Hi everyone and welcome to another episode of Living on Blockchain. Today we are speaking to Chris. Chris is the co-founder and VP at BVNK.
BVNK is creating the world’s largest crypto stablecoins infrastructure, payment infrastructure. It’s a global payment platform and its services, financial entities and fintechs who are trying to perhaps add stablecoins to how receive payments. This is a very, very insightful conversation I would say for people who are perhaps looking to build in the payment space, who are working with stablecoins and even just folks who are curious about Web3 and crypto and they are perhaps looking to get into the space via, you know, the lowest hangers fruit which would be stablecoins.
So I can’t wait for you guys to hear this. Very pumped up after this conversation. Let’s deep dive right in.
Hi Chris, thank you so much for joining me today. How are you doing? Hi Tarusha, thanks very much for having me. I’m excited to have a conversation with you.
Likewise. Can you tell us a little about, you know, how you started your career? You started your career in traditional finance and you worked in equity and, you know, FX markets. What initially attracted you to the world of crypto and blockchain? Yeah.
So as you mentioned, I actually, you know, had a tradified career before, you know, entering the crypto space or falling down the crypto rabbit hole. But it was really across different trading desks and most of that time was spent on an FX trading desk. So I think, you know, spending time on an FX trading desk, naturally Bitcoin kept popping up on our Bloomberg screens and we’d read debates, you know, extensively about like, what is this new currency given we were obviously currency traders.
And, you know, I think, you know, we would debate the merits of it and this sort of thing. But, you know, to be perfectly honest, I never really dove in until probably about 2016. And really what intrigued me was sitting on an FX desk doing large FX transactions for multinational corporates and then watching the difficulty to actually settle the money.
So I send that payment so that, you know, that customer could get their euros, their dollars or their South African Rand settled. And then looking at this kind of immutable blockchain ledger that works 24-7. And that really got me thinking about kind of using the blockchain for payments.
And that kind of coincided, you know, with a bit of an interest in stablecoins and that sort of thing. And that’s really how I made that transition. And eventually I left banking and tradfied and actually set up a hedge fund with my ex-business partner.
And we, you know, we very much approached crypto as this kind of new asset class to invest in. But I was very much, you know, always interested in the kind of the payment side of it. And as we started building that hedge fund out, we were using active users of stablecoins to move money between different exchanges to do, you know, arbitrage trading strategies.
You know, so I was arguably an early user of stablecoins. And but, you know, given the FX and payments background, you know, it all kind of made sense to me. So that was kind of the journey into crypto and, you know, how it led me into kind of the stablecoin space.
Okay. So that’s quite a, you know, organic journey, perhaps, you know, you were working there and, you know, this was something that kept coming up. So you decided to make the leap.
So how has your background in equity trading and asset management helped shape your approach to building, you know, the platform that you’re working on right now, BVNK? Yeah. So, I mean, I guess I got baptized in how the traditional payment system is, doesn’t work and doesn’t operate 24-7, 365, you know, it’s got a lot of intermediaries and a lot of costs built into it. So, you know, at least understanding at its core, how traditional payments work, and then thinking through how, you know, payments could work on a blockchain, that obviously gave me a lot of insight into, you know, how could you set this, how could you set something up like this? And naturally, like, you know, as you mentioned, it might’ve been an organic journey into blockchain, but, you know, when we started looking at the space, you know, stablecoin market cap was, you know, 3 billion, like no one was really using stablecoins for anything else, but, you know, trading.
So that payments use case was very new, you know, and, you know, I think it just made a lot of sense. And then the more you spend time in it, the more you realize, you know, what you can use stablecoins for. And, you know, our firm belief is that, you know, blockchain will, you know, will become a new payment, core payment trail.
And we’re trying to, you know, bring that future into existence by building and, you know, building BVNK. Right. So would you, would it be right to say what you’re building is like an infrastructure basically for providing stablecoin payments? That would be a good way to summarize what you guys are doing? Correct.
I think we definitely one of the largest stablecoin infrastructure providers in the space, but, you know, at our core, you know, BVNK is a global payments platform. And we’re building the stablecoin infrastructure that enables our customers, which are, you know, businesses and fintechs to send, receive, store and convert stablecoins, but also traditional fiat currencies across a variety of domestic and international traditional payment trails, but then also blockchain rail. So it’s really sitting at that intersection, bringing bank rails and blockchain rails together and creating that interoperability between the old payment systems.
And, you know, what we seem, you know, what we deem to be a new payment system being, you know, stablecoins on blockchains. Okay. All right.
Okay. This is wonderful. It’s good.
I think it is a big pain point. So is this particular, are you open to platforms integrating with you as well, or is it just primarily for institutions? It’s so we, you know, we’re a by design, a multi stablecoin platform, and we’ve got a bunch of different customers. So we, we enable three core use cases.
So one is that stablecoin pay ins use case. So these are actually big platform businesses like large, you know, CFD brokers and, and FX brokers that have platforms and many users trading on those platforms. We enable them to receive a stablecoin pay in as a means to deposit into the platform.
