Crypterium interview: Will Central Bank digital currencies replace fiat currencies?

Steven Parker is CEO of the Crypterium wallet app, which has over 600,000 registered clients in more than 170 countries. The application enables users to hold a crypto balance in more than 20 tokens, allowing them to spend assets via a Visa card. Crypterium didn’t reach its high levels of success out of nowhere, however. Parker has prior experience as a former General Manager of Visa’s Central and Eastern Europe network.

With cryptoassets, specifically, DeFi, having grown so strong in the last few years, where do you see the industry trending next?

It is extraordinary how far cryptocurrencies have come in only a few years. Mainstream adoption of crypto has only occurred over the last 2-3 years, and yet we have a vibrant ecosystem of miners, exchanges, wallets (like ourselves at Crypterium), marketplaces, and technology providers. Chainalysis estimates that crypto adoption has increased 880% over the last year, with an estimated average of 220 million users worldwide. 

Currently, there appears to be a few critical use cases for crypto, and Crypterium is happy to enable all these types of innovation. Crypterium has many customers in developing markets, such as the Philippines, Nigeria, or Bangladesh, where financial inclusion is a real issue. Bank accounts are difficult to obtain, and the tokenised nature of crypto has significantly pushed safe and rapid P2P payments. For all types of customers - both business and consumer - crypto's frictionless and borderless nature is perfect for cross-border payments. Finally, in a low-yield world, some of the new ability to lend and invest in crypto with high returns is an exciting alternative. Crypetrium has recently enabled staking through Uniswap to open up these opportunities to retail customers who can’t easily access DeFi platforms.   

In what ways are Trad-fi and DeFi blending to create the next experience in finance?

We are in the early days, but we see several areas where convergence is happening. At Crypterium, we enable pay-in and payout through partnering with traditional banks and card companies - our own Visa Europe card is particularly popular. We are also seeing more and more players such as Paypal and Visa offer crypto as a payments alternative. MasterCard recently announced an exciting alliance with Bakkt, for example. On the investment side, investment banks and fund managers are providing crypto as an alternative asset.  

What countries are leading the charge into crypto regulation?

Regulation is a ‘hot’ area in crypto. Regulators are worried about money laundering or un-educated customers losing lots of money. At a broader level, central banks are concerned about the “privatisation” of money. One approach is to ban crypto like China, but not every country can control and manage that. Other countries such as India are half-hearted in their openness. The US has been very fragmented, and the SEC is now urgently looking at how they have a joined up approach. Europe is arguably leading in a direction that manages the risks but also attempts to facilitate innovation. Countries like Germany and Switzerland have strict policies and registration processes, but there is room to create innovative services once approved. Of course, we need to avoid over-regulation in an industry where innovation is rapid, and we have no real idea of where it will develop. 

In any case, it is essential to note the fact that Crypterium has recently been registered by the UK’s Financial Conduct Authority (FCA) to provide cryptocurrency services to UK citizens and companies (registered firm) and is one of only a small handful of companies to have passed the registration process from almost 200 that have applied. This registration ensures that as Brexit measures kick in, Crypterium can continue to provide its crypto wallet services, including its crypto Visa cards and exchange functions, to practically everybody in the UK. Not only that, but its market-leading B2B offering can provide the same level of functionality to UK businesses. FCA crypto registration is an extensive, detailed process that takes almost 18 months of assessment of policies and processes before approval is granted. This process highlights the quality of the systems and compliance procedures applied by Crypterium, as well as the small number of companies so far approved.

Do you see cryptocurrencies completely taking over fiat or acting as a supplement similar to gold and other alternative assets?

I think stablecoins have a real opportunity to supplement traditional finance. After all, we see how the world can effectively use this technology with RippleNet’s enablement of cross-border small business payments with conventional players such as Santander. Otherwise, the example of a country like El Salvador adopting Bitcoin as legal tender is vast, and, undoubtedly, more countries will follow.

Central Bank digital currencies are also a fascinating idea - will they replace fiat currencies? There are lots of problems here about central banks competing with the commercial banking sector. For investments, it is too early to say. Bitcoin is an alternative asset when inflation is a fear. As for DeFi, its exact direction isn’t clear, though we can be sure that the space is heading for a bright future.

What role does Crypterium play in the future of cryptocurrencies?

At Crypterium, our mission has always been to make it as easy to use crypto as it is “normal” money. Through our pay-in, payout, and exchange functions, we do just that. You can send money to a mobile device anywhere in the world with a couple of clicks, and we have now brought this “easy to use” philosophy to borrowing and investing in crypto. Our current focus is to provide income and maximum benefit from working with, storing, and using cryptocurrencies. Crypterium has also run some exciting, recent promotions around staking CRPT on Uniswap and earning via the Xen token. Finally, through our B2B offering, we enable more interested consumers to access crypto services easily.

How do we convince more institutional investors to get involved in crypto?

Institutional interest is already increasing a great deal, and Chainalysis’s recent survey of the market shows that, in developed markets, larger players (transactions over US$1m) accounted for 75% of DeFi volumes at the end of last year. This interest should come as no surprise, considering institutional players such as Goldman Sachs and Fidelity will want to provide their customers with choice through alternative assets, particularly in a low-yield world. We also see “new economy” companies such as Square, MicroStrategy, and Tesla holding large amounts of crypto on their balance sheets, but they remain exceptions for now.   

What’s standing in the way of mass NFT adoption?

NFT is a whole other world. Off the back of smart contract ecosystems such as Ethereum, we can create all sorts of NFTs. Currently, we’re experiencing artworks and collectibles in the NFT space. In my youth, we collected and exchanged paper cards of top football players - now you can do it digitally. Recently, a group formed to buy a physical world copy of the US Constitution. 

It is such a new market, and the idea of what something is really worth is so uncertain that, for the moment, I think NFTs have space to evolve and stabilise. Even so, NFTs are here to stay as part of our new digital world, and we can imagine them being used within virtual games, for exchanging virtual goods, and for digital money - all features which are part of the much-hyped “metaverse.” 

Again, we don’t really know where all this will head, but cryptocurrencies are here to stay in one form or another as easier ways to pay. The yields that DeFi can support in a disintermediated way are attractive enough to bring in institutional and consumer interest. Then we have NFTs accelerating the world into digital platforms. It is all so exciting and unknown, and Crypterium will continue to fulfill its mission of making all of these services readily available to the interested consumer. Our next step is to start actively working in the US, launching a US Visa card next year, and expanding our local presence.