Why this crypto lender is “safer for customers” than other banks

Antoni Trenchev, Co-Founder and Managing Partner of Nexo, joins Yahoo Finance Live to explain how the company is transforming the crypto lending space and potential crypto regulation in the second half of 2021.

Video transcript


Welcome to Yahoo Finance Live. As we watched, we saw the growth of people in crypto turning to lending platforms, BlockFi, of course, one that we talk about a bit on this show. Celsius we had earlier this week. But there is another, Nexo, which is gaining ground. And to learn more about what this platform has seen as people turn to try and earn a return on their crypto assets, I want to call on Nexo’s co-founder and managing partner. Antoni Trenchev is joining us now.

And Antoni, when we look at it it seems like a no-brainer to explain it, but there are, I guess, nuances that are different to how you would interact with the bank. But tell me about what you’ve seen here in terms of growing your platform and how much money per user could come in now.

ANTONI TRENCHEV: Well the growth has been spectacular. Last year, this time around, we had almost $ 2 billion in assets under management. Right now we’re sitting on $ 15 billion. So that’s a growth of 700%, 800%, which is, obviously, in line with the growth that the crypto itself has experienced. But we see people who weren’t originally from space come in, experiment with crypto.

The Elon Musks, Paul Tudor Jones, and Michael Saylor of the world had the effect of bringing people in. And frankly, in the macroeconomic environment still exacerbated by the response of governments and central banks to the COVID situation, all ports in favor of companies such as Nexo and the crypto space in general.

Yes and on your platform you pay up to 12%, in terms of return, on a crypto asset. It’s a bit of an apples and oranges comparison, I guess, if you compare it to an interest rate in a bank, because there is additional volatility in crypto. But I mean, when you look at that, how has it changed, maybe, as people tap a toe and feel comfortable?

We were talking earlier with BlockFi. And obviously, there are counterparty risks and risks with centralized lending platforms that people need to consider here. So they were saying that there is a small number that people could actually table to begin with. But on average, what do you see, as people sort of test your rig and maybe develop what they feel comfortable risking?

ANTONI TRENCHEV: Well, we are the lender that historically has primarily focused on the retail business. Some of the other companies you mentioned were initially more in the institutional space. So right now we have all kinds of customers. We have someone who deposits as little as $ 1,000. It’s just the minimum we have. We have – and our young entrepreneurs, who are sitting on a pile of crypto pits, so several hundred thousand. Then we have the whales, which sit on millions and hundreds of millions of crypto.

But I think you mentioned a very interesting detail here, like how does that compare to a bank product and apples and oranges? Yes, in some ways, but frankly it works exactly the same. You know, we in the western world were brought up with this notion that a bank automatically equates to a safe deposit box.

And that might be true for some of the smaller or middleman clients who are covered by something like FDIC insurance, up to $ 250,000, or the ECB equivalent in Europe, where it’s $ 100,000 l ‘euro. And it is as safe as anything because it is guaranteed by the government. But if you are above that threshold, you have the same counterparty risk as everyone else.

And on our platform, everything we do, whether it’s borrowing or lending, is over-guaranteed. So I would say, just from a financial point of view and the way the business is structured and the way it makes perfect sense, that we are safer, especially for larger customers, than your bank. mean.

Yes, even that said, it looks like you are having a harder time convincing regulators, especially given the current environment in the crypto space. We have seen the latest crackdown on finance not only in the UK but also in Japan. How do you see all of these headlines right now and what could that potentially mean for your business?

ANTONI TRENCHEV: Well, I wish more people read the full articles than the headlines because when you actually look at it, what’s going on, regulators are cracking down on some aspect of crypto business, and in fact crypto trading activity, which is leverage, you know, historically leverage. And the 100x, 135x leverage has been very negatively received in the US and elsewhere, in the UK as well.

So I think what we are seeing right now is not an attack on crypto per se. If you read the article, the FCA UK press release, it says we are tackling the derivative and the high risk, high leverage product. And it’s not even our job to oversee and regulate crypto assets, such as bitcoin and the Atrium per se. It’s almost verbatim from their press release.

So people are stuck with the headlines. So it’s a bit more complicated. My personal feeling from everything I see, and we interact with regulators around the world, crypto as such is here to stay.

Yes, it’s very interesting to see the different things that they disagree with. But for now, these lending platforms continue to grow, yours included. Antony Trenchev, Co-Founder and Managing Partner of Nexo, thanks you for coming here to chat with us today. Be well.

Troy M. Hoffman