Q2 was one of our most productive quarters so far. We achieved three major milestones: by implementing the first stage of the fiat gateway, we opened the doors to new users, especially those with less experience with digital assets; with the addition of the first stablecoin, we created an option for DAA managers to hedge during bear markets; and with the proof of solvency, we demonstrated our dedication to transparency and set a new standard for the blockchain industry.

We had the chance to interact directly with ICONOMI enthusiasts and ICN holders at events around the world, both events we hosted and events we attended. We found that attendees were especially impressed by two things: 1. The fact that we have already launched a functioning platform, in contrast to many projects in the blockchain space; and 2. Our open and transparent style of communication. We will be attending several events in Q3, including Delta Summit, Malta’s leading blockchain and digital innovation conference, where co-founders Tim Zagar and Jani Valjavec will be speaking.

The market correction that lasted throughout Q2 impacted every aspect of the crypto-economy, resulting in less overall activity and interest. While this was not surprising, it was an interesting trend to observe.

Despite the market correction, Q2 showed some positive numbers. We received a large number of DAA manager requests and accepted several applications, increasing our DAA manager base by 27%. We also added 2,662 new users, for a total of 60,637. Our book value in Q2 was $148,840,329.

While Q2 was a very busy quarter, Q3 will be even busier: the bulk of the goals outlined in our roadmap will be achieved this quarter.

Innovation is at the heart of what we do. As we enhance our platform, we will continue to evaluate all new features with strict performance and scalability expectations.

Department Overviews

Revenues

Revenues in Q2 were US$404,410, representing 141.95 ETH earned from platform fees ($64,613) and 746.51 ETH (US$339,796) from CCP performance fees. Q2 revenues were 253% higher than in Q1 2018.

Expenditures

Expenditures in Q2 totalled US$1,544,306. The three biggest expenditures were:

Salaries : US$848,256 (increased compared to Q1 due to additional taxes and obligatory holiday allowance)

: US$848,256 (increased compared to Q1 due to additional taxes and obligatory holiday allowance) Services : US$194,418

: US$194,418 Travel, marketing, PR: US$153,149

Columbus Capital

On June 30, the assets under management for CCP totaled US$65,969,795 (a 1.47% decrease compared to Q1 2018). During Q2, CCP made investments in seven projects, which we will disclose in the near future. A more detailed report will be published by Columbus Capital.

Repayment Program and Treasury Management

We continued our repayment program by buying and burning 226,635.78 ICN tokens using 289.14 ETH and fees collected in ICN. The total amount of ICN tokens outstanding at the end of the quarter is thus 98,930,686. The token burn smart contract can be viewed here.

Note: Do not send tokens to this address. Tokens sent to this address are permanently locked in the smart contract and cannot be recovered.

In Q3 2018 we are continuing with our repayment program using revenues generated in Q2, which amounted to US$404,410 or 888.46 ETH. As stated in our Introducing Fees Payable in ICN blog post, DAA management fees are now collected and converted to ICN on a daily basis and will be burned at the end of each quarter, rather than in the following quarter.

Legal

The legal department has been very proactive in regard to regulations, banks, and achieving GDPR compliance. We have set a strong precedent for handling the legal aspects of businesses involved in the blockchain space and are recognized as experts in this field, being regularly invited to conferences to give talks and take part in panels.

Highlights

Regulation

We have continued in full force with the work we started in Q1. Being in contact with EU regulators throughout Q2, we have made great progress toward becoming regulated.

ICONOMI is actively monitoring proposed changes in the regulatory environment of the digital asset industry in order to identify the most appropriate means of obtaining adequate licenses to support its business model. We deem users’ trust to be the most fundamental building block and as such paramount to the very existence of our platform. This is why we have undergone a proof of solvency and also why we currently have in place a level of self-regulation that far exceeds any legal requirements in the blockchain industry. On April 5, 2018, a Big four accounting firm verified that ICONOMI had $133.6M of liabilities and $210.2M of reserves distributed across 80 digital assets, fully covering all liabilities.

