Unlocking Digital Assets: Tangany’s Path to Secure Crypto Custody

Speaker A: Welcome to a new episode of the Elevator Ventures podcast. I'm, um, Alessandra, your host and communication manager at Elevator Ventures. I'm excited to guide you through the dynamic world of venture capital and innovation. Broadcasting from Jena, right in the heart of Europe. Let's embark on this journey together and elevate your growth. Today's focus is on Tangini, a crypto custodian, enabling financial institutions, fintechs and corporates to launch secure digital asset services across Europe. Elevator Ventures. Noemi Sabour is joined by co founder, founder and CEO Martin Kreitmeier, uh, who will deep dive into crypto accounting, KYC compliance, staking NFTs and more. Let's get into it.

Speaker B: Hey, Martin. Welcome to our podcast. Thank you for taking the time to sit down for a brief chat today. As you know, this is a special period for us since we officially announced our investment into Tangany, which we are very excited about.

Speaker C: Hi, Naomi. Thank you for the invitation and the opportunity to be here today and to tell you and, uh, the audience a bit more about Tangany.

Speaker B: Then let's dive into our discussion. But first, can you share your entrepreneur journey with our listeners? What was the aha moment that led you to found Tanganyi in munich back in 2019?

Speaker C: Oh, that's a, uh, couple of years behind me already. So we are three founders at Tangany and we used to work together in the same company. So we started there in 2010 and worked there until, uh, 17. So seven years together in the same company. And I remember one of our co founders, Chris, came to me and told me something about some investments he did something about Ethereum cryptocurrencies. And I didn't care in the beginning, so it just, there were no interest and attention on my side on that part. And he, uh, came every single day to my office or to my, to my table and showed me the graph, how the values have increased and we have made money with Ethereum and invested into Bitcoin. And at some point, I think 10 days later, there was something, something happened, uh, in my mind as well. And I was, okay, what is he doing there? And I have to take a look. And that was actually the beginning of the journey. We went down the rabbit hole, started with investment into cryptocurrencies, but really soon figured out technology behind it. It's even more interesting. What's blockchain? What are private keys? How does it work? What's the innovative character here? And we dived more into the depth of blockchain afterwards. And at some point, a Couple of weeks or months later, uh, we eventually decided that we have to start something on our own here because it felt a bit like the Internet in the 90s. So I have been 10 or 15 years in the 90s. Um, but still it felt like there's something coming and it's a huge opportunity for us to be a part of that change that's going to happen in the financial industry. And that was actually the start. And then we decided to start Tangany.

Speaker B: Mhm. And what was the original mission behind Tangany when you launched it? And how has that mission evolved as the digital asset landscape shifted?

Speaker C: Actually it was quite similar to what we do today. We didn't do any, um, significant pivots or anything like that. The very first idea was a bit more about privacy and a bit more focused on the user, the retail market, so B2C product. But we always wanted to simplify the usage of blockchain and wallets and digitalized assets. It was very technical in the beginning, 10 years ago. So someone needs, uh, really had to know something about cryptography, about technical uh, basics and so on to really being qualified to handle cryptocurrencies themselves. Over the last couple of years that has been simplified by many, many players in the market. But back then it was really about complexity and security and privacy. And we ended up rather soon with the private key because the private key is the one thing that added the complexity for the user. And we thought, okay, what if we take care of the private key of a wallet and the user only interacts with us via an API where our API is integrated in some kind of interface and the user does not see the private key anymore. And with that the user doesn't see the blockchain itself anymore. And with that we have the same usability like with the web 2. So like the Internet applications we use every day. And that was the, that was our goal in the beginning and that focus on the private key. We found out rather soon, um, that we are going to be, um, operating in a regulated environment. So back then in the beginning everyone was allowed to do what we did. So you could do it from your basement alone at home, providing custody services to anyone in the world. But then the fifth um, AML directive from the EU was applied in 2020 and with that in Germany the custody license was also created. And from that start, or from that point on, we knew we had to become a regulated institute and to lift a startup mentality a bit behind us and going more into the regulated world environment.

Speaker B: Mhm. And how do you maintain innovation and regulatory compliance simultaneously being made in Germany, yet globally recognized?