We then also serve big companies for the stablecoin payouts use case, think global payroll platforms like deal, you know, doing stablecoin payouts to the, you know, to the emerging market contractors, think marketplaces paying out sellers. So very much a mixture of fintechs, traditional businesses, but, but largely fintechs, other payment companies, PSPs, and that sort of thing. So a whole host of underlying businesses that we, you know, we offer these new payment rails or the interoperability between these two new payment systems.
Okay. So that kind of takes me to the next question, which is to do with perhaps, you know, the compliance aspect of it. What are the geographies that you’re available in? What are the kind of jurisdictions that, you know, you’re not servicing right now? And what kind of compliance hurdles have you had to face so far? Because I’m sure that there must have been quite a few there.
Yeah. So we’ve, we’ve naturally been building the space for quite some time, you know, north of five years now. And so we’ve seen it all from the early days where there was no regulatory frameworks in any markets to, you know, things like Mika coming to market today.
But the, you know, we are, we very early on made a strategic decision to be one of, if not the most regulated stable point payments or crypto payments provider in the space. So we have multiple different licenses across the fiat payment stacks. And we have payments licenses in the UK and the EU, which are called e-money licenses, which allow us to access, you know, fiat payment drills.
And then we also have crypto asset licenses across the EU, the US. We’re getting one in Singapore, which really helps us to, helps us to be fully regulated. The Singapore one is really hard to get.
So congratulations on making that happen. It’s not there yet. You know, I spent six months in Singapore last year getting the license application in, but you know, it’s moving forward and we’re really excited about it.
And, you know, it’s a, it’s a, it’s a very good license because it allows you to do the stable coin crypto side of things, as well as the fiat things in the same entity and through the same license. So, I mean, it’s, it’s very committed and that’s what I’m saying that, you know, kudos to you guys for at least getting the application move forward because, you know, many big shots have tried and failed in Singapore. So yeah, that’s, that’s wonderful to hear.
That’s very exciting. Please go on. No, exactly.
So yeah, we’re quite proud of our licensing status across the world and, you know, by being, you know, given, if you think about, you know, what we’re trying to do is really bring those banks and blockchain rails together. We need to be fully regulated on both the fiat and the crypto side. So by getting all these licenses and, you know, building out our compliance and financial crime teams because of the regulate, you know, the regulations that we need to adhere to.
I think we’ve set ourselves up really well to be, to operate at scale in a regulatory compliant way, naturally. And some of the new, you know, things like travel rule coming in and that sort of thing. We, again, well prepared because we’ve been operating on the fiat payment side for some time through those fiat licenses.
So I think, you know, getting the right talent, getting the right licenses, making sure you operate those licenses and, you know, in the right way and cover most of the globe through our EU and UK licenses, you know, for Europe and the UK, our US licenses, you know, we’re getting MSBs across the US as well. And then obviously, hopefully in time, that’s Singapore one to cover APAC. I think we we well covered on the regulatory front.
Brilliant, brilliant. And, you know, wherever you have these licenses, I’m assuming that, you know, your services are readily available for institutions and entities like and registered in those jurisdictions. Correct.
So we serve a global merchant base by design. And we are obviously we don’t serve, you know, any sort of sanctioned countries or anything like that. But we have our own internal risk policies.
And we serve global merchants through any one of those licenses, depending on where that merchant is based. But you know, you know, payments is a global business. We’ve building a global payments platform, hence the licensing strategy.
And, you know, and so we very much pride ourselves on being able to serve most customers in most markets with most of our use cases, you know, it’s probably the way best way to put it. Okay, so, you know, because all kinds of people kind of tune in to living on blockchain and to listen in, if you had to give, you know, tell me the difference perhaps between so I think people might confuse your platform with a on-prem off-prem sort of a platform. Can you can you perhaps shed some light there so that they understand that there is a distinct difference there as well? Sure.
So I mean, I think in the traditional on-prem and off-prem sense within crypto, it’s very much focused on kind of consumers buying crypto with fiat. Yeah, we’re very much a stablecoin infrastructure provider. So we actually enable fintechs, you know, traditional fiat fintechs, or even crypto businesses with a full payment stack, whether it’s a stablecoin payment stack or a fiat payment stack.
So there’s obviously the element of moving between a fiat currency like dollars, euros or GDP and any multiple of the stablecoins that we offer. So there is that element to it. But we very much an infrastructure stack that enables, you know, businesses to launch stablecoin payments, use cases, you know, come up with new use cases and take those to market running on our infrastructure.
So, you know, we very much serve consumer facing fintechs, but do not serve consumers directly. So we enable, let’s say, a cross-border remittance company to leverage stablecoin infrastructure while it’s payments to, you know, get better at moving money from point A to point B, you know, but they would have that relationship with the end user. Yeah, I think that that is a wonderful way to point out the distinct difference.
And thank you for sharing that. So now, you know, I would like to talk a little more about the other kind of challenges that or maybe surprises, perhaps, that, you know, when you made this, first of all, this transition from, you know, traditional finance to building in REP3, and then, you know, building the solution itself. And why I’m asking this is because we’ve talked about compliance already.