Regardless of self-regulation, we are working tirelessly to obtain appropriate licenses fit for the business model of the platform.

We have regular contacts and meetings with Maltese regulators and welcome the progress Malta has made in this field by setting up a regulatory environment for blockchain-related businesses. Malta is a leading light in this field because it has been fast and adaptive in developing a regulatory framework and at the same time has made this framework flexible and open enough that it can be adopted by such businesses. We will continue working with Maltese authorities to secure ICONOMI’s place in Malta’s newly established regulatory environment.

Banks

We have established good business relationships with the banks we connected with in Q1, explaining our business model, our work in anti-money laundering, and our work in other fields where banks see problems with crypto-related companies, making it clear that our self-regulation is at such a high level that risks are minimized to a level acceptable to banks.

Fiat Gateway

The fiat gateway service was publicly launched in Q2 and is currently available for larger sums via OTC deals. This is not the final stage, however, and in the future the fiat gateway service will be made available to all users with no minimum transaction value. Making progress in this area was very work-intensive for the legal team, requiring alignment with banks. Further details will be communicated in Q3.

GDPR Compliance

On May 25, 2018, the General Data Protection Regulation (GDPR) came into force in the EU. A complete overhaul of our privacy policy and supporting systems on the platform was undertaken to achieve full compliance, and we are taking further action to devise a sustainable GDPR-compliant system for handling our users’ data. We have all the checks and balances in place to fully respect all the rights provided by the GDPR.

Trademarks

Being the first of its kind, ICONOMI has developed a large number of proprietary solutions as integral parts of the platform. Many of these solutions are the first of their kind. To protect these solutions, we have continued to register trademarks, a process that began in 2017.

In recent months, it has come to our attention that ICONOMI’s intellectual property rights have been violated. We have successfully appealed all known infringements and will continue to monitor potential violations.

Legal Staff

We have added another lawyer to the team with years of experience in the legal field. He will be taking over day-to-day tasks, easing the burden for other members of the team and allowing them to focus more on their specialized tasks: AML, compliance, governance, etc.

Focus for Q3

Our main focus in Q3 is on registering ICONOMI as a money service business in order to enable a fiat payment gateway for all users of the ICONOMI platform.

We will also be focused on preparing applications for licensing under the new Maltese DLT regulatory framework and actively engaging in discussions with Maltese and other (European) regulators with regard to proposed regulations for governing DLT.

As part of ongoing operations, we will be providing internal support to all ICONOMI departments in order to maintain the highest legal standards and full regulatory compliance.

Finally, we will be increasing automation of AML/KYC processes to achieve the highest possible level of automation by 2019.

Customer Support

The downtrend influenced by the bear market was reflected in a general decrease in activity across the industry, including in the number of support-related requests ICONOMI received. Despite this, our support department stayed busy.

In Q2, our users made more than 12,000 searches in our Knowledge Base, and our support team solved more than 1,100 support requests.

Highlights

With the latest releases of the official ICONOMI iOS and Android apps, users can now verify their accounts to both Tier 1 and Tier 2 directly from the app to raise their deposit and withdrawal limits.

We added support for eight new countries for Tier 2 verification: The United Arab Emirates, Egypt, Ghana, Jordan, Kazakhstan, Malawi, Peru, and Serbia.

Common Questions

Focus for Q3

In addition to ongoing support operations, in Q3 we plan to update our user-friendly ticket request form to automate solutions for the most common support requests and optimize the process of solving tickets. We will also be preparing for support requests related to the fiat ramp-up.

DAA Managers

We started the quarter with 26 DAAs and by the end of Q2 had onboarded 7 new ones. Three new countries were added to our DAA manager map, and we now have 33 DAA managers from 18 different countries. Because of the continuing bear market, some of our candidates are still waiting for more favorable market conditions to create their DAAs.

Highlights