Good morning, welcome to this presentation for Arcane Crypto's Q1 report. This is actually our Q1 report as a listed company. I'm really happy to be the one presenting this report to you. My name is Torbjørn Bull Jenssen, and I'm the CEO of Arcane Crypto. Here in Arcane Crypto, we are working towards becoming the leading full-service digital finance platform in Europe. We have a particular focus on how cryptocurrencies can be leveraged to revolutionize payments, not only niche payments denominated in Bitcoin and other cryptocurrencies, but traditional payments that can benefit from leveraging cryptocurrencies as a technology and as a platform. I will come back to that. During our Q1 this year and our Q1 as a listed entity, a lot has happened. At the start of the year, we listed Arcane Crypto through the reverse acquisition of what was then called Vertical Ventures. We switched the name to Arcane Crypto and started trading under Arcane ticker on the February 5th. Shortly after, we increased our ownership in one of our portfolio companies, Pure Digital, to a 37.5% ownership rate. We raised capital around SEK 50 million, or almost SEK 50 million from a U.S. hedge fund called Lucent Capital and Klein Invest. We completed acquisition of Kaupang Crypto, a Norwegian cryptocurrency broker with a registration from the Norwegian FSA. After the end of the period, we have entered into two investment agreements. One, to increase our ownership in LN Markets, a derivatives market leveraging the Bitcoin Lightning Network for instant deposit and withdrawals of collateral. We increased our ownership there from 6% - 16%, and we've entered into a share purchase agreement to acquire all the outstanding shares, or the remaining shares of Trijo, a Swedish retail exchange regulated by the Swedish FSA. In this presentation, since it is our first quarterly presentation, I'll start with an introduction to Arcane for those of you who don't know the company too well from before. There's some overlap with the presentation I did earlier this year. I'll talk about our sector, the main trends we're seeing, and the main development during the Q1. Before I look more thoroughly at our portfolio, our key figures for the quarter, and the key operational updates, before I round off with a summary and open up for questions. Feel free to ask questions on the platform during the presentation, then we'll answer some of those after the presentation. Arcane Crypto, as the name tells, is a company operating in the cryptocurrency sector or cryptocurrency market. This is one of, if not the fastest growing sectors in the world today, and we see that on all fronts. In this market, Arcane has taken a strong position. We've built an internationally recognized brand, working with some of the biggest industry players globally. We are offering services that are inherently scalable, targeting the main financial use cases of public blockchains and digital assets, payments, asset management, trading. We also offer leading market research. Strategically, Arcane has always had a focus on M&A, on building a portfolio, and on executing on a buy and build strategy. That's a key reason why we listed the company to increase our toolbox, and it's also a key reason how we got to where we are today. Today we are a group of eight different business units. This is just the start. The cryptocurrency sector is very fragmented. There's a lot of interesting companies out there, but that are standing a little bit too alone and could benefit from being a part of a larger family of companies to benefit from synergies and returns to scale. In that game, Arcane intends to take a leading role and consolidates parts of the industry in Europe. If you look at our sector, we are looking at a young market, but a maturing market. We now see that there are large institutions coming in. This is no longer a market for the nerds or a niche traders. This is a market for some of the biggest financial players in the world. This is now reflected in trading volumes. Bitcoin trading alone has become a $1 billion market on a daily basis in terms of trading volumes. The technology is improving fast. Open source allows for free and permissionless innovation, which we see in countless iterations and improvements all across the board. Where there used to be a lot of regulatory uncertainty around how Bitcoin, other cryptocurrencies should be dealt with from a tax perspective, reporting perspective, those uncertainties are now being removed. Regulations tailored to cryptocurrencies are being put in place. The Fifth AML dDirective is live in Europe, already regulating exchanges, and new regulation is coming, really paving the way for traditional finance to be able to interact with this sector. If you look more specifically at the Q1, we've seen that, of course, as many has probably noticed, that prices of cryptocurrencies has exploded. Bitcoin doubled in value. Ether more than doubled, increased to 160%. The trading volume, if you look at the real trading volume, so the trading volume for Bitcoin, where we correct for wash trading, all the misreporting, has reached levels north of $10 billion on daily trading volumes. This means that this market is now large enough to really attract the interest of some of the biggest financial players