And compliance usually is one of the bigger challenges when you’re building on the infrastructure side of things, especially with a global payments platform like yours. But other than that, what are the kind of challenges you can talk about personally from, you know, because you made that transition, and then vis-a-vis the platform as well, when you were building it, and how did you overcome them? So I think it’s the biggest step change, I would say, coming out of traditional finance into REP3 and building REP3 is just the speed and intensity, you know, that you need to build at, especially to just will an early stage startup into existence. And given the speed at which the crypto market moves, I’d say it’s probably a little bit even, you know, even faster than, let’s say, traditional fintech.
So you’ve obviously got traditional businesses, financial institutions, you’ve then got fintechs who are moving at a much faster pace than trying to innovate. And then you’ve got the crypto market, which is like arguably a subset of fintech, moving at even and even faster pace. So I think, you know, adjusting to that intensity, and then obviously, just building startups are pretty hard.
So, you know, you just got to have staying power and resilience to keep going. And then, you know, to the question around some of the challenges with building the platform, you know, I think because we’ve been around, you know, for five years plus, you know, in the early days, you know, there was no real custody tech providers or that sort of thing. So we had to build some of the early infrastructure bits that you could buy off the shelf today as a SaaS product.
So I think that was probably an early challenge where you’d need to have a liquidity engine, you know, to plug into multiple places to source liquidity, you’d need to have a custody engine running your own security modules, you need to do your own hot and cold storage. So all of those pieces, you know, we had to learn how to do while building, you know, at speed. And when those solutions went there, obviously, it looks very different today, there’s multiple different options to choose for all of those different, I guess, pieces of infrastructure.
But, you know, we’ve obviously, you know, managed to build our platform, you know, own the tech, own our entire crypto stack. You know, we’ve actually unbundled that crypto stack into, you know, a product we called layer one. Because of all the learnings that we had of building this ourselves, and specifically building for payments use cases.
So I think it was really early days, just lack of some of the tooling that you would need. And then we had to build that in house. So I think if you had to rebuild from today, there’s probably several off the shelf solutions you could knit together.
But I think it’s actually held us in, in good stead longer term, you know, given we own the full stack. Right, yes. No, I completely empathize with this particular challenge, I think.
So I’m working on a decentralized social network. And, you know, I’ve been around for a while as well. But when we started really working on this decentralized social network, wallet abstraction, chain abstraction, they were not a thing.
So, you know, we were thinking of, we were basically finding our own way and tinkering with things to make it more, you know, happen more quicker. But then obviously, this new tech came around. And that kind of did help us in expediting how we were sort of building and it obviously makes the journey easier.
But then, you know, good for you guys, you’ve been around for five odd years. And you know, you really got the foundation right before you actually started building and scaling. Correct, correct.
John, I think you have to tinker and get those foundations built, because you need that scale. You need, you know, specifically in payments, you need that system to be doing tens of thousands, if not hundreds of thousands of payments a day. Yeah, no, no, absolutely.
Because otherwise, you’re carrying the debt, right? The debt of the platform that you might have, or the debt that you’re carrying for your product and that kind of compound. So I completely agree there with you. So can you tell us a little about the kind of traction that you guys have seen so far? Yeah, so, you know, the business is doing, you know, like I mentioned, we are one of the biggest players in the space, we’re doing north of six and a half billion in annualized payments volume.
All of that is touching a stablecoin in some way, shape or form that is split across those three use cases, one being stablecoin pay ins, another one being stablecoin payouts. And then we have stablecoin settlements, which is more of a B2B transaction. Think of a, you know, a PSP settling a merchant in stablecoins and these sorts of use cases.
And we’re about 240 people in the business today, London headquartered offices in Bulgaria, Barcelona, as well as one in San Diego in the US, and then a big one in Cape Town. Myself and my co-founder is also originally South African, so we still have a decent sized office in Cape Town. Like I said, multiple different licenses, north of 200 customers.
So yeah, and then on the back of, you know, a successful, early success of the business, we raised a $40 million Series A in 2022, which targeted global led. So we’ve been using, you know, been using that Series A money to keep growing the business and, you know, have doubled the business since then. Wow.
Yeah. So, you know, I know of all of these numbers, I’ve studied you but I wanted to give you guys a chance to really highlight it because I feel this is so important that in Web3 people keep talking about noise and, you know, how platforms are not really creating solutions that are being used perhaps. You guys are a stark example of how, you know, solutions, great solutions can be created and they will see amazing, fabulous DBLs pretty much at par with their Web2 counterparts.
Yeah, no, no, for sure. So can you tell me a little about, I know you guys are one of the biggest, you know, blockchain enabled payment solutions, but can you talk to me a little about the USP of the platform perhaps? What sets you apart in this space? Yeah, so I think we found, you know, as we’ve gone, you know, as we’ve gotten bigger and the scale’s gotten bigger and specifically more, you know, more traditional fiat fintechs and fiat payment companies are starting to look at stablecoins, you know, arguably 2024 has been the breakout year for stablecoins. You can see this across the market with, you know, good pieces of regulation coming in, many of the big fintechs like Visa doing more and more in the space, Worldpay doing things in the space as well.
