The crypto market is extremely fragmented, which makes it difficult for both retail and institutional investors to access deep liquidity and reliable execution. There is a need for a true brokerage/ best execution model in the space and Voyager is continuing to build that with our Smart Order Router. We connect to more than a dozen exchanges and market makers, which gives our customers unparalleled access to the market. However, more interconnectivity is still needed between exchanges to really grow crypto to the scale of the traditional equities markets.
I had the pleasure of interviewing Steve Ehrlich, CEO and CO-Founder of Voyager Digital. Steve has over 25 years of experience in capital markets, starting his career at TIR Securities, an institutional brokerage that was sold to E*TRADE Financial.
Steve is the former CEO of E*Trade Professional Trading, which later became Lightspeed Financial. Under Mr. Ehrlich’s lead, Lightspeed Financial became the third-largest brokerage in the United States and executed an average of 450,000 trades per day by 2009.
Currently, Steve is the CEO and Co-Founder of Voyager Digital; co-Founded with Oscar Salazar, one of the co-founders and first investors in Uber.
Can you tell us a bit about your “backstory”?
I started my career in public accounting working for BDO Seidman in the late 80s. I wanted to work for a smaller CPA firm so I could learn more about how small companies work, as I always felt the pull to be an entrepreneur and start my own company. In 1994, I was lucky enough to be hired by Jarrett Lilien to oversee all of the financial, operations, and compliance aspects of TIR Securities, Inc in New York. We subsequently sold the business to ETRADE in 1999 and my transition from traditional brokerage to online brokerage was made.
I spent 7 years at E*TRADE, and was Head of Brokerage Strategy and all M&A on the Brokerage side of the business. I subsequently executed a management buyout to acquire the Professional Trading Division and became the CEO of Lightspeed Financial, which became the 3rd largest broker/dealer based on trades per day in June 2008. The long years of building companies, being the CEO of my own online brokerage and being a senior member of a successful Public Company have groomed me well to oversee Voyager.
Can you tell us the story of how you got first involved with the Regtech or Crypto markets?
I was introduced to crypto by a friend of mine. My wife and I built a youth hockey program in Norwalk, CT from scratch to 300 kids and he was a member of the executive team. On a trip to co-coach a game on Long Island, he gave me a lecture about Bitcoin and crypto, and I was hooked!
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
There are many people who have helped me along the way and who I have learned from, but it all starts with my father. He ran his own accounting/tax practice for 50 years on Long Island. During tax season he worked 80 hour work weeks which is where I learned what work ethic really means. The other most important thing I learned from him was to always treat people fairly, whether employees or customers. That goes a long way in building relationships and businesses.
Can you share 5 things that should be done to help stabilize the Crypto Economy?
Regulatory infrastructure within the US
- Currently, there aren’t clear regulations in the United States when it comes to cryptocurrencies, and how they are classified and should be used. Companies are often forced to follow existing regulations that are antiquated and out of touch with the digital currency infrastructure. I believe that when the U.S. finally gives consumers and businesses concrete regulations, the market will stabilize and grow exponentially.
Connectivity between exchanges
- The crypto market is extremely fragmented, which makes it difficult for both retail and institutional investors to access deep liquidity and reliable execution. There is a need for a true brokerage/ best execution model in the space and Voyager is continuing to build that with our Smart Order Router. We connect to more than a dozen exchanges and market makers, which gives our customers unparalleled access to the market. However, more interconnectivity is still needed between exchanges to really grow crypto to the scale of the traditional equities markets.
Ease of use
- Crypto is still pretty complicated, which makes one of its most exciting use cases — empowering people to be their own banks — difficult. Blockchain transfers and cold storage wallets have gotten easier to navigate, but they still need improvements to bring peer-to-peer payments and self-custody mainstream. Voyager is working on a product to do just that. Stay tuned.
More projects that make everyday life easier
- People care less about how something works and more about how it can make their lives easier. The more real-world applications of blockchain and crypto people begin to experience, the faster adoption will come and the more stable the crypto market will be.
- Similarly, the more people that own crypto, the more stable the market will be. As adoption grows, “whales” will have less influence on price.
In your experience, what are the top strategies that crypto firms should be considering in order to have a competitive edge?
I believe that one of the biggest challenges facing the crypto industry is trust. There’s a lot of misconceptions about crypto, and in order to legitimize the asset class and bring more mainstream investors in, we need to follow existing regulations and push for greater transparency. At Voyager, we did this by bringing our company public on the Canadian Securities Exchange. We’re audited quarterly and forced to prove we hold the assets we say we have. We are held to the highest standards by regulators and from our experience, this combined with security measures like 2FA, has enabled us to develop a strong bond of trust with our customers, leading them to be more comfortable holding large sums of money on our platform.
What are the 3 things that most excite you about the blockchain industry? Why?
- From video games to sports contracts, blockchain technology is innovating nearly every business sector. I believe that in the future, all assets will be on a blockchain, making a variety of industries more decentralized and efficient.
- Blockchain is proving its value and utility, especially in these unprecedented times. As businesses no longer want to accept dollars, due to COVID-19 transmission concerns, supply chain tracking becoming a necessary component of the industrial economy, and investors looking for future-proofed alternative assets to invest in, blockchain’s value is emerging stronger and stronger every day. Simultaneously, at Voyager we’re making buying, trading and transacting crypto easier than ever, bridging the gap to the average consumer without the stress and frustration.
Elimination of middlemen
- One of the most exciting things about blockchain and crypto, in particular, is its ability to remove the middleman from transactions. For example, people can be their own bank by sending money without the need for a bank or a money transfer service. This makes transacting cheaper and more efficient, disrupting the need for financial intermediaries.
What are the 3 things that worry you about the blockchain industry? Why?
Lack of individual understanding
- Blockchain technology can be complex and hard to understand, therefore preventing people from investing and participating in the industry. Simple products need to be built to bring in mainstream participants.
- While blockchain can make processes more secure, the technology can also leave people vulnerable to compromising situations. For example, if you accidentally send Bitcoin to a Bitcoin Cash address it can be nearly impossible to recover.
- Similarly, bad actors can use blockchain’s anonymity and permanence to scam innocent people out of their money, like we recently saw in the mid-July Twitter hacks.
How have you used your success to bring goodness to the world? Can you share a story?
My wife and I have been building youth sports programs in the Fairfield County area of CT for years. For instance, we built a new hockey program in Norwalk, CT. That program worked with the local elementary schools in bringing children to the rink to teach them skating as part of their Physical Education requirement. Additionally, the program made sure any child that wanted to play had access to equipment and coaches. We partnered with the NY Rangers in this program. Additionally, I ran the largest Winter Girls Basketball Program in Stamford, CT for 7 years. We had over 350 girls from 2nd grade through 8th participate.
Can you share a story of a time when things went south for you? What kept you going and helped you to overcome those times?
Being part of a startup, now for the 3rd time, not including ETRADE, it’s always a persistent battle to keep moving forward. Startups are not for everyone and you must learn to battle every day.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
Another simple answer as said by Wayne Gretzky, the greatest hockey player of all time, “You miss 100% of the shots you don’t take.”
Startups are all about taking risks and analyzing opportunity. It’s something I live by every day.
How can our readers follow you online?
Follow me on Twitter — @Ehrls15
Follow Voyager on Twitter — @investvoyager
Get the Voyager App — InvestVoyager.com