Speaker C: That's an ever challenging, ever challenge, um situation. So being an institute means by definition being slow because you have to document everything. You need your processes, the process need to be documented, you need to lift the processes and the requirements. You have to lock your uh, activities, you have to put uh, your signature under the documents. There are a lot of paperwork, digitalized paperwork that needs to be done, um, which takes a lot of the spirit and the agility out of the team. But at the same time I think we managed to stay innovative, to stay interested in innovation, to see what happens, where is the market going? And especially our market, the digital asset market, it was created 10 years ago or 15 years ago with the invention of Bitcoin. So we are speaking about a market who itself is still in the early days. 15 years is nothing. And um, so the market is also ever changing every two years. It's like a turnaround of everything that is around us and we have to adapt accordingly. And that keeps us uh, fresh and also um, open for change. But at the same time we also have to comply with a lot of regulation. Mighty bit Dora, uh mer, the German Banking act, the AML Directive in Germany, the transfer of funds regulation and many many more um, laws which are applicable here. And that of course also takes a lot of um, investments on our side from a team wise side, but also from product, from processes, from everything that runs through Tankany is also touching on compliance. Mhm.

Speaker B: Martin, now let's move to the product part of the conversation, the core of Tangany. Can you walk us through the key components of the Tangany suite like digital asset custody transfer processes, crypto accounts, KYC compliance, staking NFTs and more.

Speaker C: Yeah, so you mentioned most of the services we provide already. So we are in custodian. We are regulated, um, crypto custodian based in Germany, operating under NICO license. And we can um, um operate across the European Union and even beyond that and associated um countries meaning what we can do. And we are B2B provider nowadays and we provide our services to institutions, banks, brokers, um, institutions, asset managers, family offices and so on. And they can use our service for custody. So we take care of the safe storage of digital assets. It can be anything from cryptocurrencies to tokenized assets such as real estate or debts to stable coins or NFTs. So we uh, take care of the asset security for cryptocurrencies. We also offer staking, so some kind of yield generating for different currencies like um, Ethereum, Solana or Cardano, where the customer can yield up to 5% per year. But we also offer transfer services for deposit and withdrawals in our regulated manner, meaning we take care of the travel, we take care of AML requirements and so on. So basically we do everything that is related to custody, custody itself, staking deposits and withdrawals, accounting, um, reports, um, and a few more services as well. And that's something we have decided very in the early days already that we want to be in custodian, but only a custodian. We do not offer trading for example. For that we have very close partners in the market. And every time a trader or liquidity provider is needed we bring in our partners as we believe in segregation of duties here. So there should be someone doing the custody. That party needs to be highly trustworthy, that needs a lot of transparency and then needs to be the other party takes care of the trading and execution of trades, which is a bit less sensitive in our point of view at least. And that model is highly appreciated in the market. Especially since the meltdown of uh, FTX three years ago. It became a kind of a standard that the segregation is in place between trading and custody.

Speaker B: And what should banks, fintechs and brokers do when they want to offer digital asset investments to their clients?

Speaker C: If someone in Europe wants to offer their customers uh, crypto trading or investment opportunities, first thing uh, surely is to reach out to us for custody. Um, now there are many players in the market so we might be one of the largest B2B custodians in Europe or especially in Germany. We are the largest one from my understanding for B2B. Um, but yeah, someone really needs to figure out how do they want to approach the product. They can develop themselves, apply for license, ramp up to tech, of course can also buy parts of the tech themselves, but they have to connect everything by themselves. In our experience that is not feasible, um, especially with the cost, time to market and um, audit compliance topics that needs to be covered here. And that's the reason why um, nearly all players outsource to some extent to third parties like Tengen. It might be only outsourcing of technical infrastructure. So we can only take care of the technical infrastructure we provide the wallets, the APIs, the accounting that the transactions on the blockchain itself and different blockchains are facilitated through our system on a compliantly way. Or they can outsource the full package meaning um, to the technical outsourcing that comes also the compliance outsourcing regulatory outsourcing, where we onboard the customer of our customer. So the customer of the broker also becomes our customer. Legally speaking, we provide the customer service directly to the retail um, sector. In that case our partner does not even need to have their own custody license. They can skip that one. And custody especially it's a bit more challenging uh, to receive from the authorities as you take care of assets from customers every single day. If you're only a trader or only a consultant, that potential damage is lower compared to being custodian. Like we have several billion uh, euros in SMS custody for nearly 1 million customers. So it's a lot of responsibility. So applying or getting a license, it's much more challenging here in that field. And so it's really someone needs to make clear what's the product they are looking for. And then looking for the best setup could be something like Tengany plus Market Maker, could be Tengini plus they are their own liquidity provider or they do everything themselves. So it's a mixed bag they can choose from. From our experience usually most of the services are outsourced because it's not worth doing it themselves without the scalability. Mhm.

