Okay. Thanks everyone for joining. Alex Markgraf, research analyst here at KeyBanc. Excited to have Pascal and Jason here with us from Coincheck. Why don't we start just with a quick introduction to yourselves and the Coincheck platform. We'll dig in much further, but maybe just kind of high level, introduce us to yourselves and the platform. Absolutely. Pascal St-Jean, I've been the CEO since April, and I came in through the group through the 3iQ acquisition. The Coincheck Group platform really is a continuation of the mission that we've been set as a team for almost a decade now. The two growth engines that we have right now, which is essentially execution or exchange and asset management, those two companies or those groups have been in the space for almost a decade. 3iQ since 2014 and Coincheck since 2017 in Japan. The mission was always to bring access to crypto to individuals. Now you got to think, a decade ago, no regulation, uncertainty of the asset class. Retail was the natural user, and it was very difficult for retail to gain access to crypto. How do you simplify that? You create an exchange, you create that's regulated, you create ETFs, et cetera. Now, like any disruptive tech, as you move up the bell curve, where are we today? Clear regulation. I know clarity hasn't passed yet, but globally, regulation's as clear as it's ever been. It's creating tailwinds for a lot of companies. Institutional adoption is here. Everyone's testing out crypto rails. What are we going to do with this? What does that mean? That means that continuing the mission of giving access means we need to start shifting our approach. That approach has started several years ago, which is to become an institutional partner of choice. That means mostly infrastructure. Where are all the users? The users are with the banks, with the asset managers, with crypto exchanges, with wealth managers, as a Coincheck Group, we provide multiple services, infrastructure, execution, and asset management to those institutional partners to reach as many people as possible to continue our mission. And just maybe to hit on the scale of the business today Yep Speak to that and then just sort of maybe bifurcating between the more direct channels and indirect channels, who users and customers are. Yeah characteristically. You got to think right now, this industry itself is having sort of a pivotal moment. I was talking with someone before. You see Robinhood get into crypto, Coinbase getting into equities. The reality is the concept of BlendFi is happening, which is where we thought the space would always be. The reality, and I have been in disruptive tech my whole career, this idea that crypto was going to replace everything and be its own thing, it is not the case. If success was going to happen, which we are seeing, it is natural that this integration was going to take place. Everyone in the industry that has been here since the beginning are trying to reinvent themselves. You got to think of Coincheck Group as that. To your point, Alex, we do have what we call our legacy businesses that are quite well-positioned. 3iQ Corp. is the leading crypto asset manager in Canada by far. In Japan, we are continuously ranked top three from an exchange perspective. In our native organic businesses, we are in a position of strength and power in our key regions, and that has created sustainable cash flows to help continue to expand the business. In terms of where we are going on the institutional side, we have taken that pivot for quite some time. We are now in eight different jurisdictions, license-wise, capability-wise. Who are those customers? Those customers are institutions looking to gain exposure or to give exposure to their customers. Think of banks looking to get into crypto products and need a partner, whether that is infrastructure or asset management capabilities. Think of sovereign funds saying, "We want to allocate beyond Bitcoin. We want active strategies. Who has that pedigree to be able to manage that?" A telco in Japan saying, "We want to create a whole financial services arm. We have 70 million users. We want to leapfrog legacy tech and build this whole new business on chain. Who do we pick to help power all this?" Coincheck Group, right? The customers have shifted, but the end user sometimes is still retail, but we are just going through institutional channels. Different channels. Yeah. Yep. Understood. BlendFi is a new one for me, but I am going to steal that. I like that. You touched on legislative regulatory tailwinds earlier. Yes. With a significant presence in Japan today- Yeah Can you just kind of bring us up to speed as to what is happening on the ground in Japan? Some pretty notable updates. Absolutely. Japan regulated crypto relatively early after Mt. Gox and those kind of things. They had a Stable Coin Act, and then they also had some regulation to say, "Well, how should capital requirements be treated for a crypto exchange and AML KYC?" Which enabled the industry to grow to where it is today. From the next level in terms of expansion, in terms of who can access it, wasn't an enabled infrastructure, so institutional could not access it. It was really just retail. Retail could access it through exchanges, but it was