Haseeb Qureshi is the head of strategy at Dragonfly, a US fund that has already invested in more than 150 crypto companies. He shares with us his view of the market and explains why, in his view, the US, and New York in particular, has become the epicentre of the crypto industry.

The Big Whale: You've been working in the crypto world for years. What motivates you the most?

Haseeb Qureshi: I'm convinced that the world is going to change significantly, in ways that most people don't realise yet.

When I started working full-time in crypto in 2017, it was before Libra, central bank digital currencies, the FTX collapse, SEC lawsuits and all those stories. At the time, crypto was still very marginal!

What fascinates me most is seeing how crypto, which I really believe in, develops over time. It's one thing to know that the internet has become inescapable, or that social networks are ubiquitous. But how did it really happen? It's like the great battles of history: we know the victor, but the details of how the war was won are often unknown.

I believe that crypto will become an essential part of the global financial infrastructure. But how will this happen in practice? I don't know. Being an investor is my way of having "skin in the game" and showing that I believe crypto will come into its own.

When did you first become convinced that you wanted to be in this industry full-time? Was there a triggering event?

I had heard of Bitcoin long before I really got involved in crypto. But I saw it simply as a means of payment for international transactions. I hadn't grasped the underlying geopolitical and financial implications.

It all clicked when I was working at Airbnb in 2016-2017. Airbnb pays people in over 50 countries, and users think that someone on the other side of the world gets paid instantly when they pay by card. But in reality, there is no system that pays people anywhere in the world 24/7.

The system I was dealing with was a nightmare: a tangle of different payment systems that don't communicate with each other, don't have the same formats, and don't work 24/7 or internationally. We're talking about systems created in the 1970s.

When you see just how dysfunctional and unsuited such a system is to today's world - which is global, digital and operates 24 hours a day - a software engineer's first instinct is to throw it all out and rewrite it. To start from scratch with something designed for the world we live in today. That's when I realised that's exactly what crypto was.

How do you see things today?

I never believed we'd all be paying ourselves in Bitcoin in 10 years' time. I think that's a ridiculous statement. But I do believe that the way we use money in 50 years' time will be very different from the way we used it 50 years ago. And crypto will certainly play a part in this evolution of money.

The crypto industry has changed a lot in 10 years, particularly with the arrival of many companies. How do you strike the right balance between an industry that was originally very community-based and this much more business-oriented prism today?

One of the strengths of crypto is its total openness. Some people are worried about BlackRock, JPMorgan and other big banks getting into crypto. But the very principle of an open platform is that anyone can use it as they see fit.

That means BlackRock can use it as they see fit. And whatever they do, it doesn't stop you from keeping your bitcoins, being against the financial system or anything else!

The reality is that the very principle of openness is that, if someone creates an application on that platform, it doesn't stop you from doing the same thing. Linux was open source and the fact that Google used it to create Android never stopped others from using Linux in their own way.

That's the nature of cryptocurrencies, bitcoin, ethereum and all these technologies. No one can stop you from using ethereum, not even BlackRock! Ethereum is currently in a BlackRock ETF, and in parallel, countless projects are developing in decentralised finance (DeFi).

Can't states prevent use and construction in the crypto space?

Look at Tornado Cash which has been sanctioned by OFAC (Office of Foreign Assets Control). The US is the most powerful government in the world, yet people are still using Tornado Cash.

States have real power, there's no escaping states, but the technology will always be there, and states only have a national impact. If you're American or within range of OFAC, you won't touch Tornado Cash. But if you're Chinese, maybe you don't care.

If you're in a country that doesn't respect US sanctions, you can do whatever you want.

What is your thesis or the main topic you focus on in cryptocurrencies?

I don't adhere to any particular thesis. I'm an investor who doesn't rely on preconceived ideas. I'm not particularly enthusiastic about the DePin, the DeFi, Layers 1 or Layers 2.

What I am enthusiastic about are great founders and their ideas. If I meet a great founder who is building something in DePin or DeFi, and I think it's a great idea, I'll invest. One of the best examples is Ethena (a new algorithmic stablecoin, editor's note).

We led Ethena's funding round in 2022, shortly after Terra Luna collapsed. At the time, nobody wanted to touch stablecoins or DeFi. We met a founder, thought his idea was great, and invested.

"What do you think is the most interesting thing about Ethena? Why are they going to succeed?

The cash and carry trade, which is what Ethena is all about, is one of the oldest strategies in crypto. It's an extremely simple strategy that essentially involves lending money to people who want to take a long position (a bet on the asset going up, ed.).

Normally, to do this, you'd need to have access to a hedge fund, or be a fairly sophisticated trader. But Ethena has managed to tokenise this transaction and make it accessible to everyone!

What makes this concept interesting is that it's a delta-neutral transaction, meaning you have no long or short exposure to the underlying crypto. You only have exposure to the dollar and your return depends on how much you get.