So I think it’s been a great year for stablecoins and we were uniquely positioned on, I guess, three fronts. One is those licenses, you know, and that regulation that we’ve built over the last five years, you know, that takes some time to get right and operate these lines, not just get the licenses, but also operate them at scale. So I think that sets us apart.
We also have enterprise-grade security and infrastructure, which is obviously super important for, you know, global, you know, some of the world’s biggest payments companies starting to enter the space. They want someone that’s got, you know, ISO certificates sorted, tech security and data security seriously. So I think that’s holding us in good stead as well.
And then, you know, I think because we are, you know, by design bringing, you know, banks and blockchains together, we support multiple different stablecoins. So we’re a multi-stablecoin platform on multiple different blockchains. And then also, you know, the core G3 fiat currencies like Euro, GBP and dollars on their local domestic payment schemes, you know, and we’ve included Swift in that, you know, in that infrastructure.
So you really do get this, you know, you really do get this platform that allows you to easily bridge between the traditional historical fiat payment systems and this new stablecoin payment system that’s quickly developing. So I think that’s really set us up to win some of the bigger customers in the market. And, you know, and hopefully keeps, you know, we keep going from success to success, but the pipeline’s also looking pretty good.
So we’re quite excited. Yeah, wonderful. This is all very exciting stuff.
You know, you guys have recently launched, you mentioned it, LayerOne, which is a self-hosted, self-custody digital asset infrastructure. But can you tell us a little more about it? What inspires this development and how it kind of benefits businesses in terms of control and privacy? Sure. So as I mentioned, you know, when we started out, it was very difficult to get a custody tech solution off, you know, Fireblocks was just starting out.
A couple of others weren’t really ready to go. So we, over the years, have used a mixture of our own crypto infrastructure plus, you know, third-party solutions. But we really realized that those third-party solutions were not really optimized for a high-performance payments platform.
So what happened was we effectively, you know, got our best engineers and our CTO, Don, locked themselves in a room and rebuilt our entire crypto stack. And we unbundled that stack as a standalone custody tech solution that fintechs, crypto businesses can use to enable, you know, seamless stablecoin use cases. So it’s really a custody tech platform, which enables payments use cases at scale, but has multiple, you know, features like auto consolidations across different blockchains into asset pools.
You can trade, you know, there’s a smart auto router that kind of sources best execution to, you know, get in and out of those stablecoins against fiat or other stablecoins. So there’s a bunch of different modules on top of the wallet and security module, which obviously comes standard with custody tech solutions. I think what makes it slightly unique is we also, the way you deploy that system, you know, obviously all of these custody tech solutions are non-custodial.
So you own your own private keys, no different with layer one, but crucially, we allow you to deploy in your own AWS environment. So you control your own data, you have that data privacy, and then you have the non-custodial aspect of it, which I think is something unique in the market today. And, and, you know, for those very security forward fintechs and large enterprises who want to own that, you know, that they it’s landing really well.
Right. I would imagine so, because this kind of really puts control and privacy forward for entities. And I think especially fintechs would be eager to perhaps not having to rely entirely on an infrastructure, which they cannot really control.
So I would imagine that this is, and I would also think that this is probably first, you know, first of its kind, because I haven’t heard of something like this before in the space. Yeah, I think that there’s very few full on-prem deployments, you know, in the custody tech space. Some of them are like a hybrid SaaS where it’s a SaaS model, plus a little bit of your own deployment in terms of the security module, but like a full deployment in your own AWS environment.
It does seem to be unique in the market. So we’re quite excited about it. Excellent.
This is brilliant. I think more entities and fintech should be looking at this. Now I want to touch a little about, you know, PayPal integrated USD basically.
You guys have integrated PayPal USD into your platform. How does this integration really enhance your offerings? And what kind of impact do you see it having on the adoption of stablecoin payment? Do you think, or have you seen so far that this kind of increases the ambit and more entities are jumping on the bandwagon? Yeah, so we’re obviously a multi-stablecoin platform by design, you know, as mentioned earlier. So looking across the space and supporting the stablecoins that firstly customers want.
So we’ve let, you know, customer demand as well as liquidity drive, which stablecoins we support. So we support all the major stablecoins today. PYUSD is obviously one that we integrated more recently.
You know, I think, you know, to your point, you know, what does that really do for the payment sense? I think, you know, one of the OG original, you know, original fintechs, you know, with 420 million accounts, so a massive distribution network coming into the stablecoin space and, you know, and taking that bet and launching their own stablecoin just shows, you know, those payments use cases are real and, you know, having a digital dollar moving around on a blockchain, whatever form that takes, whether it’s Tether, USTC, PayPal, USD, is something the market wants and, you know, something the market needs, I guess, to solve some of these challenges in payments. So we were quite excited when PayPal, you know, obviously pulled the trigger and entered the space for their own stablecoin. And we’re looking forward to partner with them to bring, you know, PYUSD into more of the stablecoin and payments use cases that we enable today.