there is. We've seen that by several large investment banks announcing different ways in which they are planning or already engaging with the cryptocurrency space. BNY Mellon has said that they will roll out digital asset custody. Goldman Sachs has relaunched its trading desk development, which it shut down in 2018, and Morgan Stanley has started to offer wealthy clients access to Bitcoin funds. These banks are coming into the sector, of course, because their underlying clients, the institutions, and the corporations are piling into Bitcoin. Rothschilds, BlackRock, Harvard, Yale, Tesla, ARK Invest. Companies and funds alike are taking positions in Bitcoin, and we're moving towards a world where having, say, a one percent - two percent part of a well-diversified portfolio allocated to Bitcoin is about to become a rule of thumb. What is particularly interesting from the development the last quarter, however, is that in addition to all of the focus on Bitcoin as an asset for investment, we start to see more and more interest coming from what is more traditionally payment companies. Companies like PayPal, where you now can use cryptocurrency when you pay for your goods and services when you check out using PayPal. Venmo, that will also support buying, storing, and use of cryptocurrencies. Mastercard that has announced that they will allow for settlement of cryptocurrencies over their network. This is all very interesting. This shows how traditional payment rails are now integrating with cryptocurrency payment rails to enable the spending of Bitcoin over the traditional rails. However, in Arcane, what we are looking at doing and the future we find particularly interesting is the opposite. Where we can take traditional fiat currencies and settle them and transfer them over the Bitcoin blockchain and over the Lightning Network, this scaling solution built for instantaneous Bitcoin transactions. Where you can leverage the fact that Bitcoin is a digital bearer asset, not a claim on anybody. Which means that you can buy Bitcoin, say in Norway, send that to the U.S., and have final settlement, and if you send that Bitcoin over Lightning, you'll have final settlement within a second. I cannot send money from my Vipps account to my U.S. friend using Cash App, but I can go to Kaupang, or if I were in Sweden, to the Trijo, buy Bitcoin, and send to my U.S. friend using Cash App. I can do that on a Sunday, and the money will come into his account and settle right away. This is truly transformational, and this is where we see the next frontier for Bitcoin adoption. Right now, all of the focus is on the investment case, how digital scarcity at the time when the money printer or where central banks are printing money at a higher speed than ever before, all of the focus is there. Under the radar, we start to see more and more companies like Arcane seeing a future where we can leverage Bitcoin as a payment rail for traditionally national currency denominated transfers. That does not only give increased speed and reduced cost, it also gives the interoperability where different service providers can interact. Where you get away from the closed networks that has been dominating in the fintech space, and where you can get the same level of interoperability that we take for granted, for instance, when it's an email. Where I can use ProtonMail, someone else can use Yahoo, and a third person can use Gmail, and we can still all send money to each other. In light of this, it's particularly interesting to see companies like Cash App with native support for Bitcoin. Companies like Revolut that for a long time allowed its users to hold Bitcoin as an investment, but are now actually opening up for depositing and withdrawing Bitcoin, meaning that Bitcoin can become a part of their payment rail. It's likely that PayPal and others will follow because the benefits are massive. Disrupting global payments is a really big opportunity. There are really big frictions, and especially if you look at the digital space and cross-border. McKinsey estimates that around $2 trillion a year are paid in or becoming revenue, and basically frictions that are paid to those who are processing payments. These are frictions that Bitcoin can help alleviate. In a world that is ever more digital and ever more global and completely borderless, we need a settlement system, a payment rail that has the same characteristics. That is fully digital, that is open every day in the week, every week in the year, and that it's truly borderless, digitally native. However, it's not likely that we'll switch to a world where everyone starts denominating their prices in Bitcoin. Where everyone becomes a cryptocurrency expert, know how to store their own cryptocurrencies, take care of their passwords, and want to hold massive amounts of cryptocurrency on their balance sheet. What we are working towards in Arcane is rather to bridge the gap between the traditional world and these cryptocurrency payment rails by combining things like open banking and APIs, so that users and companies can still rely on their local bank. Pairing that with efficient exchanging in and out of cryptocurrency so that they can still get the benefit of using the new payment rails. Without having to deal with all the complexities pushed