Hello Wellfield Investors and Stakeholders,
Since the last CEO newsletter, we have seen price stability in the digital asset markets but significant SEC enforcement actions that have forced conflict between regulators and centralized exchange trading platforms. Given the uncertainty this has created in the markets, I would like to use this newsletter to reinforce how Wellfield is differentiated from these exchanges, the latest regulatory events in the market, and why we believe our strategy since day one largely insulates us from these headlines and creates opportunity as the ecosystem continues to evolve.
- WFLD is is not a centralized exchange. We are unique as a public company “Pioneering a Future Powered by Onchain Finance”.
- WFLD is not exposed to the US regulatory risks associated with issuing securities tokens or operating unregistered trading and clearing platforms.
- WFLD is positioned to strengthen its PnL with our recent operational restructuring and the growth of our onchain products and services.
Wellfield’s Vision and Strategy
From the beginning, the founders and management at Wellfield have been aligned in one vision.
As blockchain infrastructure begins to support new opportunities and use cases, more capital and financial transactions will move away from centralized platforms (ex: Binance and Coinbase) and onchain.
In the last year we are seeing this begin to play out as centralized platforms have failed or faced increasingly larger regulatory headwinds and as customers have begun to leave centralized exchanges and adopt decentralized financial services.
Wellfield does not operate centralized trading platforms. We are building our businesses onchain, focusing on valuable IP and infrastructure that enables customers to bring their money onchain and use blockchain directly for decentralized financial services.
Additionally, acquisitions like Tradewinds enable us to expand the scope of our technology beyond cryptocurrencies to real world assets. Assets like VaultChain Gold and VaultChain Silver – physical precious metals custodied by the Royal Canadian Mint and digitized onchain in compliance with relevant regulatory requirements.
US Regulatory Volatility
While the SEC is pursued a direct “legislation by enforcement” approach, it’s important to note that the actions of the SEC seem to be dislocated from the rest of the world. The EU has practised a more cooperative method taking strides to regulate the cryptocurrency market with a new ordinance known as the Markets in Crypto-Assets (MiCA) Regulation. This action is broadly welcomed by the industry as it unifies European legislation and provides regulatory clarity for operators. Elsewhere in the world like the Middle East and Asia, we are also seeing collaboration and regulatory clarity.
The SEC has been criticized by both the industry and Congress for not providing clarity and selectively suing operators as a method of industry engagement. Binance is accused of fraud and failing to execute sufficient anti-money laundering practices. Coinbase is accused of operating an unregistered securities exchange. We believe that our robust AML practices and the fact we do not operate a centralized trading platform avoids both issues.
While this creates uncertainty for our industry, it is important to note that lawsuits from the SEC are not precedential and federal judges ultimately determine whether complaints made by the SEC are valid. As an example, since December 2020 Ripple has been engaged in legal disputes with the SEC. The SEC claims that Ripple has been offering unregistered securities via the XRP token since 2013 and this lawsuit is projected to reach a pivotal milestone in the coming weeks with Ripple management cautiously optimistic about the outcome.
Wellfield’s Regulatory Position
In light of intensifying regulatory scrutiny from entities such as the SEC, particularly targeting companies operating centralized exchanges or issuing unregistered securities, we believe Wellfield’s unique business model creates a distinct advantage. By steering clear of the immediate scope of current regulatory crackdowns, Wellfield strategically minimizes its regulatory risk and focuses on building out products and services that align with where the ecosystem is moving – onchain.
At the end of the day, we are in the products and services business. Our products are vetted – VaultChain Gold and VaultChain Silver are backed by a Crown Corporation of the Federal Government of Canada – the Royal Canadian Mint. Our services are compliant and robust – Coinmama’s global on-ramping infrastructure is the result of close to a decade of rigorous AML
and anti-fraud policies and practices reinforced by global regulatory compliance and adherence.
This, combined with potential leeway for the innovation of decentralized financial technologies that exist within the regulatory framework, Wellfield is positioned as a resilient entity
well-equipped to navigate the turbulent waters of the evolving blockchain regulatory landscape.
The Opportunity Ahead
Let’s pause for a moment to reflect on our identity, our purpose, and our determination to stand strong and continue to grow. Wellfield Technologies was founded with the goal of harnessing blockchain technology for individual and institutional digital asset management. We fulfill this purpose by serving customers across three primary areas:
- Global Customer Onboarding and Self-Custody Services
- Precious Metals Tokenization Solution for Investors
- Decentralized Services like Liquidity Management and Advanced On-Chain Solutions
These services are not only paramount across our industry but also extend beyond it, and we anticipate they will continue to be in high demand for many years to come. Through our two distinct brands Coinmama: A trusted platform for crypto services that has served over 3.5 million users worldwide since launched. Wellfield Capital: for professional and institutional investors. We’re able to meet the diverse needs of our two core customer groups – from individuals seeking accessible crypto services to professional and institutional investors requiring advanced on-chain solutions, in a safe regulatory environment.
Since going public 18 months ago, we have demonstrated consistent growth. We have successfully executed our goals, growing our revenues from $5.7M in Q2/2022 to $42M in Q4/2022, and managing $176 million worth of precious metals through our flagship products, VaultChain™ Gold and VaultChain™ Silver. We take pride in our accomplishments to date and are eager to seize the exciting opportunities that lie ahead.
We recently announced that we are undertaking an operational reorganization aimed at improving our margins. We look forward to sharing the results once these changes are fully implemented. We look forward to sharing the results e invite you to visit our online platforms wellfield.capital, www.wellfield.io, and Coinmama – and encourage you to stay tuned as these sites undergo upgrades to enhance user convenience and clarity. Thank you,
Levy Cohen CEO/Co-Founder
Wellfield Technologies, Inc.