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Cabital and BCB Group’s Interview on The Future of Payments

Hear from Cabital's CEO Raymond Hsu and BCB’s founder and CEO Oliver von Landsberg-Sadie about the global adoption of crypto and the role of stablecoins.

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We spoke to our CEO, Raymond Hsu, and BCB’s founder and CEO Oliver von Landsberg-Sadie about the end of cash, the future of payments, and the global adoption of crypto. We’ve selected a few excerpts from the interview, which you can watch in full here:

The crypto industry exploded in 2021. Yet widespread adoption hasn’t happened yet. What do you think is the future of payments like with crypto, especially for this year?

Oliver: Crypto has teased us what good looks like in terms of payments and as a store of value, but in order for it to get through adoption, it needs that connective tissue to the traditional finance world. It needs critical infrastructure to really bed in, and it needs really powerful agents to get that liquidity flowing. So what Raymond is doing with Cabital is exactly one of the missing ingredients to accelerate adoption, and we're just there to support that.

Raymond: Yes, I think infrastructure is definitely one. So that's what Cabital has been doing, but I think there's another important component here, which is the regulation. So I think the good sign so far is that we have seen how the U.S. government decides to regulate crypto further, basically giving crypto strong legality to sustain and also prosper. I think the European Parliament also just advanced the MiCA, omitting the ban on the Proof of Work-based cryptocurrency. So I think that's another important push.

"You can also see in Asia, Lat-Am, and Africa, the emerging markets are also taking off incredibly, right now. I think, unfortunately, the war happened in Russia and Ukraine, but people definitely find crypto as a very important way to help them to protect their asset value. So all these early signs, I think, are pushing the users to recognise this new payment, new currencies and new ways to manage their assets more. So I think now is the time to build a strong on and off-ramp solution. That's why I think Cabital offers all the ways, including Cabital Connect to help the users to access the crypto world. Yes, so just to be clear, we are still at a very early stage, so I think there's more to come in the next few years."

Crypto is volatile and, in the U.S., taxable, which makes it tricky to convince consumers to spend it when that transaction could generate tax obligations and lose future gains. How will stablecoins pave the way for the adoption of crypto as a payment?

Oliver: I think Stablecoins are today a mirror of fiat government-produced currencies, and if you are a crypto maximalist, I think you can probably see that in the long-term, in the rearview mirror, it'll be a bridge, but it is actually, in my view, a critical bridge. It is the way to say, okay, look, we get that your business is based in dollars and you can't face the intra-week, intra-month volatility of Stablecoins, less so of CBDCs, but that's a separate conversation. Yes, I see them as another essential part of the infrastructure.

We need infrastructure at all layers. Stablecoins are, in my view, one of those layers that we can't ignore.

Raymond: Yes, I think that's a game-changer because most of the users when they first learn crypto, they learn BTC, they learn ETH, right? I think the volatility is one thing that really scares them when they try to participate. It will be easy for them to make money but at the same time lose money. Stablecoin is like an anchor for them to say, "Hey, I want to participate, but I don't want to get frustrated with the crazy volatility of the market value of typical cryptocurrencies." That is a catalyst to the market as well. So you can indirectly participate in this booming economy without exposing yourself to huge risks.

So personally, I think that stablecoins are very, very beneficial for all participants in this ecosystem right now. It’s also pegged to the USD or other fiat currencies. So you start asking yourself whether you want to use traditional fiat money to settle or to use stablecoins as an option. But the thing is, with stablecoins getting so big, people start asking whether that's going to be a systemic risk, because what's really underlying and what's the regulation behind it? It's still not fiat money.

It's interesting to see that right now, the U.S. government is coming into the picture and saying, "Hey, we want to start regulating it" and I think that's the only way for people to understand what the stablecoins' risk profile looks like. To be honest, you cannot really blame them because there's no rule right now for them to follow. Once there's a rule, I think it's much easier for everyone to follow and stick to that.

So it's something very similar to the fiat currencies, but there's a regulation to make sure the underlying risk is still acceptable for the whole system but is also interfaced with a very innovation-driven crypto economy. So yes, I think definitely a game-changer and the role of stablecoins will only get more important from now onwards.

Oliver: You're absolutely right, Raymond. When you're looking at the stablecoin landscape, I think there's a lot of FUD about what's inside the stablecoin because the most useful way for me to think about stablecoins is to compare it to a bank model. I'm not suggesting stablecoins should be regulated like banks. That would not be progress, but if you look at a bank model which takes capital and then lends it out again, re-hypothecate it, they only need to keep a certain small percentage of actual one to one cash, like sub 10% in most cases.

"If you look under the hood of all major stablecoins with traction, that ratio of cash to commercial paper and other assets is drastically different. So I think of most stablecoins, legit ones that have good level transparency as a super, super, super conservative bank. So yes, I think there's a lot of myth busting that we need to do to get more people, especially in the institutional market, comfortable with stablecoins because they are fundamentally a much more creditworthy product than a lot of tier ones."

How is Cabital planning on helping the people of Switzerland improve their ability to make payments and earn more money on their digital assets? 

Raymond: Yes, thanks for the help from BCB, I think now we are able to accept the Swiss Francs for our users to top up and to buy and sell crypto and withdraw Swiss Francs back to their bank account. So the experience is very similar to the daily banking experience to move the money around. By doing that, what they can do first is to tap into our Cabital owned products to start earning much higher yield, then be part of the booming crypto economy. Secondly, what we try to do is that once we have this rail, once we have this infra, we also want to share with the other crypto platform by interconnecting with each other.

So once the user deposits Swiss Francs and exchanges these to USDT or BTC, or ETH, they can also easily and efficiently transfer to the other platform for the other services, and it’s instant rather than waiting, rather than paying the high fee because we are paying transfer based. So that's really for the users, and for the platform, they can also be very happy working with us because we deal with the AML and KYC. So whatever users we push it through or they push over to us, are enabled to open an account with Cabital, I think we can guarantee the compliance levels there and can benefit both ourselves and our clients and the users, of course.

(To Oliver) How does Cabital fit in your vision of building digital infrastructure? 

Oliver: So, day one of any partnership like this is: let's just get you up and running in the channel that is most valuable to you. Very vanilla kind of "here's the bank account, you're legit, let's get this going." But then there's a much more long-term view, which is anticipating what direction Cabital is moving in, anticipating how we can support Cabital in the other services that we offer. So we're always tuned in not just to the kind of day one onboarding for the basic service, but also to understanding your purpose and also your velocity as you grow as a business.

Looking at all of this through partnership mindset rather than as a kind of vanilla backend service provider mindset, almost always leads to much more interesting partnership opportunities down the road that deepen the relationship. So yes, I mean, as Raymond mentioned earlier, it's early days, but I think both of us have got a sense of what that path looks like ahead, and I'm super excited to support that.