculations using the crypto-crypto format which is especially important for brokers and crypto-banks that do not want to build their own infrastructure.
For example, when customers purchase our , they have a choice: write their own harness to the open API of the exchange or take such a ready-made solution. Most of them choose a ready solution so as not to waste a whole year of their developers’ time. 
In your opinion, will a simple solution for cryptocurrency payments help the large-scale adoption of cryptocurrency in the world? What other technical, psychological, legal and other barriers have to be overcome to achieve such acceptance?
Artur Azizov: Of course. In our opinion, B2BinPay solves major and global tasks of promoting cryptocurrency to the masses. Imagine that in your wallet you have a bitcoin with which you can pay everywhere: buy a coffee at Starbucks with bitcoin, buy dinner with Ethereum, order sushi with Ripple, buy a new laptop with Monero or buy shares with Bitcoin Cash.
Broadly speaking, when all the merchants and websites start accepting cryptocurrencies as a way of payment, there will be a real common usage of cryptocurrency regardless of whether or not they will exchange them for Fiat.
It will be then that bitcoin turns into a real payment instrument and not just a speculative investment tool. Now unfortunately, 90% of the market is speculation. Many people buy bitcoin not for the calculations but in order to invest in its growth.
Companies such as B2Broker, B2Binpay, BitGo, BitPay and CoinPayments have introduced blockchain to the masses and have popularized cryptocurrencies, as well as simplifying the calculations between private customers and legal entities.
What could you recommend to the beginning start-uppers who intend to enter the fintech market?
Artur Azizov: First of all, I would like say that it is not necessary to reinvent the wheel. If there are any ready-made products on the market that have already proven themselves and demonstrated their competitiveness, it makes sense to give preference to the ready-made solution. It saves a lot of time and money.
And having built some of your own add-ins on these technologies, you will only increase the value of the products and the services, and your business will develop much faster as a result.
In any case, IT and Fintech are ones of the key cores of the business at the moment, but there are still aspects such as support and service. For example, now that the “cryptocurrency boom” has passed, many crypto-exchanges have a lack of clients because exchanges do not differ much one from another.
Therefore, everybody swiftly started focusing on client service offered by the crypto-exchanges, even though it has already existed in brokerage for a long time. Those brokers who prosper are the ones who serve their clients better, devote their efforts to marketing, sell more actively, attract partners and offer referral programs and own more solid licenses.
The main mistake made by Fintech start-ups is that they think that they have come up with a good idea and how they will implement it and that the customers themselves will go to them. But that is not the case!
They can have an excellent service, but without professional legal and financial functions, good customer support and marketing the business will not move forward because IT is just one of the pillars of business.
Put simply, it is more effective to use ready-made solutions and focus on the whole package – service, marketing, sales and infrastructure development.
What are the plans for B2Broker in the near future? What are the long-term prospects?
Artur Azizov: The main plan is to occupy about 10% of the technology and liquidity market for forex/crypto brokers and crypto-exchange. There are currently around 4,000 forex-brokers and 800-1000 cryptocurrency exchanges and crypto brokers in the world today.
On the whole, we estimate the size of the market to be somewhere in the region of 5,000 companies (excluding traditional stock markets and exchanges).
Our goal is to serve at least 500 companies in the next 2-3 years. In fact, we have already partly fulfilled this goal. We also intend to develop our infrastructural products and trading platforms, develop our crypto exchange B2BX, B2BinPay and liquidity provision products.
Finally, a very important direction of development for us is obtaining the maximum number of licenses for all our projects and services. The more licenses we secure, the more local markets can be serviced and the more opportunities ahead for the company.