treated as income and not capital gains. There was a lot of tailwinds that became headwinds. A lot of people were excited about Japan, and for years they were saying, "We want to get in." Coinbase came in and left. Kraken came in and left because everyone was saying, "How long is this going to take?" We were already in Japan. We sit on the crypto subcommittee with the regulators. We have a first-eye view of where things were going. As of now, as of this year, there is a clear 18-month roadmap. Now the headwinds have turned into tailwinds, and what does that mean? There are three phases. Phase 1 is regulation shifting from the Payments Act to the Exchange Act, which means it is becoming a security asset instead of a payment asset. That is going to change tax codes. It is going to change who can access it. That unlocked phase I, which is now traditional institutions could offer that through an introductory broker agreement, which is what triggered a lot of our recent partnerships. Phase II, which is going to be about in a year, give or take, is going to be the access to trust structures. Let us think of ETFs, mutual funds, hedge funds, anything like that will be distributable, and now that is going to bring in institutional capital. Then phase III is tax reform. It is going to go from income to treat it into capital gains in line with Japan's global national strategy of what they call asset formation. They have been pushing hard basically NISA accounts, which are your Roth IRA type equivalents. They have been trying to promote Japanese to go from cash and treasuries into more investable assets, and they see crypto and tokenized products as a way to tap into the younger market. That is great. Clearly a lot of, or many tailwinds, not just in Japan, but globally. Yes. Coincheck has been active on the M&A front a s a public company and building, as you described them, legs of a stool to support this broader initiative. Now in the process of unifying the platform. Maybe just walk us through the deals that you have done Yep And how they kind of support this vision of a unified platform. Right now there are legs to a stool. It may become a chair, as we were talking earlier. At a high level, we see M&A not as the only strategy, but as a tactical, powerful tool to the overall strategy. Today, the three legs are infrastructure. Think of staking and custody, primarily in Japan right now. We already had built that for our exchange, and a bit like how Coinbase had started that way. Now we are, with clear sort of expectations of what institutional custody expectations are in Japan, we are pivoting to be able to service that. That part of the business is being spun out. Without having to do M&A, we are spinning out sort of the infrastructure side. NFT, which was one of our acquisitions, which was the staking company, is being put into the infrastructure play. Think of custody and staking as the beginnings of infrastructure. 3iQ Corp. was brought in to kickstart what we feel is a very important part of the three-legged stool, which is asset management. Think of exchanges looking to offer new products and new yield capabilities for their users, are looking for a global partner. Banks looking for, like our Scotiabank deal was a clear example. Other asset managers who want to get into crypto would need a crypto partner. Asset management is definitely a growth vector. Of course, execution, which is where, of course, Coincheck, Inc., our Japanese exchange, built a lot of the capabilities to not only service Japanese retail, but a lot of the institutional execution partners which we signed. Then finally, Aplo, which was again, a tech bolt-on play. Think of, as we see execution needs going up, their smart auto routing technology, their team, et cetera, really allows us to take a legacy technology which we had and really go from low volume trading to high volume servicing. Those acquisitions were bolt-ons. Where does that lead us moving forward? Like I said, we are looking at M&A that could bring a new leg to go from a stool to a leg. At the same time, tactical M&A that could expand the existing lines of business. Yeah, I would just add then, since the evolution of the company, what that has done is when we first went public, we were really very reliant upon trading, spot trading via retail demand. Through those acquisitions, specifically 3iQ and the staking acquisition, we have more recurring, stable revenue that is a bit more resilient in times of downturn. Then now from growing our assets on the platform, we have the assets under custody, which is our retail assets in Japan, plus the assets under management through 3iQ and the asset management side. This Crypto as a Service effort Yep That is ongoing and sort of exposing a lot of the great infrastructure that Coincheck has to partners, Mercoin, KDDI. Maybe just, Jason, if you could talk about how we should think about the nature of those relationships, the ramp timing around those, catalysts for those to start to show up. Then just as you think about distribution and efficient distribution, how that differs from the sort of the core, the legacy Japan exchange. Yeah, from a ramp-up perspective, we have already seen significant traction from an account growth perspective. I