down into the back end. This is really where we see that Arcane can add value, both for payments, but also more generally making the world of cryptocurrencies more easily acceptable and accessible to traditional players. How do we do that? Well, we've taken an ecosystem approach, and we built a company spanning the value chain for financial services in the sector. If you look at other cryptocurrency companies, they're typically focused on one task and one task only. This is in stark contrast to what we see in traditional finance, where if you look at the bank, you'll typically find a one-stop shop where you can have asset management services, market research, payments, trading, all under the same roof. The reason you find all these services under the same roof in traditional finance is because there are strong returns to scale. There are strong synergies of having these different and complementary services in the same setup. This is the approach we've taken in Arcane. An additional benefit, of course, by building this portfolio is that we get diversification. We get a more robust exposure to the activity within the sector because we have more baskets to have eggs in. Looking at these different businesses, as I mentioned in my previous company presentation, all of them have different models, all of them have different markets they're going after. What has been key when we've decided what parts of the value chain to go after has been the possibility of having a scalable business model. If you look across our portfolio, almost all of the revenue will be generated either as a fee on a payment volume, a spread on a trading volume, or a fee on a trading volume, which means that once those volumes really start growing, 10x, 100x, 1,000x, the revenue grows in line with that. What does not grow at the same rate, however, is the cost base. This is the kind of the fundamental dynamics which will allow us to have a super profitable growth if we are able to execute well on these business opportunities. What is the status? Well, we're still a very young company. We're still at the start of our journey, and we've brought the products from ideas to live products and starting to see the first revenue streams. We're also at the very starting point, and most of our growth is ahead of us. That said, we're already seeing strong growth, percentage-wise in our revenue. In Q1, we almost doubled our revenue compared to Q4 last year, and we've made as much in Q1 this year as we did all of last year. Bear in mind also that this is revenue coming only from Arcane Research and Arcane Assets. Our portfolio companies, our associate companies, their revenue is not consolidated into our P&L. Kaupang Crypto, which we acquired at the very end of the quarter, will be consolidated, but only from Q2 and onwards. For Tesla Coil, the payment software, we are still pre-revenue. The total revenue in Q1 was around a little more than SEK 2 million. We had reported operating expenses of NOK 13 million. However, NOK 7.5 million of this is one-time costs linked to different particular events and legal costs that will not be recurring going forward. We ended the quarter with around NOK 54 million in cash and a reported result for the group with a loss of NOK 136 million. It's important when reading that number to bear in mind that the main reason for this reported loss has nothing to do with our actual operation, but rather how the reverse acquisition is accounted for. Due to accounting rules, and I will not go into the details of those, but it's purely a technical accounting matter, we had to book a cost of almost SEK 127 million related to the listing. Aside from that, the result ended up with a loss of SEK 9 million, which was in line with what we expected and really where we saw everything going. If you look more deeply at the different business units, Arcane Assets has had a great year last year and especially now in Q1. We have reached more than SEK 170 million or almost SEK 170 million under management. That is still a small fund, but it is also just the very start of the growth rate for Arcane Assets. We're seeing lots of interest for the fund. The fund has outperformed both Bitcoin and other cryptocurrency hedge funds as measured by the Eurekahedge index. To strengthen the team and accelerate the growth going forward, we have brought in two new people to the team who will really help fuel the growth of Arcane Assets going forward. Looking at Arcane Research, they doubled or more than doubled their revenue, yes, from low levels, but also by working with some of the biggest and most recognized brands in the industry. Arcane Research, for instance, published a 70-page report on Bitcoin as collateral asset together with Bitstamp. It's working with LMAX both on consultancy agreement and producing industry reports. Have entered into a partnership with BlockFi. BlockFi is an industry leader, and what we will do with Arcane Research is to produce bi-weekly, or as in twice per month, every second week, institutional reports that they will distribute to their underlying clients, securing a recurring revenue stream for Arcane Research. In addition to these B2B sales from Arcane Research, we have our weekly market report that we're selling on a subscription basis. That report has