There has been talk of tokenising different assets for a long time, but it's going to take a little time. On the other hand, we can already optimise market operations such as cash and carry trade.

All the big market-making firms do it. So it's only natural that people in crypto would want to too. So why not just tokenise it, make it easy, programmatic and algorithmic? Then you can treat it like stablecoin and use it as collateral. In fact, that's exactly what Blockchain has started experimenting with Ethena.

When we talk about crypto and blockchain, it's very often about finance. Do you think that will remain the case?

If you look at everything that has really worked in crypto over the past 10 years, there is no doubt that it is primarily a financial subject.

Bitcoin paved the way for digital payments, Ethereum brought smart contracts, ICOs are about fundraising, DeFi is about lending and trading, NFTs are about non-fungible financial assets, and this will continue.

How do you see Asia? Do you think it's the best playground for crypto? What do you think of the US and Europe?

I think Asia is very important for crypto, but like Europe, it's not a homogenous market like the US. We often talk about Asia as if it were a single entity, whereas each country is very different.

If you take China, it's obviously a huge country, but it's still complicated for crypto with authorities blowing hot and cold.

In contrast, in South Korea, around 25% of the population holds cryptos, while in Japan, the figure is less than 10%! South East Asia with Vietnam or Thailand is also very different.

In terms of crypto use and adoption, Asia is outpacing the US. However, the US has more capital, so it's more likely to be the US that really moves the markets, as we saw with the incredible success of Bitcoin ETFs. As far as I'm concerned, today it's the US that's the driving force.

And what about Europe? For years, Europe was seen as a driving force. Is this no longer the case?

I think Europe is still an important economic area, but it has never really been in the driving seat when it comes to crypto. Europe has a role to play, but some people are kidding themselves. No European country is big enough to make things happen in crypto.

In 2017-2018, when the market was still very experimental and small, Europe was ahead of the game, but since 2020 things have changed. Regardless of the SEC lawsuits, the US has really taken the lead.

Some people explain that Silicon Valley has completely turned its back on crypto and that everyone is now focused on artificial intelligence. Is this really the case?

It's absolutely true. Things have changed considerably in the last two years. Just 2 or 3 years ago, San Francisco was one of the most dynamic cities in crypto, and not just because of Coinbase.

There have always been a lot of crypto start-ups in the region. In 2020, I'd say more than 50% of our investments were concentrated around San Francisco. Today, that figure is closer to 5% to 10%.

Now, it's New York that has become the most attractive city for crypto in the US.

You travel a lot. What would be your world ranking of "crypto" cities?

For me, New York is clearly at the top of the podium. It has Wall Street and many crypto companies. It's no coincidence that Circle has just set up its global headquarters there.

In second place, I'd put Singapore, and in third, Dubai.

So no European cities in the top 3?

No, or maybe London, because London remains a global financial centre.

And Paris?

I'd put Paris in 5th or 6th place. There's a great ecosystem with many very high-quality crypto companies. But that's not enough. You also need a dynamic market, and in that respect, Europe is a bit behind.

It's still incredible that New York is the number one crypto city in the world for you, even though the last 18 months have been particularly complicated for crypto players in the United States.

How do you explain this?

That's a very good question. In fact, I think for years crypto was all about technology. In 2017-2018, crypto was an engineering field, we talked about tech. Today, it has become an increasingly financial subject. And when you talk about finance, it's inevitable to talk about Wall Street.

If you're a finance expert, New York is the place to be, there's no debate about that.

Have you been impacted by the market turbulence in 2022-2023? We know that these are not easy periods to manage.

I don't worry about this kind of period, quite the contrary, I think there are plenty of opportunities. It was in 2022, just after the fall of Terra Luna with its algorithmic stablecoin, that we invested in Ethena's first round of financing. We were also among the first investors in Monad.

The reality is that when other funds lose confidence, that's the time to be aggressive. That's when valuations are lower. Overall, I'm conservative when everyone else is aggressive, and aggressive when everyone else is conservative.

My job is to find the right founders, those with the right ideas and the energy to see their projects through. If I find one, I'm going to support them, whatever the market conditions.

How many investments do you make a year at Dragonfly?

I'd say between 10 and 20 transactions a year.

How many people work with you? Are you present all over the world?

We are just over 45 people, spread around the world.

Are you present in Europe?

We have a few people in Europe, but we don't have an office there. Our only offices are in Singapore and New York.

What is your main objective for the next 12 months?

Honestly, my main objective is not to be distracted by the negative comments and ideas that proliferate in the sector. I've been in this world long enough to know that there are cycles and that you need consistency.

Over the next 12 months, I want to make sure that I think for myself and keep the energy I need to continue to support and detect structuring projects for the future of this sector.