It’s been a tough start to 2019 for cryptocurrency firms. With the price of Bitcoin crashing at the end of last year and interest in digital assets declining, firms are no longer swimming in cash like they were 12 months ago.
Exchanges have probably been the most badly affected by all of this. Unlike the companies issuing tokens, which have products and services to work on, exchanges have seen volumes declining and, one would presume, revenues shrinking.
And yet, for those exchanges that are still operational, the show must go on. A case in point is Globitex.
On Wednesday of this week, the firm launched its EURO Wallet. Managed by Bitcoin pioneer Jon Matonis, the wallet could act as a gateway for the firm to provide a number of different services in the future.
To get a better idea of what the wallet can do, and see what else Globitex has been up to, Finance Magnates spoke to the exchange’s CEO, Uldis Teraudkalns, this Thursday.
Making payments with Globitex
Based in the Latvian capital Riga, Teraudkalns, who was one of the exchange’s Co-Founders in 2015, has been in his role since May of last year.
We started our conversation by discussing the product that has just gone live – the EURO Wallet. The new service will grant Globitex users access to a personal IBAN number, allow them to send and receive euro SEPA payments and enable them to make instant deposits and withdrawals to and from their Globitex trading account.
“Traditionally, when a trader deposits euros with an exchange, that money goes into the exchange’s custody,” said Teraudkalns. “That in itself can be a problem for people. But the bigger issues are time and utility. Withdrawing fiat currency can take two days or even longer and, when the currency is with the exchange, you can’t do anything with it except withdraw it to your bank account. Our EURO Wallet speeds things up, you can make instant withdrawals, and allows you to use that money for something – making an online payment for instance.”
Reading the above, one of course gets the impression that the EURO Wallet is aimed exclusively at retail traders. But, over the course of our conversation, Teraudkalns kept describing prospective customers as ‘traders’ and ‘companies.’ Who then, I asked the exchange CEO, is Globitex hoping will use its new wallet?
“It’s both,” he said. “The features that I described would be useful for a regular trader but also for companies. Any business that deals in crypto needs the ability to convert to fiat currency and move money around quickly. The other benefit for them is that it acts as a means of storing fiat currency. Many banks, as soon as they hear the word ‘crypto,’ won’t deal with you. So having an IBAN account is a major benefit for those companies.”
The Globitex card
Though you may be able to store money in an IBAN account with Globitex, the firm is not a bank, only a payments provider. NexPay, a subsidiary of the exchange, facilitates those payments.
Licensed by the Bank of Lithuania as an ‘electronic money institution,’ NexPay is headed up by the aforementioned Matonis. One of Globitex’s founders, as well as the first Executive Director of the Bitcoin Foundation, Matonis left his director’s role with the exchange last month to focus on developing NexPay’s services.
Though in the fast-moving world of financial technology people may have forgotten it, both Monzo and Revolut started out as purely payments providers. In fact, Nikolay Storonsky, a Revolut Co-Founder, initially launched the company as a means of allowing people to make payments overseas with lower fees and at a better exchange rate.
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It’s unlikely that we’ll see a Globitex bank in the near future but, I asked Teraudkalns, might we see the exchange start to provide cards to customers?
“Yes, that’s something that we hope to develop this year,” said the Globitex CEO. “It’s a very appealing option and one that should come naturally to us. After all, if you are able to make payments to friends and so on, it follows that you can also take that money and spend it in a shop for example.”
No PoS machines
Another growing area in the world of cryptocurrency payments is point-of-sale (PoS) machines. True, you can’t pay for your groceries in Bitcoin just yet, but the number of companies offering machines that facilitate such payments is increasing. For now, however, it seems as though we won’t be seeing a Globitex PoS machine.
“It’s definitely an area we’re keeping an eye on,” said Teraudkalns. “But it requires a lot of due diligence and compliance. We want to be a gateway between this new world of crypto and traditional banking. So we’re very interested in working with a retailer that accepts crypto as a form of payment but not necessarily as the company facilitating the payment itself.”
Moving away from the company’s newest product, we turned to the state of the cryptocurrency market.
Surviving the bear market
In February of last year, Globitex was able to raise approximately $10 million via an initial coin offering. Combined with ramped up trading volumes, especially in the first quarter of last year and at the end of 2017, the company should have enough money to keep going for a while yet.
Still, the bear market has been fairly brutal and, though the firm is doing much better than some of its competitors, Globitex hasn’t been immune from this.
“We are believers in crypto and, because of that, have significant cryptocurrency holdings,” said Teraudkalns. “Of course, that means we’ve felt the market downturn strongly. So we cannot do everything at once, which is what we wanted to do. That doesn’t mean we aren’t going to do those things we planned doing, it just means we are being more prudent about how we do them.”
“Things” is of course an imprecise word. Thus, I had to ask – what products does Globitex plan on launching in the future?
“We are developing more complex financial products,” said Teraudkalns. “That’s something we always planned on doing. It’s just going to be a slightly longer process as we prioritised the launch of the Euro Wallet.”
A required part of any cryptocurrency interview, I had to finish off my discussion with Teraudkalns by asking him that most cliched of cliched questions – where is the cryptocurrency market heading?
“I think recent events have provided a necessary education to people in the market,” he said. “Companies should understand now that they have to focus on building quality products and bringing value to their customers. You can’t just slap ‘blockchain’ or ‘crypto’ on something and hope it works. Doing those things will help but, broadly speaking, there will be have to be a major revolution in the global financial system for cryptocurrency to really take off.”
Whether that revolution will require us all to live like Venezuelans remains to be seen. In the meantime, Globitex is plodding along well, even if we will have to wait a bit longer for its derivatives products.