seen strong growth, and we expect that to accelerate going forward as we are now planning to spend more marketing resources on really driving that forward. Moving over to Arcane Technology, the business unit that develops Tesla Coil. I'm now happy to announce that we actually have live external clients. We have an instance running for Kaupang. We've licensed the software to Kaupang, and through Kaupang, there are now several small web shops, sponsor, and fundraising platforms that are using Tesla Coil to be able to accept Bitcoin over Lightning as a payment method. They end up with Norwegian kroner at the end of the day. This is, of course, just the very start, and almost like a pilot phase, where the intention is to use all of the learning points we are getting from these clients to really develop Tesla Coil into a Lightning as a service software that we can sell B2B to many other cryptocurrency players like Kaupang. We see that during the quarter, the fees for doing on-chain transactions in Bitcoin has really exploded and really validated the use case of Lightning, which circumvents or kind of avoids the high fees and inefficiencies of relying on traditional Bitcoin payments. Regarding some of the dialogues with the really large clients, where we are seeing a lot of interest, there's been some challenges. For many of those, having a very smooth on-ramp or off-ramp, in other words, a way for their end clients to easily go straight from a bank account or a credit card into Bitcoin, has been key to their willingness to go with this. Working with external on-ramp companies during a market in complete fire has turned out to be a little bit challenging because these on-ramp companies have been focused very much on keeping up with the growing trading volumes rather than exploring payments. We expect, however, that as either these companies get accustomed to the increased volumes or the market cools down again, the interest to work on exploring payments will come back. We're not sitting here and waiting for that to happen. There's a reason why we are in the process of acquiring Trijo. There's a reason why we acquired Kaupang in the first place, and there is a reason why we've implemented Tesla Coil for Kaupang. That's because these exchanges, Kaupang and Trijo, they are also on-ramps. We can build our own on-ramp. Kaupang is using open banking APIs today, and we are in the process of building deeper integration so that users on Kaupang actually will be able to spend Bitcoin over Lightning straight from their bank accounts. In addition, during the quarter, we have signed up two really strong and new resources who will join the team. They have a background from, amongst other companies, Telenor, where they successfully developed and set up a multi-tenant cloud-based solution for telco distribution. We are going to replicate that setup for Tesla Coil and build that integrated with Kaupang so that we can have a setup where we have one instance running, but where we can serve many different clients. That's the multi-tenant part. It means there can be many different clients and brands running on the same instance and really make us more able to scale and push this product efficiently. Moving over to Kaupang and Trijo. Kaupang, we went into an agreement to acquire last autumn and finalized that during the first quarter. Trijo, we entered into an agreement to acquire all their outstanding shares just after the quarter. Both of these companies have seen strong growth in trading volume. Trijo had a good trajectory all the way until the end of December last year, when their payment provider abruptly shut them down. That gave Trijo a setback. Trijo is now back live up again, supporting both SEPA transfers and credit cards and are seeing the growth picking up. Kaupang launched a new front end during this quarter and has really kind of started focusing more and more on OTC. Being a broker, Kaupang is in a unique position to offer deep liquidity to those who want to do larger trades, but also a wider variety of coins, depending on what the different users want. The long term plan here is to merge the operation of the two companies, to bring them on the same platform, to really leverage the returns to scale, to leverage the fact that they are using some of the same service providers and continue to build the exchange service and really capture that market. Also doing this deep integration with Tesla Coil, really enabling the payment flow and using these regulated entities as the bridge between the fiat world and the cryptocurrency world. Moving over to some of our portfolio companies, Pure Digital, the company where we increased our ownership to 37.5% during the quarter, had some really great news they could publish as well. They announced that State Street, one of the largest banks in the world, are exploring trading on Pure. Not only that, the subsidiary of State Street, Currenex, will actually be providing the technology to the platform and help building out the interbank market that Pure is building. During the quarter, Pure Digital has seen a lot of interest from many different investment banks and are in far coming processes with several banks that are getting closer to either announce that they have signed LOIs with Pure Digital or sign these