EXCLUSIVE: “Grabbing Wall Street by the Horns” – Matt Leibowitz, Stake in ‘The Fintech Magazine’
Aussie trading app Stake set out to liberate rank and file investors’ money by giving them direct access to the biggest stock market in the world. Crypto asset trading represents the next freedom, says CEO and Co-founder, Matt Leibowitz
Standing near Wall Street is an imposing 3,200kg bronze sculpture, appropriately called the Charging Bull – a powerful allegory of ‘bullish’ market optimism and symbol of recovery from the 1987 stock market crash. But while the world markets bounced back, nowadays Wall Street is facing something of a different challenge.
What was once the preserve of traders and privilege is now being decentralised with the arrival of everyday trading apps and new types of stocks, most notably crypto assets, bringing stock market investment to the masses. One app that has already successfully moved into this space is Sydney-born Stake, which was launched to give ambitious investors direct access to Wall Street. It enables investors in Australia, the UK, New Zealand and Brazil to trade on the biggest stock market in the world – NYSE – and others across the US, without a brokerage fee.
Indeed, its UK website proudly declares: “Still pay to trade the US? We call bull. Stake lets you trade the US market with $0 brokerage fees.”
Since its launch in 2017, the platform has amassed more than US$1.5billion in funds under management and acquired an almost 500,000-strong customer base. Now, bolstered by the successful completion last month of US$63million Series A funding round, Stake is going one step further in challenging the status quo by building into a cryptocurrency exchange. With plans to offer about 100 cryptocurrencies for trade, it’s expected to launch in Australia in Q4 2022, with a rollout to the UK, New Zealand and Brazil thereafter. And while that may in itself present a new world of challenges – most notably in terms of regulation and compliance – it is a move that very much sits with the ethos of Stake’s co-founder and CEO, Matt Leibowitz.
“I’m passionate about markets,“ says Leibowitz. “Markets represent all walks of life. It doesn’t matter where you live, your age or your gender. Financial opportunity should be available for all, so access to the markets shouldn’t be exclusive.”
Stake is the fastest growing brokerage in Australia and one of the largest, too, says Leibowitz. Building for crypto on top of that is just ‘another layer of opportunity’ for customers. And it’s all part of what he describes as Stake ‘taking Wall Street by the horns’ and breaking down the traditional barriers when it comes to trading.
“We give you the full suite [of stocks]. We don’t limit it to 500, or 1,000 names; it’s literally ‘you trade in the US, as if you live in the US’,” Leibowitz adds.
Today’s neobroker, he says, is a ‘hedge fund that is in your pocket’ and no-one should be limited from participating by their background, how old they are or where they live. True to his libertarian sentiments, Leibowitz adds:
“The way I see the world, if you’ve got an idea, you can express it, if you’ve got an opinion, you can back it, and if you have ambition, you can make it.”
When it comes to finance, there have been some cultural shifts, too, that make opening up investing to everyone the logical next step. With TV shows and films such as The Wolf Of Wall Street, Billions and The Big Short taking trading to mainstream audiences, finance is becoming much more ingrained in who we are and the way the world moves, he says.
“We celebrate entrepreneurs that are doing great things, people that have created great companies and changed the way the world works. We celebrate the power of the individual and I think people are just more open to that.”
Technology, of course, has also made investing more accessible and crypto looks to be the next frontier. It’s a sector already growing massively, with the global cryptocurrency market projected to move from $910.3million in 2021 to $1,902.5million in 2028. Indeed, Stake has already been offering exposure to the crypto market via last year’s Coinbase IPO, as well as ProShares Bitcoin ETF (BITO) and a selection of OTC stocks with crypto exposure.
Nearly a third (30 per cent) of its users – most of whom are 44 years old or under – already have some exposure to crypto, while many of the others are ‘really curious’ about it, according to Leibowitz. He says there are generally two types of investor when it comes to investment apps – incumbents and beginners – with Stake predominantly appealing to the former.
“Our customers are slightly more sophisticated and the features they’re asking for are generally the more advanced things, like sophisticated order types; more information on the charts; more detailed information from companies, in terms of financial information; and more insights as to how the market works.”
Customers, as a whole, are being pretty dynamic and opportunistic, he says, adding that it is still early days in its UK market.
“Ultimately, they’re looking to maximise their wealth and that’s why people invest,” says Leibowitz. “So with everything that’s going on, some are moving into commodities, for example, whether it be nickel, gold or even coal. They’re riding the belief that commodities have up-side and are shifting out of the tech stocks as they cool.”
But while moving into crypto trading in many ways is the logical next step for Stake, it will present some challenges. For one, trading in cryptocurrency is usually more expensive than traditional trades and there is no information as yet on whether its promise of a zero per cent brokerage fee will extend to crypto, Stake saying only it is ‘committed to removing the fee ambiguity when investing in crypto’. There are also security concerns surrounding crypto that mean checking the integrity of those using Stake’s platform will be even more important than it is now. Stake maintains it has a robust process, spanning both equities and crypto customers, led by local regulators.
At present, it uses Trulioo’s GlobalGateway platform for its ID and verification services as well as others within its ecosystem of partners, with the aim of the know-your-customer and onboarding processes being as seamless and as quick as possible – to the benefit of the business and clients alike. This is for good reason too, as Stake COO Dan Silver once explained: “When optimal onboarding is achieved with real-time identity verification, customers are almost 250 per cent more likely to deposit funds into their Stake account. That’s why we see identity verification as critical to our business.”
Crypto trading is likely to be subjected to increasing amounts of regulation as the sector matures, the recent collapse of the Terra stablecoin prompting calls for even tighter controls. Any company moving into that space risks being ‘debanked’ unless they’re considered legitimate members of the financial services system. Even with its current non-crypto offering, Stake has to comply with standards of multiple regulatory regimes and this could position it well for the inevitable tightening of regulation.
“If you meet the highest standard, you’re likely a good part of the way to meeting them all, and that’s the way we approach it,” says Leibowitz. “So, we collect all the information we have to, run it through all the databases, do any additional checks that are necessary, pass information through to all the partners that we work with that also require these checks. We obviously have to share the data, for regulatory reasons, but we just make it as easy on customers as possible, while being as safe for them, as well.”
Only a handful of brokers in Australia – and Australia’s Commonwealth Bank – have given clients access to digital currencies amid regulatory uncertainty. Currently, digital currency exchanges are simply required to register with the Australian Transaction Reports and Analysis Centre (AUSTRAC), but the government has signalled that a new licensing framework will be introduced by the end of this year. Moving forward, Leibowitz doesn’t see Stake’s emphasis on providing a safe and seamless customer onboarding experience changing. Nor does he seem too fazed about the challenges that increased regulation of crypto trading may bring, thanks to the company’s current business model.
“As a regulated entity, you’ve always got to be aware of what your obligations are. I don’t think that changes with crypto,” he says. “There are rules there that provide a clear path for safe customer outcomes and we’re always supportive of working within a regulated framework to provide the best experience for our customers.”
That Wall Street bull better watch out, because Stake is clearly intent on giving it a run for its money.