Jack Chan, co-founder and CEO of Airwallex, said: Lionel Ng/Bloomberg—Getty Images
Go to a crypto conference and you'll soon hear someone bring up SWIFT. Of course, I'm not talking about any particular pop star, but rather a financial messaging protocol devised in the 1970s that allowed banks to send money to each other across borders. Cryptocurrency insiders will be quick to say that SWIFT is slow, outdated, and expensive compared to blockchain. Their points are correct. That's why cross-border payments, like those facilitated by Ripple and Circle, have long been touted as a potential killer use case for cryptocurrencies.
There's just one problem. Ever since Bitcoin was introduced 15 years ago, the traditional financial industry has been nonstop in improving its remittance networks (and the “rails” of payments). I was reminded of this while speaking to Jack Chan, founder and CEO of Airwallex, a Melbourne-based company that helps businesses move money quickly and cheaply across borders.
Chan told me that he started Airwallex when he was working as a foreign exchange trader with a side job running a coffee shop when he realized paying suppliers in places like Guatemala was an expensive headache. . His Airwallex, which competes in payments with the likes of Stripe and Adyen, works by pooling funds in a number of different countries.
This means that if an Australian seller wants to pay a supplier in Mexico, Airwallex simply arranges each transaction in the local currency and rebalances the relative pools of funds from time to time. This is a much faster and cheaper process than sending a wire and doing a currency conversion. Airwallex is essentially his B2B version of Wise (officially his TransferWise), a service that offers the same arrangement to consumers. The company, whose customers include credit card service Brex and race car brand McLaren, said it was profitable last year with $350 million in revenue.
I asked Chan about the possibility of using stablecoins, or XRP, the cryptocurrency used by Ripple to facilitate cross-border remittances in regions such as the South Pacific. He said that while he thinks cryptocurrencies are interesting, he doesn't think they have the potential to become widespread as they are inferior to fiat currencies in terms of liquidity. He said no company would seriously want to abandon the multi-trillion foreign exchange market and pay people in cryptocurrencies instead, especially since the spreads are often much wider.
Regarding the reputation of SWIFT and other legacy systems as being unwieldy and expensive, Zhang said this is changing. He pointed to a number of new networks, so-called RTP (real-time payment) networks, that are emerging in different countries, such as UPI in India, PIX in Brazil, and FedNow in the United States. We make transactions faster and cheaper. Companies like Airwallex are leveraging this to make SWIFT and his infamous 3-day delay associated with ACH a routine failure.
All of this means that while blockchain continues to evolve, the traditional financial system does not stand completely still. Enjoy your weekend! If you think these new Trad-Fi services are a game changer, we'd love to hear from you.
jeff john roberts
[email protected]
@jeffjohnroberts
decentralized news
chris dixon He tweeted about his book reaching No. 9 on the NYT's bestseller list, but the newspaper noted that this recognition was driven by heavy sales, many of which came from a16z and its startups. (Deputy)
inside Bitcoin ETF marketing war, grayscale has an advantage due to the quirky regulation of being the only company eligible to promote the ticker. (luck)
United Nations Sanctions Monitor We are planning to release a report on north korea’s massive hack of cryptocurrency companies has netted rogue states billions of dollars in profits for weapons systems. (Reuters)
the judge said Book of Genesis It is possible that the Winklevy family will be able to keep the GBTC shares that were promised but not delivered. gemini As collateral for a loan before Arn's debacle. (WSJ)
coin desk has replaced its CEO and many other members of its senior management team. (coin desk)
Meme-O-The-Moment