think the real question is, which we cannot certainly predict when there was the crypto market specifically rebound, but we have already seen account activity. When we see additional assets come on the platform, when we see trading, that is to be determined, probably aligns with when we will see increased volumes overall. Pascal, I am not sure if you have anything else to add. But on the distribute, it is very similar product that we are offering on the retail side. It is just through a different channel. That user experience is somewhat similar. To look at the exchange side specifically, whether it is our organic users or our channel partners, Crypto as a Service. Think of the whole world is, going back to the BlendFi concept. Every execution exchange is trying to. As things move on chain, and Nasdaq going 23 or 23.5 or something like that. Blockchain is going global. At some point in the next five years, every tradable asset will be on a unified sort of infrastructure. Which means that whether you started as a retail brokerage account, moving into crypto or started as crypto offering tokenized stuff, it is all going to look. It is going to be more around the user experience and how do you get to the users. Yeah. If you think about Mercoin and KDDI, like I said, KDDI is a great example where it is not just about can we offer Bitcoin to our users. That is where you start, right? Because it is the simplest to activate. But they are looking at this as how do we build a top 10 financial services app for Japanese retail, built leapfrogging legacy technology. Think about all the things that have to be built to be able to offer those capabilities over time without telling you exactly what the roadmap looks like. Think of how you monetize those users. You have a channel partner that already has 70 million users looking to get into financial services pretty aggressively, choosing to go natively on-chain, starting with crypto trading, moving to other types of trading vehicles, and asset management capabilities over time. The whole platform play makes sense there. Same thing with our organic users. Our users are asking for more than just spot crypto, and we are trying to meet that demand. It was impossible until the change of regulation. This FIEA transition is really unlocking a lot of opportunities, and we want to continuously be the best experience to our users. Naturally, the things we're going to build there, and this will be announced in the coming quarters, will make their way into the channel partners as well. We're solving a problem that those channel partners have as well. They have the same problem. They're trying to figure out other ways Yep To monetize their customers. Correct. So- Sure This is an efficient way for both of us to achieve those goals. Yeah. Not just Japan, of course, right? This is correct. This is a global opportunity, and the idea is to kind of extend this. Yep beyond Japan, right? Yeah. Yeah. Correct. Yeah. Correct. Jason, you talked a little bit about the evolution of revenue mix. I think it's still fairly early in terms of contribution from some of these non-trading components. Maybe just help us think about how the- Yeah The model should evolve, and then as we think kind of down the P&L, how some of these things will impact the model. Yeah, just to give some numbers, even just like quarter-over-preceding quarter, our revenue mix was like, adjusted trading revenue was like 75% last quarter, and this quarter was like 64%. Right. Full quarter of asset management revenue, full quarter of additional staking revenue, which kind of think about that as more of like on the asset management side. To give a sense, obviously that depends on what the trading volume is. We, of course, would like more trading volume. Yeah. But the last two quarters were sort of consistent from a volume perspective. It just gives you a sense of more of the resiliency of the revenue mix. Mm-hmm. Just in terms of operating leverage and sort of discipline at the expense line, ability to manage that through the course of cycles. Maybe speak to that a little bit, just in terms of what's necessary to keep the core business running. Yeah, we feel like we are pretty well-stabilized from an expense perspective to manage our core operations. We, of course, are deploying cash to new product development, new channel partners. But overall, to put it differently, at the extent that the trading revenue increases over where we are at, the majority of that drops to the bottom line. We feel the expense and on the customer acquisition cost side, we have been pretty well-disciplined and consistent over the years. And the new channel partners, we have been targeting those to be as cost-efficient, if not even more economical. I think the two core engines, it is not our first winter. Yeah. We have been through this. Sure Battle tested before, understanding when it's coming, starting to see sort of the leading indicators that would lead to that and sort of shifting that way. We think these are great times to build. It's like the noise has just disappeared. There are valuations for things that make sense from an M&A or from a partnership perspective, become much more reasonable where people have a- Yeah Their ego in