So I think it’s, uptake’s been good across the stablecoin, you know, PYUSD has obviously also been growing and recently hitched, you know, reached a billion dollars in market cap. So they’re doing some great things on their side as well. And we, you know, playing a small part in helping that stablecoin grow.
Yeah, really wonderful. I think, like you said, this is the OG platform and the distribution is very sorted there. So it obviously makes sense that considering you support multiple stablecoins environment, then this is like the organic next step, I think.
But now I want to go a little philosophical, perhaps, you know, and or just personally, why do you think stablecoins matter? How do you see their role in transforming the global payments landscape? And I ask this, especially in the context of Web3, because, you know, a lot of people are not for the idea of, you know, centralized currency pegged crypto. So what is your take on that? Like, how do you feel about this particular, you know, set of people who are not for these kind of coins and they don’t see that, they feel that this goes against the ethos of Web3? Yeah, I mean, I think, you know, we’ve been on this mission to really accelerate the global movement of money, you know, and stablecoins themselves will change the way that money moves today, you know, and it’s really by replacing the underlying rails, you know, that core infrastructure that hasn’t been upgraded in in many, many decades. And, you know, that really is just good, ultimately, for the consumer, if you look at consumer, I think the last, you know, the last that I saw, like, what is the average remittance, you know, cost across the world for certain corridors, you know, it’s like 7%.
And I think stablecoins can definitely bring that down to, you know, 1 to 2%, because of the, you know, reducing payments complexity, you know, reducing the number of intermediaries in the payments chain. And, you know, it’s really this infrastructure that allows the messaging, i.e. sending the message with that payment and the settlement to happen together at the same time, which is not how payments work today, today, those move separately, there’s the message that gets sent, let’s say through a system like Swift, and then the settlement of that money happens, you know, two days later, or, you know, asynchronously, whereas blockchain is really an infrastructure that enables that message and that settlement to happen together. So I think it’s probably, you know, stablecoins and block and stablecoins on top of blockchain is definitely, you know, an innovation at the core infrastructure layer of payments.
So I personally think that, you know, stablecoins today is cryptos killer. It’s really where the actual use cases are happening. I think there’s a lot of work to do on, you know, reducing costs even further, getting more different stablecoins and other currencies on chain.
So I think, I mean, if you go back to, you know, what I would say to those, to the people in Web3 that, you know, look at stablecoins and say, look, it’s got one foot in the traditional financial system, you know, I mean, I guess two things I would say one is, there’s, there’s no way that this technology replaces the existing infrastructure that this will in, you know, we have a full belief that these will, you know, coexist and be and therefore we are building to make these two systems interoperable. And then I would also say, if you just go back to Satoshi’s white paper in the Bitcoin white paper, he says peer to peer electronic cash. So effectively, blockchain was birthed to do payments, you know, if you want to look at that way.
So from a philosophical Web3 standpoint, I would still argue that, you know, that payments is really, is really the killer, the killer app. Right. Yeah.
I love how you bought that peer to peer cash. I think that that is very true. This, this was always built on that particular foundation.
So, you know, your answer gave me something to think about. I have two questions that have come from right there, but one is that, which I want to ask first, you had commissioned a report recently, I think, on the economic impact of stablecoins, and this is something that I had read in my research. Can you share some key findings from that report? Because, you know, we are talking about how stablecoins are pertinent in moving the economies forward, the global economy forward. Sure.
So, you know, obviously we hyper-focused on real-world use cases of stablecoins in payments, that’s kind of our core business, those are the use cases we’re enabling. So we partnered with the CEBR, which is a research body, economic research body in Europe, to commission a report where we spend a bunch of time thinking through and trying to calculate that economic impact of stablecoins on global economies. And I mean, I guess the three key findings to summarize was really around stablecoins, you know, are being used globally, specifically in emerging markets to mitigate the cost of currency volatility.
So I’m originally South African, you know, ZAR is, you know, traditionally, so the South African Rand is traditionally a currency that depreciates and has depreciated against the dollar. That’s obviously very difficult for South African businesses if you’re paying dollar invoices. Same thing in Brazil, same thing, look at the hyperinflation sort of, you know, scenarios in Argentina.
So when you have a currency that’s by design due to, you know, poor economic policies or that sort of thing, depreciating against the global reserve currency, being the dollar, it’s really difficult to, you know, head, you know, to kind of plan ahead. So you have to do all, you know, sophisticated hedging and most businesses and individuals are not able to access that. Those are really only multinational corporates that can access that level of sophistication in terms of hedging.
So we’re finding that stablecoins are being used as a way to mitigate this currency volatility, i.e. using their local currency to buy a stablecoin and holding on to that until they need to settle a dollar invoice, you know. So that was one of the key findings. Another one was it’s really bridging the dollar gap.
And what we mean by that is it’s very difficult for emerging market consumers to get their hands on a stable currency if they are in a market such as South Africa, Argentina, you know, we’ve seen this, you know, across markets where, you know, the government tightly controls the access to dollar flows. And therefore, you know, I think in Argentina, you can buy $200 a month of actual dollars. So you can’t even protect yourself as an individual against this because there’s just no way to access dollars.