LOIs. Going forward, expect a news flow of some of these banks going out being public about engaging with Pure Digital. What is so unique about Pure Digital is that it's the last missing piece in terms of trading infrastructure. We have platforms for retail, we have platforms for institutional traders, but we don't have platforms for banks. Where the banks now are coming into the sector, they are looking for infrastructure that is replicating the way they're trading FX, which is bilaterally, so that they can choose with whom they're willing to be matched, but also use credit lines on each other. That is exactly what Pure is building. Seeing the interest and seeing how the big banks are now finally coming into this market, it makes me extremely optimistic on the future for Pure. On the other end of the spectrum, almost, we have LN Markets, this derivatives market that is using the Lightning Network for instant deposit and withdrawal of collateral, meaning that you can open a margin position straight from your phone, have it open, and then make money or lose money, and then have the collateral coming straight back to your phone instantly afterwards. We increased our ownership because the team has really executed well and the market opportunity here is enormous. Even though the product is still in many ways in an alpha stage and was only launched a little less than a year ago, it's seen really strong growth and reached SEK 800 million in turnover during Q1. With the development and the roadmap they have, we expect that this can really accelerate going forward. If I take one large step back and look at where Arcane is headed. In the previous presentation, I talked about where we could potentially be in 2025, there's nothing in the updates here that makes this less likely. If anything, I'm more optimistic that we'll be able to reach this than before. What we're then looking at is a future where I can easily see that across the group, we would process around SEK 55 billion a year in trading volume in relation to exchange volume. On that volume, we expect to be able to squeeze out somewhere between one percent and two percent in margins. You might say, "Hey, wait, hold on a second. Isn't one percent and two percent really high? Doesn't the exchanges only take half a percent? How can you take out so much?" Well, actually here is where some of the beauty of working with payments come in, because it's correct that exchanges are taking out only half a percent as the market norm. If you look at payments, the standard is typically three percent. If in addition, you're doing a cross-border payment, so there's FX, there's at least another percentage, which means that the competition we're up against for payment flows is typically four percent. The other reason why we expect that we will be able to take out a higher margin is because we are going after a broker model rather than a pure exchange. When you as a user trade on an exchange, you don't only pay the fee that the exchange is taking, you're also crossing the spread. Looking at some of the other Nordic exchanges, we typically see spreads of 1.5%-3%. This is a cost to the user, but not a return or a revenue for the exchange. As a broker, however, being the counterpart to the trade, you can capitalize on that spread and take out a higher margin without the user actually paying more. If you look at the fund and the assets and management we think will be achievable, I can easily see a future where we can reach, say, a SEK 10 billion size of the fund. Our fund is actively managed, which means that we can take out a two percent management fee, but hopefully also some success fee. That will give the return from the fund in terms of revenue, somewhere between SEK 200 million-SEK 300 million a year. Combine this, and we're looking at a total of around or a little north of SEK 1 billion a year. The big question is, of course, what type of margin do we expect to be able to take out from this? Well, here comes the beauty of having scalable business models, which is that we can easily do well north of 50% on this type of flow. These numbers might seem large compared to where we are. At the same time, if you look at industry peers, company after company has proven that in this sector, it is possible to deliver on this type of explosive growth. If you look at the traction and the development we've seen during Q1, it's something that seems likely. I said that the mission for Arcane Crypto is to become the leading full-service digital finance platform in Europe. These numbers would be nothing near that. The day we have that position, these numbers will be way higher. That means that what I'm talking about here would merely be a stepping stone on a longer trajectory. I don't know if we reach these goals in 2024 or 2026, but that is not too important. The really important part is that once we reach these, it'll not be where we stop. I also want to highlight, of course, that part of this will come from growing and scaling the businesses we have, but part will also come from M&A and acquisitions and our intentions to take a role consolidating parts of the industry going forward. To summarize, Arcane has in only three years been able to build a portfolio, a group of companies spanning the value chain for financial