check. The conversations that we're having are much more productive than when you're in the middle of a cycle. People are like, "Well, Bitcoin's going to 1 million next week, and so my value should be this. Yeah. It's just impossible to have an adult conversation- Right In the space. This is great time to build, and in terms of operating, we've been there, done that. I think this is the culmination of decisions we've made years ago of saying, if the space continues to evolve in a positive way, where will this go? How do we position ourselves to take advantage of that? Nothing that we're doing now is reactive. This has been planned for a while. Yeah. Yeah. Yeah. We did the capital raise with KDDI in Q1. We executed on that. That allows us to, again, we've been disciplined on the expense side. Yeah. But at the same time, it's given us the ability to invest Sure during this downturn crypto winter to be well-positioned when things turn a bit. Yeah. Yeah. Just to bring a few of these things together, you talked about non-crypto tradable assets kind of coming together with crypto assets, revenue diversification. Help us think through how this roadmap looks for Coincheck, for example, in terms of expansion beyond core sort of crypto, whether it's within asset management or the exchange, just how we should think about that evolution to a multi-asset platform. Yeah. Again, coming back to revenue diversification, cycle resilience, things like that. I'll paint you a picture of where we believe trading is going. Everyone will get to that destination depending on where you came from. Sure. I met a startup, and I think they best describe where things are going. Their goal is, tokenized equities, right? And indices, derivatives, up to perpetuals, and crypto, and spot crypto, all on the same infrastructure, all cross marginal, tradable 24/7. Now, they're building that engine, right? They still don't have the volume, but fundamentally, this is where things are going. Yeah. You bring in, you add on prediction markets and everything else. That's what people want. Now, how do you build that to offer that? That's where you could go and plug in a bunch of different legacy tech, or you could try to build natively on chain. We're choosing to build natively on chain to be able to, longer term, offer those things. I won't say it in what order, what mix. Sure. But that's the painted vision of where all of trading will end up for everyone globally, right? Anything, anytime, everywhere. Yeah. How do you get there, and how do you get there most cost efficiently? That's where execution becomes important. That's what everyone wants, whether it's our channel partners or our users, or whether it's another exchange, that's where the North Star is. For us, it's how do we get there as efficiently as possible over time, depending on the jurisdictions we're in, and what the partners want, and the regulation, right? Okay. You navigate those levers. That is the product roadmap on the trading execution side. When you look at monetization of everything else, asset management is that nice stable thing. At some point, we have been talking to payments companies or others. At some point, some are moving into stable coin issuance. Yeah. We know a company in the Middle East super well, that what they do is they plug in with African banks. They want access to U.S. Dollar. They do not have access to SWIFT. USD 100 million a month is converted from local currency to USDC. The first step was let us build a platform. That is what this company does, build a platform that gives them a flight to safety. Now you are in USDC, you feel you have access to a better currency. Now you are on chain. Now the question becomes, how do I do something with that? You are not going to go back to your bank into your local currency and into a local mutual fund. You are saying, "I want access to the U.S. markets. Sure. That is where tokenization comes in. That is where the asset management comes in. Think about distribution. For us, it is not just about crypto products to TradFi. It is also about blended products to now the growing crypto on-chain economy. That is where we are focusing our asset management arm is to service all of those users. Again, painting a picture of where Yeah things are going. No, that is great. Yeah. Just to pull together some of these, the conversation on some of these growth opportunities. To crystallize it a bit better, if you think next 12 months, next 3 years, Yeah what are you guys most excited about? Maybe Jason to kind of chime in here from a resource standpoint, headcount, capital. Does it feel like you guys are in a great place to address some of these? Pascal start with some of the top ideas next 12- Yeah 36 months. Next 12 months and then the next 3 years. Yeah. The next 12 months is distribution. What does that mean? That means more channel partners that will help more rapidly monetize one of those three channels, whether it is starting with custody, whether it is starting with execution or asset management, there are three legs in. You are going to continue hearing more of these types of distribution channels where people are choosing us for our infrastructure or asset management capabilities or our execution. Then between the