Benzinga is hosting a two-day event at New York City’s Pier Sixty, December 7-8, 2022. The likes of Kevin O’Leary and Anthony Scaramucci — as well as leaders at DriveWealth, Prime Trust, Synctera, and beyond — will talk about controversial topics, perspectives on opportunities, and threats in fintech, as well as share insight into how they’re monetizing on disruptive trends.
Benzinga will periodically publish articles on those it sees are making big impacts. Today’s chat is with Kiel Dowlin, head of growth of Wirex.
The following text was edited for clarity and concision.
Q: Kiel, nice to meet you. Want to kick it off with an introduction?
Kiel Dowlin: I spent the last 18 months deep in the crypto sphere.
My initial deep foray into decentralized finance (DeFi) was with Tse Chris Tse of Cardstack. Then, about four months ago, I got poached by the Wirex team to help them build out their base. Wirex is best known for its Bitcoin (CRYPTO: BTC) or crypto-backed debit card. It was the original provider that started in 2014 and launched its first product in 2015 which was focused on helping you use cryptocurrency as an everyday utility and mechanism of payment.
Why did you enter the space?
I came into the space focused on making payments more equitable and available to users from both a regulated fiat on-ramp and fiat off-ramp side.
Also, I’m concerned with the support component for users in other geographies that may not have access to stable currencies. That's been a big focus of my career.
How is Wirex bringing utility to this emerging finance ecosystem?
Bitcoin likely wasn't going to be accepted by every vendor or merchant. However, if you could easily convert that into fiat rails, you could grow the addressable utilization of cryptocurrencies by magnitudes. So, that was the initial product that was launched in 2015. It's now deployed across 40 different countries, and there are 5 million registered users globally.
How has Wirex expanded?
The headquarters are in London but our operations are across the world. We recently launched in the United States in February and expanded to support around 80 different digital currencies and continue to add additional currencies every couple of weeks. We've also expanded into a DeFi-based organization where we have our centralized finance (CeFi) -regulated product that is a direct intermediary to the fiat rails. We issue both Visa Inc (NYSE:V) and Mastercard Inc. (NYSE:MA) debit products globally, but, we also, now provide a non-custodial MPC (Multi-Party Computing) wallet.
MPC wallets do not use seed phrases. That’s really unique in helping the mass market adopt more crypto-native experiences versus people having to lose their MetaMask seed phrase or get exploited. That's one of the big opportunities there.
What other solutions exist and how is Wirex different?
When we look at some of the crypto exchanges, many have secondary products. There is Crypto.com’s debit card product. You also have Binance with its crypto debit card product as well. FTX recently introduced a similar type of product. Those products are really more around prepayment. You basically fill the card up or choose a single currency, and that is the currency that you spend.
Our product is differentiated in the way that it's effectively a crypto banking account of sorts. You can choose up to seven different currencies and those are natively spent and converted at POS (point of sale).
There is really no need to go in and manage which accounts are linked. It's automatically drawing and converting those currencies at the POS. It's far more flexible and there is no prepayment. You're still holding them in your account.
A handful of our competitors have a one-way fill and then it's there. Better go spend it.
Who is warehousing that crypto?
We are a regulated custodian and we operate and hold the cryptocurrencies that are on our platform for our users. We are integrated with Fireblocks, a large enterprise custody solution in the market. Our users each have their own on-chain wallet address for the assets that are supported, so they can send assets on-chain and then they are moved into our custody and immediately available for use.
Let's talk about recent crypto market turmoil and Wirex credit programs.
We have recently launched our credit line programs internally. Users are able to take loans out against over-collateralized positions on our platform and borrow stablecoins against Bitcoin and Ethereum (CRYPTO: ETH).
No counterparty risks?
We don't have counterparty risk. It's something that we've continued to support ourselves. A lot of these other players in the industry may be bearing duration risk. You're taking on assets people are depositing and then loaning them out. If you're not appropriately hedged as you can, you can find yourself in tricky situations. There are also questions about how you put those assets to work while you're holding and loaning against them. At the end of the day, don't do stupid things with other people's money. Simple as that.
What about accessibility?
We do have a web application. We also have an Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) Android and Apple Inc. (NASDAQ:AAPL) iOS application. Given that Wirex is a KYC-regulated product, we have put in place strong compliance to prevent fraud or other devious actions. We are regulated by the FCA in the United Kingdom. We hold the appropriate licenses in other jurisdictions, too.
You are working on a DeFi component. Care to tell me more about that?
Last fall, we released our MPC non-custodial wallet with the idea that any entrance for users to access DeFi has to come through a non-custodial wallet.
Previously, non-custodial wallets have been extremely complex to use. It's something that you have to set up in private and, essentially, you are acting as your own bank. What we have created and launched is an MPC wallet that effectively uses two pieces of unique data.
The first is a face print and the second is an email address to provide a wallet that is encrypted and can be revived from anywhere. This reduces the likelihood of loss so long as your face does not change.
We think the DeFi wallet is the entry point for the next billion users in blockchain and Web3.
What are you most excited about and concerned about?
From the Wirex perspective, we provide the fundamental core utility of spending. We have a number of users who have made money during the bull market run. Ultimately, users need to still spend to be able to survive. At the end of the day, people still need to pay rent, they need to buy food, they need to pay for transportation and travel. We've become a core utility for these users as we basically take them from on-chain to the real world. Therefore, in this bear market, we continue to see growth as we are providing that core utility.
As it relates to the DeFi side, you know, we are definitely a big proponent of social media and being able to access and control one's own data. We're going to see a significant increase in functional utility.
What should people be focused on within the next 18 to 24 months?
As it relates to the non-custodial Web3 space, it is going to be a great time to build and really focus on what matters. This means not focusing on speculation. It's nice to have a little bit of a quiet period to truly build and focus on what's next.
How do you overcome fears?
It is kind of we look at and adapt to regulation. That's very important to us as an organization that is participating and facilitating our relationships with our consumers and our end users. Regarding that fear that crypto is dead, we've kind of taken a step back. The organization has been through three bear markets since it was founded. Every time the dialog is the same and every time we come out stronger.
Is there anything else you'd like to add?
We're very excited by the prospect of launching in Latin America. It's on our roadmap. We also continue to be super excited about our operations in the US where we've seen significant growth even in this downturn. We have a really strong product market fit and the goal is just to help provide the utility to more people. We believe it's a fundamental right for individuals to have access to their cryptocurrencies and be able to use them in everyday life.
