The former group president of WaveCrest, a company that tried to pioneer crypto debit cards but had a falling out with Visa, has established a business in Gibraltar that aims to create an investment advisory and management service in crypto-currencies.
Miles Paschini, who is based in La Jolla, California, says his new venture, B21, is meant to promote broader adoption of crypto assets for investment portfolios. “We’re creating an environment for non-technical people to create, purchase and secure a portfolio,” he told DigFin.
As part of this effort the company is working on a user interface that is free of jargon, so that it can serve a similar purpose as robo-advisors such as Wealthfront or Betterment, but in the crypto space. “My mother doesn’t know what a private key is,” he said.
The WaveCrest saga created turmoil in the emerging field of mass consumer crypto adoption. The company was the biggest provider of debit cards to startups, including TenX, Wirex and Bitwalla, that offered these to consumers. However, in January this year, Visa – whose network these cards rely on to process transactions – barred WaveCrest over violations of its policies.
This led to WaveCrest being forced to stop servicing startups; a few crypto debit cards do exist, such as Monaco, which uses Germany-based Wirecard as its issuer. The debacle has been reported in various media as a fiasco for mass adoption of crypto.
Paschini says WaveCrest was the first company to attempt to bridge, at scale, traditional finance and the crypto world. “We created technology linking crypto wallets and exchanges to real-time spending on debit cards, so that crypto assets could be used by consumers,” he said, adding that traditional credit-card companies are resisting this shift.
He is still trying to build those bridges. B21 is intended to gap the difficult reality of investing in crypto assets and the ideal of making it easy for consumers to access.
My mother doesn't know what a private key is
B21 is not a blockchain company but it interfaces with them. One reason to launch B21 in Gibraltar was to take advantage of its pro-blockchain regulator, so it can become a licensed financial company (perhaps the first in the tokenized financial world); the company has applied for a license to let it send or receive funds, make exchanges, and provide both custody and advice.
Paschini says the company is also pursuing a banking license in Puerto Rico, a U.S. territory. (Puerto Rico is also where B21’s most prominent advisor and investor, Brock Pierce, has moved business, as described by the New York Times. A second notable advisor and investor is Samson Lee, founder of CoinStreet in Hong Kong, a player in the Shenzhen/Guangzhou/Hong Kong blockchain space, and a consultant to Gibraltar Blockchain Exchange.)
B21 is not a trading platform. It is intended to become a longer-term platform for asset management. It will use traditional, centralized technology as well as the EOS blockcchain as a data publishing system. (EOS is the technology to be developed by Block.one, also backed by people based in Hong Kong, which raised $4 billion earlier this year in an initial coin offering to finance the development. Pierce was an advisor to Block.one until the company dissociated itself from him over allegations of sexual misconduct that Pierce denied.)
B21 is launching a coin offering of its own (U.S. and Chinese nationals can’t participate), with a private raise now in progress and a public offer to follow the granting of a license in Gibraltar, which Paschini hopes will happen this summer.
This will look like a large perpetual fund
Investors are meant to use the coins to gain access or fee discounts for crypto-investment advice. They can also be used to invest in early-stage blockchain companies (i.e., other ICOs), not just crypto-currencies. “This will look like a large perpetual fund,” he said.
Paschini says the B21 ICO is meant to raise anywhere from $3 million to a hard cap of $29 million.
But is there $29 million’s worth of demand for this kind of thing, on a blockchain tech that doesn’t exist yet? “There are people who will wish in 10 years from now that they had invested a small percentage of their overall portfolio in crypto startups,” he said. “This is meant to be a medium- to long-term holding.”
Paschini says the EOS blockchain is intended to be for publishing data about B21 – money in and money out, for example – for the purpose of providing transparency and boosting user confidence in it. Yet, for a project that’s meant to be about decentralization, the B21 mobile app represents another centralized portal into crypto investing.