next year and the three years, two things are going to happen. The Japan catalyst is going to kick in, and then we will have won mandates. We are winning mandates. We will have won mandates in different regions, and so our licenses that we have in different regions are going to expand its capabilities. We have some licenses that are asset management only are going to expand to offer full platform capabilities. That takes time with the regulators. It takes a year and a half, et cetera. We are building that out. Those channel partners will want to expand services, so your trading partners will want asset management capabilities. Your asset management partners will want execution capabilities. It is the land and expand that I was talking about. So 12 months, distribution. Three years, land and expand the platform across those key partners. Okay, great. Yeah, what I think about from a headcount perspective and resource perspective is we've been building to get ready for this. Yeah. 3iQ, even before the acquisition, had been building to be much more sizable to scale on the asset management side. While there's probably some incremental needs, the sales teams are there, the licenses are there, the resources are there from the distribution side. Obviously there's some, but more- Sure Of we're that's what we've been preparing for. Yeah. Okay, great. You talked about stablecoins a little bit. I am curious just from the Coincheck perspective. Is there something to think about in terms of opportunity to participate in a more direct way? Japan stablecoin conversations are happening. Yeah. Yeah. Yes. In terms of how to partner with stablecoin issuers or companies that are utilizing stablecoins, we see it much more on the asset management side. Because again, at some point you are accumulating a lot of stables and users will want to deploy it in different ways. Yeah. Okay. Maybe we spend a minute or two on competition. I think it is, you touched on it earlier, but a lot of entry and exit from global peers historically. The environment is changing in a more favorable way Yeah For crypto native organizations. Just kind of describe who you are seeing today and how you would expect the competitive environment to evolve in the context of both the regulatory updates, but just general maturation of the ecosystem. Yeah. Let's take the asset management Sure Japan and then the platform. Yeah into context, right? On the asset management side, 3iQ was one of five that broke, call it gravitational pull of scaling in the, call it the 2020 to 2022 cycle, right? Us, Bitwise, Grayscale, 21Shares, et cetera. And then there was a lot of just small local regional asset managers that had two LPs and a fund and it is impossible to scale when you have 25 JPY-50 million in AUM and you need a compliance officer and a sales team. A lot of them died off, especially since they were charging 220 to hold Bitcoin. I am like, "That is going to disappear." Long story short, from our perspective, those are still competitors on the ETF front. But ETF is one of four lines of business. We chose to not go head-to-head with BlackRock, saying that is going to be impossible. We are going to provide those services to those who want to compete with BlackRock. We have done that, and now we are a multifaceted asset manager. From that perspective, on the hedge fund side, we are the largest platform in the space. We have just launched our first vault. We are on the on-chain side, and we have built that slow and steady because we want it to be not cowboy, but institutional grade. We are about to announce something super exciting, which I will not say here, but on the next earnings call through the Aplo integration, which is going to unlock lots of institutional pipeline demand. On the asset management front, we have the alpha and trading engine. We have our pipes and plumbing for distribution, and then we have our capabilities to service any customer. That is not to say that there is no competition Sure But we have positioned the asset management to be an institutional grade. Yep. That is going to be difficult with those. On the Japan side, there are two other major exchanges and then one recent acquisition. SBI is buying, it is closing on bitbank, and bitFlyer is also a competitor. None of them position themselves for Crypto as a Service, and none of them have the global experience. Right. Think of as Japan evolves on the retail native side, there is definitely pressure and competition for who is going to be. If you are going to be a retail trader and are choosing between one of the three platforms, sure. It is competition, and we were winning some, and we are always pretty high up there. But in terms of how we have pivoted to take the tailwinds, none of them have had that experience. Now we have an asset manager who was first globally launch ETFs, educating the Japanese sort of institutions on how this is going to happen. We have custody being transformed, and then we have Crypto as a Service. Everything we have built infrastructure wise to service non-crypto trading partners. We feel quite confident in that pivot. Okay Yeah. I'd like to end on confidence. We're up on time. Okay Thank you guys for joining us. Thank you so much. Everyone for listening.