Nexo’s Antoni Trenchev had the pleasure to sit down with Bloomberg’s Caroline Hyde and Romaine Bostick and discuss the state of the blockchain space and why Wall Street finds Nexo extremely interesting as a means of generating superior returns in the current low interest rate environment.
Here are the key takeaways:
- Tether cannot bring down crypto, as the space has matured enough and serious blockchain companies are providing versatile and useful product.
- Institutions like Fidelity, the Yale Endowment Fund, JP Morgan and more are showing a clear interest in blockchain, indicating recognition for the benefits of this pivotal technology that will improve the lives of hundreds of millions of people.
- In the extremely low-rate environment created by the Fed and the ECB, Nexo’s proposition of 6.5% annual returns is incredibly attractive to both the retail and financial institutions.
- Governments should provide clear and business-friendly rules so that entrepreneurs can innovative, companies can build and humanity can prosper.
- The tokenization of the world and crypto mortgages are important trends that will see crypto-wealth intertwine with real-life assets like stocks, bonds, commodities, fine art and real-estate. The world’s first crypto-mortgage with Brock Pierce is just lifting the curtain of that is coming next.
- Nexo is about to cross the $500 million mark in terms of funds processed on the platform which shows the enormous interest in the services of the world’s most advanced crypto lender.
You can watch the full video or read the transcript below:
Caroline Hyde: Talk to us about, first of all, the Tether element. Is this a crypto that you take in some way? Is this something that you lend against? Is it one that you actually believe in as a so-called stablecoin?
Antoni Trenchev: We work with Tether a lot in terms of both extending loans in Tether, as well as paying interest on it, as one of the ways to scale the operation and to provide finances. But actually what we have been seeing today is something that has been going around for quite a while. These are not the first allegations and I’m quite pleasantly surprised how the markets are taking that in.
Bitcoin being down 5 percent on a day — that’s the equivalent of the Dow Jones being flat on a day. Crypto is that volatile. And I think that’s for two reasons. First of all, there are a lot of great other alternatives already as the space matures and then companies are finding responsible ways of dealing with that. With us, with Nexo, for instance, for the interest that we’re paying on Tether comes with a conversion protection guarantee. So as soon as you give us the Tether, we sell less it for dollars and we own your dollars and you know the clients have been super happy especially with what’s happening today.
Romaine Bostick: Do you think that some of the criticism that we’ve heard about Tether or at least the way people are using Tether that that’s a little bit overblown?
Antoni Trenchev: Well, who’s to say. I mean that’s for the attorney general and the prosecutors to examine and they should! If there was a criminal activity, not following fiduciary obligations, they should definitely look into that. And, you know, the space needs this clearing and cleaning up, so to speak. That’s the way that the institutions will come in and that’s how the wide adoption will come in.
We already see that we know with Fidelity coming and providing custodial services, the Yale Endowment Fund. I’m super excited about that, I’m actually here, apart from a sit down with you guys, to take some meetings with the hedge funds and family offices in New York and they’re super excited with the overall space and what Nexo has to offer.
I want to actually take a moment to thank the Federal Reserve and the ECB. This extremely low rate environment we have been in for a couple of years makes more valuable the proposition that we bring into the financial sector.
Caroline Hyde: OK. So at the moment what your business does is takes people’s crypto and gives them money to be able to not sell raffle their crypto to not have a taxable event, but being able to take money and use it to buy houses and buy assets with it. I’m interested in the so-called maturing of the space in general because many think that the lending space that you’re in is in some way a Wild West. It’s not regulated. Does it need to be regulated to get more institutional players in?
Antoni Trenchev: Yes, my background is I studied law. I’ve been in Parliament, passing legislation. We have been in FinTech for more than 10 years so I am about clear rules, regulation. But that needs to be concise, business-friendly so that entrepreneurs in the space can develop beautiful and useful products. So definitely that is something that we would like to see and that is needed for the maturing of the space.
And right now, we already have processed or at about the mark of around 500 million dollars on the platform. It is gaining traction. What we do, as you pointed out, is we lend out against crypto assets and this is actually the best of both worlds because the mentality of the people is that they don’t want to sell. They want to keep and they occasionally need access to liquidity. And for instance one of the more interesting deals that we executed recently was a crypto mortgage with child Actor Brock Pierce. Mighty Ducks, might ring a bell.
Romaine Bostick: I am old enough to remember that.
Caroline Hyde: Me too. I am, I am.
Antoni Trenchev: He holds 95% of his wealth in crypto and he hates selling any of it. And he wanted to buy a chapel, a home in Amsterdam and he borrowed from us to do precisely that, without selling a single bitcoin.
Romaine Bostick: I’m sort of fascinated by that though. I mean anyone who’s bought a house. I mean you know that when you take out a mortgage there’s sort of that interest rate risk from the time you get your quote from the lender and the time you actually close. I mean it could be a long time and in certain markets, it could drag on. When you put something like crypto something that’s so volatile and tie it to that what is protection like how am I going to be protected and know that what I sort of originally bid on is going to be the same?
Antoni Trenchev: Well, we have fixed rates and they don’t change we charge between 8% and a maximum of 16% per year which is nothing crazy, especially given that the collateral is bitcoin and other cryptocurrencies which are quite volatile. So that’s the certainty right there. And you said a long period of time of approval. With us it’s instant, everything with us is automated. You deposit your crypto and you get an instant credit line and you get your money next or same day and that’s what happened with Brock Pierce. We were able to close the deal within a day — 24 hours.