So a digital dollar gives anyone with a Web3 wallet and cell phone access to these digital dollars. So it’s bridging that dollar gap. And then the last one, which is akin to how traditional payment systems work today, you know, if you think about how payment systems work today, it’s a network of bank accounts around the world that holds pre-funded capital to make sure that you get the look and feel of an instant payment, that the payment doesn’t actually move instantly.
It’s just people have put money in multiple different accounts around the world to be able to pay out when someone pays in on, you know, someone pays in the US and you pay out in the Philippines. So that amount of capital, you know, we call it trapped capital in the system. So think about it like, you know, capital trapped in the pipes, in the plumbing, in the payments plumbing of the world, you know.
And by using a stablecoin, which operates 24-7, 365 and near instantly on some of the high-performance blockchains like Solana, you no longer need to keep this pre-funded capital sat in accounts, you know, normally not earning interest. You can actually do real-time payments 24-7 to wherever that money is needed in a fraction of a second. So it obviously releases a significant amount of capital that’s stuck in this payments infrastructure around the world.
And, you know, companies can then use that capital to reinvest in their businesses, focus on higher growth projects and that sort of thing. So there’s a significant economic benefit to getting your hands on capital that’s been trapped in, you know, in multiple different accounts, specifically for payment companies and fintechs, you know. Absolutely, I would imagine.
So these are very interesting insights that, you know, you guys have in this particular report that you guys have generated. I think this gives me, again, this will give me and our listeners a lot to think about, especially folks who are perhaps looking to build in the payment space. Now, I want to ask you something again that came from your last answer.
You know, you guys have, you mentioned how, you know, you feel that one is not going to stop existing. That is why we are trying to bridge the gap between banks and, you know, Web3 technology. So do you think that banks are now perhaps more open to adopting blockchain on a larger scale? Do you think that eventually all banks will do it? Yeah, I think, you know, I think banks, there’s some innovative banks early on that have been quite deep into blockchain.
You know, you’ve got banks like Standard Chartered, which has a custody as well as a, you know, a market maker business in Zodiac Custody and Zodiac Markets. They have a, you know, SE Ventures, which is investing across the space. So I think banks are at various stages of dipping their toe in.
Some have gone, let’s say, put a whole leg in already. Some of them already are half up to their waist. So I think, you know, you recently saw BBVA, which is one of our core banking partners, the big Spanish bank.
They are going to be partnering with Visa to launch, to tokenize deposits. So I think banks are moving into the space and it’s happening in an accelerating pace. So obviously early days, no one really wanted to touch it and you would have to do payments with a fiat stablecoin fiat.
You know, some people call it the stablecoin sandwich, you know, where you kind of have stablecoins in the middle more just as the rail. As the market has opened up and consumers and fintechs and payment companies are willing to touch and use and interact with stablecoins because of businesses like BVNK, which gives them the infrastructure to do that. And then again, bridge between banks and blockchains, as you mentioned.
I think banks are waking up and saying, look, you know, if we don’t get involved, you know, fintechs are going to eat our lunch. And this, I think many of them can see is the future of payments. And, you know, what were they originally set up to do besides lending? It was really to make payments, you know, so those two core business activities.
So I do think we’re seeing banks enter the space at an accelerating pace. I think certain markets are struggling a little bit in terms of regulatory clarity, the U.S. being obviously the biggest one where it’s still pretty difficult to get banked as a U.S., you know, banked with a U.S. bank account as a crypto company. I think that needs to change, which will open up more innovative products and the speed and the growth in the space would be able to accelerate further.
But then you see places like Europe bringing in regulation like Mika, which has basically given banks a way to call the spaces fully regulated. You as a crypto company, I can give you a bank account. I can interact with you because I know you regulated at the same level of Mifid basically.
You know, they basically used Mifid, which was a banking regulatory regime that came in after, you know, after the 2008 crisis. So they’ve used that to architect their Mika framework. So, you know, I think certain markets are, you know, Singapore’s got a great regulatory regime as well as a license.
So I think, you know, there’s different countries moving at different space, you know, at different speeds. And there’s also different banks moving at different speeds. But overwhelmingly, I think almost all banks will be involved in stablecoins within the next 10 years in some way, shape or form.
Okay. And I feel that this is recent, like in the last three, four years, right? This has changed. Earlier, they were, they wouldn’t even touch it with a six feet long stick.
I think, you know, everybody was very… 100% right. Yeah. This has changed.
What do you think brought about this change? Like, do you think it was the financial crisis that, you know, or is it the geopolitical factors? Like, what would you say has changed the perspective? Or is it just adoption that, you know, users are looking at it. So banks are also looking at it. What would you say is the reason? Yeah, that’s a good thing.
Like, you know, how did they go from not looking at it to being, you know, some of them half in basically. It’s very much been two things for me. Like, I think the number one thing was regulation.
So like I said, clear regulation frameworks allows a bank to operate and onboard and serve a crypto customer or themselves look at crypto solutions because their bank regulators said, okay, cool, if you get XYZ license, you as a bank can operate in the space or serve crypto customers. So I think that’s been overwhelmingly the most beneficial thing for crypto companies and just the space more broadly. And then secondly, to your point, you know, user adoption.
