Unlocking Crypto’s Corporate Promise

As major cryptocurrency exchanges battle for average deposits of a few hundred dollars across millions of accounts, or face the cumbersome onboarding processes associated with institutional players—where amounts surpassing $5 million are a daily occurrence—the middle market appears to be somewhat neglected.

Whether mid-to-large corporations, family offices or tech-savvy high-net-worth (HNW) individuals, operating in the $100,000–$500,000 space is tricky.

Or it has been, until now. Newcomer BVNK, which offers an innovative core platform for fintechs and digital banks, aims to set new standards for global digital asset financial services, and hopes to become the go-to choice for fast-growth international businesses and financial services partners across leading developed markets. Its goal is to deliver great service, at scale.

CEO and co-founder Jesse Hemson-Struthers says part of the motivation for launching BVNK—he previously founded the emerging-market-focused crypto trading platform Coindirect—comes from his team’s own experience when trying to find third parties able to facilitate their digital asset banking requirements.

“As a medium-size, growing business looking for our own potential suppliers, liquidity providers and just general banking partners, we found it was a struggle,” he says.

Digital banking is facilitating the increasing adoption of cryptocurrency worldwide. Nigeria boasts the highest levels of crypto usage, followed by Vietnam and the Philippines, while Japan, Denmark and other European and Western nations are demonstrating the lowest levels of adoption, according to a recent World Economic Forum survey.

To date, crypto usage has tended to be geared toward payments. Yet yield generation and corporate treasury are two areas where Hemson-Struthers believes much of the developed-market opportunity sits, and BVNK invites clients to follow the path of dozens of large corporations—including MicroStrategy, Tesla and Stone Ridge Holdings—that have added digital assets to their balance sheets.

Generally speaking, the use of crypto is expected to meet the changing needs of more tech-focused and diverse corporate clients amid a rapidly advancing financial backdrop.

As crypto regulations vary between jurisdictions, and as the state of play is, as Hemson-Struthers notes, fast-evolving, with regulators “playing catch-up with each other,” BVNK is looking to “preempt what the requirements might be” and factor that into their policies—for instance, around safeguarding of funds and anti-money-laundering onboarding requirements.

“From a payments perspective, the emerging markets are much further ahead than the developed markets, which is where I think the bigger problems have been solved, with blockchain-based payments, for instance,” he adds.

Conversely, developed markets have, to date, focused more on crypto as an investment asset. BVNK’s plan is to cater to these varied needs as “those two worlds merge.”

Hemson-Struthers and his team are initially bringing three products to market: BVNK Business Account, which provides a straightforward “Know Your Business” process to access fiat and digital currency wallets used for settlement, exchange and payment from a single interface; BVNK Yield, offering above-average yield potential on digital holdings; and BVNK Markets, for large digital asset trades.

The team has been witnessing something of a supply/demand disconnect. As Bitcoin, other cryptos and stablecoins (pegged to a reference currency) make progress toward becoming global digital reserve assets and evolve beyond their early “speculative investment” tags, Hemson-Struthers says that too many organizations have large positions in digital assets without enough service providers offering corporate treasury solutions.

Corporate treasury performs two primary roles for a business: cash and liquidity management. Hemson-Struthers sees a growing opportunity for U.K. and Europe-headquartered businesses that are receiving digital payments from overseas and are looking either to hold cryptocurrencies on their balance sheets or facilitate payments by converting crypto into stable or fiat currencies (often using a third party).

“It depends on their risk mandates, but some are choosing to hold digital assets on their balance sheets in response to the revenues they are receiving digitally,” he says.

To optimize asset exposure and correlation of returns—or out of desperation for yield given current monetary policy—diversification is key.

A core segment of BVNK’s target audience is comprised of early crypto adopters and wealthy tech entrepreneurs who have enjoyed impressive gains in recent years and are now looking to move into business assets. Family offices and HNW individuals are also core, yet fledgling, audiences. Many of those sitting on large digital balances are looking for providers to serve as custodians to help generate additional yield—particularly pertinent given the persistent low interest rate environment—or to utilize such assets for payments.

While admittedly early days for BVNK, Hemson-Struthers says initial inquiries are coming from medium-size and larger family offices and wealth managers looking for solutions for their customers, as well as lawyers and property firms operating on their clients’ behalf.

Less-developed markets have led use of crypto as trading and investment assets, but companies in developed markets are increasingly accepting payments in cryptocurrencies from emerging-market countries, and this global trade is where the richest untapped vein might be, according to Bloomberg Intelligence Analyst Julie Chariell.

“What we’re seeing from corporations is that holding crypto is much less about the investment opportunity and much more about transactions,” Chariell says. 

She explains that cross-border activity is a major driving force for corporate crypto adoption, saying that about three-quarters of multinational corporations operating in at least six countries are using crypto for operational purposes. 

Worries about regulations in different countries, time zones, FX conversion and the risk of currencies changing value when a transaction might take several days to close are all alleviated when using crypto.