Payment Week Exclusive: Q&A With Coinsetter CEO Jaron Lukasiewicz

August 13, 2013 By: Kevin Xu

Coinsetter, a New York City based start-up, aims to be the first bitcoin exchange to serve the trading needs of both personal investors and the financial institutions of Wall Street. I had a chance to speak with Coinsetter’s CEO, Jaron Lukasiewicz, and get his views on how he hopes to establish his company, and bitcoin, as the next step in the evolution of global payments.



Your background is rooted in financial services. What made you want to create a bitcoin startup?

“I worked in private equity and investment banking for four years after I graduated, and I realized I hated it, and in the middle of that I started another start-up with my brother called Ticketometer. That one didn’t work out – I learned a lot but it was clear to me I was very passionate about starting companies and entrepreneurial efforts versus working for someone else in a 9 to 5 job. My brother and I, and another partner named Yo, stayed up talking about starting something in the bitcoin space.”

What separates Coinsetter from other bitcoin exchanges and platforms?

“There wasn’t really any platform that was user-friendly, based in the US, great to trade on and offered shorting. Once we settled on that general concept, I knew that I wanted to be the well-funded company in this space that could lead it. We raised our seed round in March from Barry Silbert and other investors. We have 8 developers working on the platform, 3 of which have previously built high frequency and forex trading platforms in the past.”

How will Coinsetter bring bitcoins into the payments space?

“To make bitcoin work in the payments space, liquidity is key. Though not many people realize it yet, dollar to bitcoin exchanges are the backbone of this system. Even though we aren’t really in the payments side of the business, we aim to be a liquidity provider to the companies who are doing it. There really aren’t any exchanges that can handle high-volume and high-frequency trades. Our goal is to be a liquidity provider.

Coinsetter is known as an exchange aggregator capable of shorting bitcoins. What’s the base of your infrastructure and who are you working with?

“We’re known as the shorting platform, but we’re not going to be bringing that to market for another six months. Right now we’re really focused on being the most reliable place to make trades. We are the only people right now who have built an ECN (electronic communication network) platform. We’re going to launch with Bitstamp and we have built in functionality to link to Mt. Gox. In the coming months, we plan on working with other bitcoin exchanges in the U.S. that are coming out. I think the purpose an exchange will actually serve is far different from what people think. They’re going to be focused on a relationship with a bank, or a payment app developer like Venmo, and we will be providing a lot of the liquidity behind those transactions.”

So you’re bringing these new features into the market that are usually reserved for financial institutions. Who are you courting now?

“We’re building up relationships with market makers. People would be really surprised by the people we’re talking to. We have interest from some very large hedge funds. A common piece of feedback we hear over and over again is that there really isn’t a platform that can handle high frequency trading. For very high volume traders, we can support their technological needs and will be the only company in the space with maker-taker pricing. Our pricing is really competitive for retail traders as well. And I couldn’t be happier with the stability of our platform.”

How do you think regulators view bitcoin and digital currencies?

“Companies in the space are starting to come together to hopefully educate regulators on bitcoin and show them that bitcoin is similar to the internet in 1992. Bitcoin has an image problem that is similar to what the internet faced in the early 90’s: that bitcoins are used for bad things. In reality, it’s a giant payment system that can replace all other geographically limited payment systems. To me it’s pretty obvious that people will link bitcoin addresses with names to understand where funds are flowing. You shouldn’t use bitcoin and assume all your transactions will be anonymous. You should assume transactions will be very fast, cheap and easy to complete. AML regulations are a huge cost to banks, and many of the AML procedures banks do by hand will become automated thanks to bitcoin. Costs for banking will go way down in the next ten years.”

What’s the future for bitcoin as an investment?

“Bitcoin will someday be viewed as the new gold substitute, and people buying bitcoins in 2-5 years will be focused on price stability. As the payment network grows, the bitcoin price will stabilize. Contrary to popular belief, the currency aspect is actually a byproduct of the payment network.”

Will you support other currencies, such as Ripple?

“It’s likely we will offer XRP trading at some point. It’s the only other virtual currency that has strong near-term potential. I think the OpenCoin team is super credible and they’ve built an amazing product. I could see us becoming a gateway as well. We’re really a clearing house in the bitcoin space, and Ripple is very complimentary to the needs of our business in that you can send and transfer funds in literally seconds.”