We’re seeing significant end user adoption in emerging market countries, you know, based on, like I said, bridging that dollar gap, hedging them against currency volatility. These sorts of things are driving young, you know, tech savvy populations like Nigeria, like South Africa, like, you know, Argentina to look for solutions to the problems they find being, you know, currency runaway inflation. So those end users are adopting it.
That means that the businesses serve those end users are starting to adopt it or bring those solutions to market. Therefore, the banks who serve those businesses, all those consumers are starting to be pushed into it, or at least taking it seriously and looking at solutions. So I think it’s a combination of end user adoption, business adoption, so adoption overall, and then that regulatory clarity that’s really pushed banks into the space in force, I would argue over the last 18 months.
Right. Yeah, absolutely. I think the kind of, like you mentioned, they seem very gung ho and optimistic about now adopting to this.
And earlier, like I’ve built in FinTech and I have built in Metri as well. And I know how difficult it was. And, you know, probably so around 2016, 2017, this is like when I had co-founded one of the first Ethereum exchanges of India.
And there was like an overnight order that came from the central bank almost in 2017 or 18 that prohibited banks from dealing with, you know, companies that are dealing with crypto in any way. So from there to here, I think we’ve come a long way. No, for sure.
Sure. Yeah. The good old days where you couldn’t get a bank account.
Now you can get a bank account in most markets, but in the US it’s still pretty challenging. It’s still, yeah. No, I think even in India it’s still a bit of a challenge, but there are platforms because, you know, there are platforms like Mudrex and CoinDCX, et cetera, that are trying to change this a little bit.
But I do think that has happened primarily because the government introduced taxation. So, you know, they are taxing crypto earnings and transactions. And that is why perhaps these platforms are still able to, you know, function because and deal with banks.
I think that it kind of gives it a layer of legitimacy, perhaps. I think that that is the perception that kind of gets built. So I believe, yeah, that answer is absolutely right.
You know, now as an entrepreneur, I’m curious because you’re building in the B2B sort of space. How do you scale a platform like BVNK? What are the kind of key strategies that, you know, you guys have executed that are responsible for the rapid growth and success of your platform? And I’m curious as an entrepreneur, and I’m sure other builders would love to hear it as well. Yeah, look, I think, you know, it’s been an amazing journey.
So from five of us, you know, we work in Cape Town, pretty much, with our CEO, Jesse, and my co-founder being in London, we started building this business out. And I think a couple of ingredients, you know, is like, you know, Don, our CTO, is a wizard from the infrastructure side. So effectively getting those basics right, like we discussed, like getting that infrastructure set up from day one, you know, obviously you have to, as you scale, you’ve got to cut a few corners, but making sure that you don’t let the tech deck build up too much.
I think secondly, is probably the key thing for us has really been the talent density in the business. So we’ve been pretty relentless on getting the best people into the right seats at the right time. And by bringing those, you know, really good people in, trusting them and allowing them to, you know, show what they can do, you know, magic tends to happen.
So I think that’s been one of the keys to our success is really that talent density and the continued focused on talent and developing talent and helping them help the business and build the business. And then, you know, I just think what is understated, I would argue is just speed of execution. So many people can come up with really good ideas.
And, you know, we’ve got a lot of ideas, people, including me in the business. So it’s, I guess, balancing, finding new ideas. So I, let’s say 20% new bets, like where the market’s going, making sure that you’re taking customer feedback, you know, testing new products.
But once you find product market fits, you know, really being able to go at speed and scaling that by adding, you know, better tech, better, you know, better people, more volume, you know, anything you need to do to get to that product scale quickly, I think is quite important. And the quicker you can scale, the better, you know, and that just takes relentless focus on execution and that sort of thing. So I think a lot of the time, it’s underrated how much execution matters in a startup.
You know, there’s many ideas around floating around, you know, ideas are a dime a dozen, I would say there’s a lot of, you know, it’s really execution where the rubber hits the road. Absolutely. I think execution is what matters and the pace of the execution matters.
The timing should be right. A lot of sorcery goes into these things, but at times it’s having a level head and doing what works and doubling down on what works, I think, can be like the secret source of success. 100%.
Now, considering, you know, we’re at the mostly at the end of this very interesting conversation, I must say, but I would like to ask you one or two more questions. I would have to get your take on perhaps the new concepts and, you know, trends in this space that kind of excite you for their potential to disrupt the payments market. Like, is there any trend? Is there any particular platform or, you know, something that, you know, you feel that, okay, this has the potential to really change the, you know, global payments market, but obviously, you know, perhaps it is too early and they might not have found a PMF yet.
Is there anything that, you know, you have your eye on like that? Yeah, for sure. So I’ve definitely been thinking about over the last 12 to 18 months, like what a fully on-chain FX, what full on-chain FX looks like. So what I mean by that is, you know, today, most of the world, the stablecoin market is 99% pegged to the dollar.