services. We've listed this company, we've brought several of the companies to a phase where we're really starting to see accelerating growth, we expect this type of growth to continue going forward. We've strengthened our balance sheet, we have money to really accelerate our development. I'm extremely optimistic when looking towards the future. Thank you so much. We can open for questions. Yes. First question: What are the key competitors and eventually their market share, in the intersection between crypto trading and payment provider? Is there any main competitor out there doing this? There are different types of competitors. You have competitors that are operating in the stablecoin space, where USDC, Coinbase stablecoin, is targeting payments and working on that. That's a competitor. You have a U.S. company called Strike, or the company is called Zap, their service is called Strike, which is one of the leading when it comes to combining the exchanging payment and Lightning. There's a couple of others doing the same. I think, as I mentioned earlier, that all of these are competitors, but at the same time, this is a network market. We're at a very early stage where the more success a company like Strike has, the more success we will have. You can think of it as a phone-selling company. If you are producing Nokia, Samsung would be a competitor to you. At the very start of the adoption of mobile phones or phones in general, the more success your competitor has, the more users there are out there that can receive phone calls, and it's the same here. The interoperability that Bitcoin creates as the payment rail is what also brings us away from the winner-take-all dynamic, which we have seen in the past, where some players have been able to corner the market, and it gives us much more of the symbiotic and mutually beneficial competition, which we've seen for so many of the internet services. How is the cooperation with State Street going on? Implementing Currenex with Pure is a success? How can this contribute to a positive cash flow? I cannot share too much detail on the exact how the collaboration is going. In terms of the technology and implementation there, that's going well and according to plan, and the test environment is up and, as I mentioned, there's also another bank that has signed an LOI and is engaged with Pure, but that has not been ready to announce that engagement yet. Test trades and testing environment is up and running. In terms of cash flow, Pure will generate cash flow once trading go live and take a fee on that trading volume into Arcane. The value would most likely accrue as appreciation as the value of Pure increases, or in the future, potentially dividends. Is the mining industry something that you or Arcane has considered to enter into? Mining is a very interesting business that we are constantly looking at. We're not in a hurry. We see that Norway has very good conditions for doing mining, cold climate, low electricity cost, a little bit challenging political climate. It's an industry we find interesting and are following closely, but not something we have acted on yet. What about DeFi products? Will you be able to stake Ether in Kaupang or Trijo at some point? When it comes to staking, we will of course add support for that once that really becomes the market standard. However, there's a lot of other product development which we will focus on in the short term, making the user experience even smoother, adding wallet functionality to Kaupang, increasing the ease of use, and reducing the frictions and the cost. As payments is our main use case, and as most of the traders are, for instance, interested in Bitcoin, staking is not high on the agenda as the market looks now. Yeah. When we're onto exchanges, is there any reason why Kaupang has better volume than Trijo? I'd think that OTC is more limited due to the nature of opening hours. The main reason is the setback that Trijo was hit by when their payment provider decided to stop serving cryptocurrency companies, and Trijo had to go dark for a period, find a new payment provider, a new bank ID provider, and get back up again. That said, there's tremendous potential in the OTC model. Although the opening hours are limited now, our intention is to build out, and we are in the process of doing that, a new back end, which will be fully automated and operational 24/7 with a wallet as well. The OTC part is rather the fact that Kaupang can easily handle a large order of 10 Bitcoin, 100 Bitcoin, and just those types of orders with large clients. Do you give any guidance on the rest of the 2021 year in terms of top and bottom line estimates? We are not giving any guidance as of now. Yep. Okay. Last question. What is your opinion on Dogecoin? On the one hand, Dogecoin is a great example of the type of energy and enthusiasm you see in the sector. On the other hand, it's obvious that its pricing is ridiculous, that it is a pump caused by social media taking over, and it's also an example of a project and a type of dynamic that makes the whole sector look a bit more Doge for outsiders. I think what is really important is to differentiate the development you see around Bitcoin from projects like Doge. If you're an investor, you should be very careful with Doge. Thank you.