For a regular business owner, it’s usually tricky to find a way to accept cryptocurrencies as payment without any technical and financial knowledge. This is where blockchain payment service providers (bPSP) come to help.
Mr. Hans Henrik Hoffmeyer is a COO and Co-Founder of such a company – Coinify. It provides a variety of two-way blockchain-to-fiat-currency conversion services that allow businesses and individuals to adopt financial innovation in a regulatory compliant way.
The company’s services include individual trading, a white-label solution for partner wallets, and a payments suite offering various B2B payment processing products for payment services providers and financial institutions. According to the Denmark based company’s website, they already have over 30,000 companies using their service.
Payments are one of the most popular types of blockchain projects nowadays. How are you different from other competitors?
Coinify was founded on and is still guided by strong regulatory compliance principles. We are focused on a sustainable route of pro-regulation and adherence to established financial sector standards and have been working with governments to help clarify matters giving regulators a better perspective. Some of our efforts include assisting with the EU Commission’s Anti Money Laundering Directive 5 that covers cryptocurrencies.We also try to differentiate ourselves by offering a very diverse range of products, modeling ourselves as more of a holistic financial organization, rather than a sole brokerage, a trading platform or a payment service provider. From that perspective, our partners view us more like a full value chain virtual currencies supplier as we support all major.
What were your biggest challenges while building a B2B crypto service?
One of the biggest challenges has been the lack of understanding and awareness of virtual currencies in the traditional financial services sector. There is also a long-worn idea that cryptocurrencies are a medium for funding illicit activities. However, there has been more education on the subject as the industry matures, and with more practical use cases for virtual currencies emerging, they are in turn gaining more corporate investors interest.Another challenge is the known volatility of blockchain currencies. High fees and fluctuations in price have made most merchants skeptical of this method of payment. 2018, however, was a much more stable year for payments, and we still see more and more adopt virtual currencies payments.
Currently, ‘the mood’ of crypto fanatics is, well, not the best. What kind of future do you predict for cryptocurrencies? We have always believed in long term sustainability in this disruptive paradigm shift, but it does require patience and persistence. People generally have a short memory when it comes to technology – just like people were also discouraged during the dot/combust, however, look today, where some of the most valuable companies in the world are built on the success of the internet.We only see a stronger interest, the adoption of our payment platform, and the increasing volume. Sure, the price of individual cryptocurrencies is volatile, but the real theme here is the massive innovation that continually solves a huge problem.
What correlating trends do you see in fiat and crypto payments industries?
When it comes to payments, trends are the same — ease of payment, speed, convenience, lower cost, and security. But I would say fragmentation is a significant theme in payments across the world. You would expect a consolidation towards a single winning payment model, but instead, banks and payment processors are seeing an increase in payment instruments.
Hardware producers such as Apple pay and Samsung pay, large scale retailers are stepping into payments: Amazon Pay, Tesco Pay+ and domestic p2p are emerging using a variety of technologies and services; providers and disruptors like Klarna even ‘removes’ the payment entirely.
Similarly, in cryptocurrencies, we are seeing fragmentation in payments as more currencies look to optimize where bitcoin falls short. So, what’s even more interesting, the emergence of more types of virtual currencies, such as loyalty points and stable coins were traditional fiat currencies are used as means of payment, brings more power to the consumer but also more headache for payment operators looking to support their customers. That is also why Coinify is agnostic to the virtual currencies and continuously curates a set of selected currencies.
You have a close relationship with the European Parliament regarding the DLT regulation in the EU. What is the EP take on the crypto industry?
I must say I have been pleasantly surprised by the level of knowledge European Commission, FISMA, ESMA, EBA, ECB, and various other bodies have achieved particularly over the last 12 months. Let’s also remember that they are here to protect the general public and institutions from risks, so they need to propose a cautious approach, which to many seems like scaremongering, rightfully so, in my opinion, as historically many people have been scammed or conned. Though comparing to US regulators, they are looking more into the potential, and the establishment -by Parliament- of the European Blockchain Observatory is an excellent example of that. 2019 is going to be a fascinating year for virtual currencies as regulation kicks in.
What are the key learnings you could share with our readers about starting a business in the crypto industry?
Patience, the “get rich quick scheme” days are over. You’ll need resilience and persistence to build a business in this industry just like in any other industry. We spent more than 4 years making Coinify what it is today, and there has always been a time horizon of 10 years for this disruptive theme to unfold. We are still not even halfway there. Also, I would say that no matter what you do, you need to put regulatory compliance first, business second, and technology innovation third and then balance the three. Most blockchain companies I have met have turned these principles upside down, and none of them are around anymore.