Fuze Qorus-Infosys Finacle Banking Innovation Awards 2024

Fuze – main results so far: 2022 - Established 2023 - Licensed and regulated across multiple jurisdictions 2023 - Largest seed funding round ($14 million) for a digital assets start-up in MENA history To date: 70 institutions and professional investors acquired as customers (OTC) Total trading volume (OTC) – more than $500 million Average trading volume – more than $1 million a day Customer acquisition/signing (DAAS platform) – 2 going live in next 3 months. 20 sandbox customers. (Please note - roll-out of DAAS B2B2C products is ongoing and too early in the roadmap to share results)

Concept and objectives

Fuze – addressing an opportunity for innovation Fuze is a regulated digital assets infrastructure platform that is enabling the Middle East’s rapidly growing digital assets market. Between July 2022 and June 2023, the digital assets value received into the Middle East and Africa was determined to be worth $506.9 billion, accounting for just under 10% of the global market share. Around 80 million people across the region are digital assets owners and 82% intend to increase their digital assets investments in 2024 (vs 70% globally). Within the UAE specifically, 67% of transactions were defined as institutional (above $1m transactional value). These statistics demonstrate the necessity for digital assets infrastructure that caters to a growing base of professional investors, and the provision of digital assets technology that empowers banks and fintechs to serve a wide (and growing) pool of regional retail investors.

Fuze – driving a more connected financial ecosystem Fuze is shaping a world where finance is faster and more transparent. Where systems are streamlined, with more efficient processes. We are not just imagining this ecosystem, we are building it and helping to launch tomorrow’s finance, today.

The Middle East has typically had a sizable gap between the ‘served’ and ‘unserved’/ ‘underserved’ through traditional finance. 85 million adults in the MENA region are unbanked and missing out on the advantages of formalized finance. Unstable local currencies and a lack of access to traditional and digital banking services has left a large tranche of the population marginalized. At Fuze, we believe that cryptocurrency and digital assets products can empower a fairer financial ecosystem that fully embraces every potential demographic, no matter their income, location or demographic.

In addition to this, the UAE in particular, is becoming a global hub for digital assets. Some of the world’s largest players have moved operations to the UAE, including the family offices of Ray Dalio and Nassef Sawiris, and leading hedge fund, Brevan Howard. The UAE also has a high proportion of high-net-worth individuals (HNWIs) – Knight Frank estimates 228,000 will be living in the Emirates by 2026.

As the UAE continues to welcome family offices and HNWIs, the infrastructure to accommodate their investments has surged. ADGM has announced that during the first quarter of the year, assets under management skyrocketed by 211 percent compared to the same period in 2023.

Fuze is providing the critical digital assets infrastructure that empowers institutional trading and underpins the roll-out of consumer-facing products through banks and fintechs.

Fuze – prioritising regulation and compliance To address this huge opportunity, Fuze was established in 2022 and incorporated at Abu Dhabi Global Market (ADGM) in the United Arab Emirates. It also set-up further key offices in the Emirate of Dubai and in the thriving digital assets hub of Istanbul. From day one, Fuze has differentiated itself from other crypto infrastructure players by placing regulatory compliance at its core, understanding that financial incumbents (institutions) could only partner with infrastructure providers that met rigorous scrutiny. As such, Fuze is a regulatory conservative company with multiple licences. It is one of the first Virtual Asset Service Providers (VASP) in the UAE to receive approval from Dubai Virtual Assets Regulatory Authority (VARA). The business is also: licensed and regulated by the Financial Services Regulatory Authority (FSRA) to operate at ADGM; completed anti-money laundering (AML) registrations in Turkey under the Financial Crimes Investigation Board (MASAK); and is licensed in Lithuania as a VASP, registered with the Financial Crimes Investigations Service. Fuze also follows bank standards of risk and compliance. Digital assets sit on our balance sheet, not our partners’, enabling clients to maintain arms-length exposure to digital assets, which is beneficial to them from accounting, risk, and regulatory perspectives. Clients’ assets are also fully insured against unforeseen risk and sensitive data is hosted in locally placed servers to ensure data security. Fuze is also compliant with the Financial Action Task Force’s (FATF) reporting standards for VASPs.

Fuze – serving our customers Fuze offers two core service lines: 1) Digital-assets-as-a-Service. A first of its kind regulated platform that enables banks and fintechs to integrate and embed regulated digital assets products. In essence, it ‘fuzes’ blockchain technologies with traditional banks/fintechs, with Fuze handling the entire blockchain complexity and regulatory overheads. This supports institutions with their innovation and facilitates more connected and inclusive finance, with lower costs, faster transactions and reductions in fraud and human error. Through simple API integration, banks and fintechs can launch multiple in-demand digital asset products, including cryptocurrency, stablecoins, CBDCs and tokenized assets. 2) Over-the-counter (OTC) – a regulated, technology-first service for institutions and professional investors to execute digital asset trading. Built for scale and institutional in its nature. The OTC desk has a smart-order-router for best execution. Algorithmic order capabilities (TWAP, VWAP) and deep liquidity pools via market makers and LPs. Clients can integrate and trade via chat, voice or API and receive transparent pricing and white glove service. Customers can interface directly with Fuze and confidently conduct larger trade sizes in digital assets efficiently and securely.

The Digital Asset Management System enables institutions to launch, monitor, and control all their digital asset products. It provides high-level insights or transaction-level details in one place. Embedded into the system are reconciliation, compliance and risk reporting - as well as granular controls to ensure every stakeholder has the exact access they need. Furthermore, institutions can enable or disable digital assets that are allowed for users, as well as the ability to set thresholds for buying and selling. To be eligible to trade, all potential customers must go through an extensive KYC/CDD process and can only gain access to trades after successful completion of these processes.

Fuze – security at the forefront Enterprise-grade security infrastructure is in place to ensure optimum standards for security and compliance. To do this, network security is implemented through VPN access layers, firewalls, and approval processes. Multi-party computation (MPC) custody is also employed to eliminate the risk of a single point of failure and to securely manage and safeguard digital assets. Continuous penetration testing is also carried out through regular tests and audits to ensure infrastructure impenetrability. Reserves and holdings are monitored in real-time and impose controls instantly. Lastly, Fuze is externally certified, earning National Electronic Security Authority (NESA) recognized certifications, such as SOC2 and ISO 27001.

Fuze – state of competition Fuze has a regional-first model and is based in the Middle East. As such, the business has a first-mover advantage and is differentiated from international players. There are certain global businesses which provide lessons for Fuze. New York-based Paxos (regulated blockchain and tokenization infrastructure platform), has attracted strong investor interest, raising over $543.5 million over seven rounds of funding. Chicago-funded Zero Hash (B2B2C embedded infrastructure platform) has raised a total of $169.9 million over 12 rounds of funding. There is a blue ocean opportunity for Fuze in the Middle East and we have already attracted significant interest, from investors to customers, to our world-class platform.