Speaker B: So how does Tangen ease market entry and regulatory uh, onboarding?

Speaker C: So you mean how do we uh, start a new project with a partner?

Speaker B: Yeah, yeah. As you mentioned in the previous answer, can you give us some more details on how uh, do you show up as a partner for banks, fintechs and brokers?

Speaker C: Yeah. So once someone reaches out to us and signals an interest in our services or having their own project, um, piloted um, for crypto trading or any other crypto, um, service for the customers. We believe in partnership, meaning from the first days on we support our potential partners, we guide them, we bring in our knowledge from over 80 um, projects over the last seven, eight years. So we have seen everything in the last eight years. We know what works, what doesn't work and uh, what should be done and what should be avoided. And that knowledge is very valuable for someone not being a crypto native. And that is something we bring to the table before even the contract starts or the product itself has been launched by the partner. And once the final setup is defined, uh, the architecture, the technical architecture is set, then we bring also in our sales engineer experts, um, guiding our partners, how to integrate our solution, how to handle processes like reconciliation, settlement, deposit and withdrawal functionalities for users, what are the best practices here? And um, so if you are very close partner for all partners, that is how we understand ourselves and um, we believe we can only be successful if our partners are successful with their business case. And there's a reason why we try to support as much as possible.

Speaker B: That was very insightful. Thank you. Now looking forward as MICA regulations continue rolling out across the eu. How is Tangany preparing or adapting its services?

Speaker C: So yeah from our side we are ready for mica. We received um our MICA license in August by bathroom. Our custody and transfer services including staking, meaning um we can operate across the European Union uh and our service which is already operational in Germany for seven years now. It's basically the same solution for every other jurisdiction in Europe meaning any player in France, Austria, Estonia, uh, Cyprus, Sweden can reach out to us and using our service um, for their customers or to create a service for their customers or even for their own needs. So we also work with corporations um, like Porsche or Google Burst who use our service partially for their own um needs partially for awesome encryptor powered product. So meaning tanking is fully um MICA ready. We are also ready for dora. We have implemented the travel rule. All those topics are already covered in our solution. Also meaning then that our partners do not need to um, um work around that themselves. They can easily utilize our solution and that's the uh beauty of our solution between of tech and regulatory services combined in one product suite. And that is um, what we can provide already from today EU wide or even beyond that.

Speaker B: And having obtained MICA license, what are the next big milestones for Tangany?

Speaker C: The next big milestones are um, of course getting a broader visibility outside of Germany. In Germany we are well known to Chinese. Like mentioned before, one of the largest German B2B crypto custodian. Um, but that's not yet true in Europe and that is our goal here. It's also the reason for our Series A, to use the funds to expand our services across Europe. We want to repeat what we have done in the last six years in Germany, becoming one of the top players. And that is what we want to be the next five years. So by the end of the decade to be one of the top three B2B custodians in Europe when it comes uh, uh, for academic custody. And uh, that's our strategy here and um, to get there we have different milestones defined internally. Um, might it be product, might it be a tech, ah scale up, um, team setup. Um so we have a lot of ideas and um, um projects ongoing over the next five years to get to the point to become one of the

Speaker B: largest and we are excited to beg you guys in this journey. As a last question, for listeners interested in learning more or exploring your platform, where should they go first and how can they stay up to date to your activity?

Speaker C: Um, the easiest way to follow up on 10 minutes is it's on LinkedIn. We post regularly, um, about any activities internally as also externally with like partner collaborations and and so on. So LinkedIn is the primary, primary source for information. We also have a newsletter once a month up to once in a quarter. Um, and our team is it's very visible on different conferences in Germany but also in Europe. So it's very likely to uh, encounter member of Tangini in different blockchain or financial events in Europe. So I would say those are the three easiest ways, uh, to stay up to date with Tangany.

Speaker B: Martin, thank you so much for joining me today and giving us a deeper look into Tangany's story.

Speaker C: Thank you Kiyo, and you're welcome.

Speaker A: Thank you for tuning into this episode of the Elevate the Ventures podcast. We hope you gained valuable insights to inspire your venture capital journey. Be sure to subscribe for more episodes and leave us your thoughts in the comments. If you would like to be featured, have news about an up and coming startup, or would simply like to connect, feel free to reach out to us. Thanks for listening and talk to you soon.