If we look at global trade flows, you know, 70% of global trade flows are actually in USD, the rest, the other 30% are spread across euros, you know, GVP a little bit, obviously Hong Kong dollar, some of the G7 currencies. So if you can bring, you know, non-USD stablecoins on-chain, so obviously in varying forms, there’s a euro stablecoin, there’s an AED stablecoin, in Dubai where I’m actually based, there’s a single SGD stablecoin, there’s an IDR stablecoin. So if you can bring non-dollar stablecoins on-chain, then you get, you know, and the market no longer resembles 99% dollars, you know, USD pegged stablecoins, you can start doing full on-chain FX.
And what that really means is every leg of that transaction can be settled instantly on a blockchain. So you can, you know, go from fiat into stablecoin through a direct mint or burn, you can then execute or trade FX from one dollar, let’s say USDC against XSGD instantly, you can then, you know, settle that and send that, you know, settlement instantly as well. And then you can get out of that back into the fiat world if needed.
But I don’t even think, you know, you really need to get back into that fiat world. So there’s a world that I see where, you know, on-chain FX, if we get enough non-USD stablecoins on-chain and enough volume and liquidity into that market where you can actually just do away with traditional payment systems and really, you know, do payments completely on-chain. So, you know, that’s obviously something that’d be wonderful.
Yeah, that’s something I’m really excited about. But like I said, I know that that’s a future, far in the future, basically. So what we’re trying to do is make sure that we keep building at this intersection of bank and blockchain rails and at least make, you know, at least start bringing this future forward slightly and make it a reality by making the fiat and the traditional, you know, the traditional payment systems and the blockchain payment systems interoperable.
And in time, as more of these local currency stablecoins come on-chain, there’s more interesting use cases that pop up like this on-chain FX piece. Yeah, no, this is wonderful. And obviously, I think this is such a, it’s such a, if just to sit back and think about it, I think that that is enough for me to get excited, like a future like that, where all of these transactions are happening on-chain, it’ll make everything so much more efficient and I think transparent, right? I think that is, that is the way we should go.
So I don’t think… And cheaper. Yeah, yeah, exactly. It’s very important, right? Because there’s so much inequity, especially when you know you are doing, especially in sending remittances, right? The fees kind of changes depending on which country you’re sending it to.
And that I think is almost cruel. So absolutely, this is something that you and I are both rooting for. Now, you know, just to ask you two more questions before we wrap it up.
What would be your advice for perhaps folks who are looking to build in the payments system? What is one lesson or insight that you’d like to share with them so that they can also take heart and build in the space?
Yeah, I think the number one piece of advice I would say for anyone trying to build a startup, whether it’s in payments or FinTech or anywhere else, is really learn how to become relentlessly resourceful. So obviously, there are tons of different problems that you need to solve that come at you each day and you just have to figure out how to solve these problems. So if you have some smarts, a great work ethic, high energy, but crucially, you can learn how to just get stuff done or solve problems, you can then keep that momentum up.
And as we mentioned earlier, speed and the momentum that that speed drives is really the key to success, I think, in startup building. Yeah. And that kind of works across any domain, I think, you know, the speed and just sort of ensuring that, you know, you are persistent enough, you know, you have a thick skin.
I think that is very important as well, because, you know, you face failures. And as long as you’re moving forward, I think you’re just figuring out what doesn’t work. And eventually, you’ll find ways that will work and you can build your success.
Correct. 100%. Okay, so to my last question, Chris, this has been very insightful.
Thank you so much, once again. But this is a question I ask everybody who comes on the show. And I would like to ask you as well.
You made a leap from traditional finance to Web3. You know, you talked about how this was a bit organic for you. And, you know, it seemed like a real problem that you wanted to solve.
But what if somebody perhaps is dealing with this dilemma that, you know, they’re working in the traditional space, and they’re looking at Web3 with a little bit of skepticism, what would be your suggestion for them to start living on blockchain? I think just dive right in, you know, I think, get yourself a wallet, start using it, see how it works. And, you know, and doing a couple of transactions, send some Bitcoin to your friends and that sort of thing. And really, really just get embedded in the ecosystem, there’s so much information available.
You know, this is the beauty of like a decentralized system and community where people are sharing, you know, free research, it’s not behind a paywall, you know, you can spend hours down rabbit holes learning about different things, and different areas. And I think the number one thing besides all of all of that is, is start with something you’re interested in. So I approached blockchain very much for my payments for, you know, FX, FinTech, you know, financial services use case, there’s people that have approached it from a media lens, you know, whether they’re doing we’re doing NFTs or music royalties, there’s people that have approached it from art.
So I think, you know, approach the space with something that’s, you know, of real interest to you, because that will then maintain the curiosity and allow you to go deeper. Absolutely, I think, with curiosity and going down this rabbit hole, it’s important that you know, you arm yourself with the right knowledge, but you have to absolutely execute and get your hands a little dirty to understand that this space is for you. So that’s very good advice and a wonderful way to close off this episode.
Thank you so much, Chris, for making the time to speak to me today. Any parting words before we wrap this up? Um, look, it’s been a great conversation to share. I’ll just leave the audience with, you know, think big, keep thinking bigger.
Yeah, wonderful, wonderful. Thank you so much, Chris. Awesome.