Hong Kong-based Monaco, which raised $26.7 million last year from an ICO, is using the proceeds to speed the adoption of crypto-currencies – this month in Singapore but by the end of the year, across the globe.
Kris Marszalek, CEO, says today there are about 23.5 million people in the world who own crypto-currencies; practically all of them are young males. He predicts in five years that number will be 1 billion. “Now is the time to challenge the status quo,” he told DigFin.
The company has an app for users to buy, download and store several crypto-currencies, and is prototyping adding fiat currencies such as U.S. and Singapore dollars, and euros.
Using prepaid cards for crypto
Of course, spending bitcoin and other coins is difficult, so Monaco is looking to cards and other services. With Wirecard as its issuing bank, Monaco will introduce a prepaid Visa card in Singapore this month (eligible only to people who hold the company’s digital token); users can convert into fiat currency, and through that transact with the card in the traditional world.
TenX, another blockchain company, based in Singapore, is also working to introduce cards that enable users to spend crypto hordes by converting to fiat. Others include Berlin-based Bitwala, and Cryptopay and Wirex in London. All of these suffered a setback when their issuer, Gibraltar-based WaveCrest, was dumped by Visa for breaking its operational guidelines – leaving customers unable to use their cards.
As a Visa-approved program manager, Monaco is responsible for compliance and its benefits program. A Visa spokeswoman told DigFin: “Visa does not process or settle any transactions in non-fiat currency of any kind, including crypto-currency. Crypto-currencies must be converted into legal tender before Visa can process the transaction.”
The WaveCrest fiasco has given Monaco a head start in the crypto-card game. But a card alone, even a fancy metal one that offers zero commissions on transactions, is not going to expand the crypto world. After all, people already have traditional credit cards – ones that offer rewards such as airline miles, or that tie in to services from issuer banks.
What does value-add look like?
Startups such as Monaco are therefore trying to build a suite of services that provide added value to the card experience.
The app serves as an e-wallet, on which the company has built research and education services about crypto, a robo advisor for crypto products that lets people build portfolios, and credit products based on people pledging bitcoin as collateral (the more tokens pledged in this manner unlock benefits, such as cash-back schemes or access to airline lounges).
For the business to succeed, Monaco needs banks such as Wirecard to serve as card issuers, so it is in the process of trying to find partners – banks – for other markets.
It must be fully compliant and meet all local know-your-customer and similar regulations.
Then there’s the challenge of generating appeal beyond the narrow userbase of crypto-currencies.
Marszalek likens the effort to PayPal’s initially slow build out. “But once you do that, you have a defensible position that is hard for others to replicate.”
Despite last year’s fund raise, he says a global rollout of Monaco’s app and prepaid cards will cost hundreds of millions of dollars, and partnerships with financial institutions as well as regulatory blessings in any given market.
Monaco intends to go live in Singapore and generate user data – and then expand to Europe and North America, starting by the end of this year.