FX goes Crypto: Exclusive interview with BVNK’s Jonathan Cumberlidge
BVNK is the new name in the City of London. Co-founded by ex-TradFi Chris Harmse, Balfour Group founder Jesse Hamson-Struthers, and ex-TrueLayer George Davis, the firm provides a single platform to bridge fiat and crypto together.
Combining crypto and fiat banking into one place, the platform covers payments, trading, custody and yield solutions.
FX brokers, for example, can leverage BVNK to incorporate cryptocurrencies into their standard operations, including accepting crypto deposits from their end customers who are traders.
Finance Feeds spoke with Jonathan Cumberlidge, recently appointed as Sales Director for its FX business, to learn more about the crypto startup that raised $40 million in Q2 in a funding round led by Tiger Global at a $340 million post-money valuation.
Jonathan Cumberlidge started out his FX career at GFT, later turned Gain Capital, and after a few years at Saxo, he became Sales Director of TradeTech Alpha (now Finalto) to provide solutions for brokers.
He will now leverage his know how and network to address the emerging needs of brokers amid crypto disruption.
What exactly does BVNK have to offer foreign exchange traders and brokers?
BVNK helps foreign exchange brokers to incorporate cryptocurrencies into their standard operations by helping them accept crypto deposits from their end customers who are traders.
We do this by facilitating crypto payment processing for traders in regions where crypto is the preferred payment method. Additionally, we enable cross-border crypto payments which improves internal capital efficienciency for brokers. Our business accounts assist brokers who want to convert crypto into fiat in order to post fiat trading margin with core liquidity providers. BVNK can process all incoming crypto payments and settle in fiat without the need for brokers to hold crypto on their balance sheet, if this is the preference. All this is made possible via integrated APIs or managed through one user friendly portal.
Using stablecoins and cryptocurrencies for payments tackles some other very real pain points for foreign exchange brokers and traders alike. Client deposit options are often time limited by the 20th Century working practices of traditional finance. If a trader gets a margin call at 5pm on a Friday as their bank closes, the broker often has no option but to extend a credit line or reduce positions to meet the call. In contrast, crypto payments are usually sent, received & settled within a few minutes which can drastically improve the outcome of this risk event for both parties.
Ultimately, this is going to help brokers extend their global reach, increase deposits, grow trading volumes and operate more efficiently across multiple jurisdictions.
Are there any other use cases besides out-of-hours margin calls?
Having just joined the business, I’m in the process of assessing where BVNK’s capabilities can be deployed to tackle some of the inefficiencies of foreign exchange operations. We see a huge range of opportunities.
Let me give you another example. crypto cross-border payments can also help foreign exchange brokers to move money between internal entities faster, at lower cost and in a way that can generate higher returns on capital..
We live in a world where it is possible to process digital transactions instantly. And yet, settlement times of T+3 are still common when it comes to moving money between certain jurisdictions. This means that capital gets tied up and protagonists will be using their own balance sheets while they wait for funds to clear. Using cryptocurrencies and the blockchain as a basis for international settlement eliminates these inefficiencies and the associated delays.
The EU has finally agreed on the Markets in Crypto Assets regulatory framework. What is your take on MiCA and will it benefit your business?
It’s worth assessing the MiCA regulation as it compares to what’s happening in other regions.
The US is home to huge amounts of innovation, investment and talent as well being the base for global crypto businesses. But until now, the regulatory stance has erred on the side of caution, which means that some businesses can get caught up in processes as regulatory questions are worked through. And crypto businesses often need to work on a state by state basis, rather than being able to work consistently across the nation.
The situation in Europe is far more straightforward with a pan-European Union approach. The EU may not be able to match the entrepreneurial energy and investment muscle of the US but, in taking a consistent approach to regulation on a continent wide basis, it has the potential to shape a hospitable environment for the further development of the sector
For us, as an organisation focused on developing and delivering crypto-powered financial services for businesses, the requirement is to build for a regulated future that is still taking shape, although we can make increasingly solid assumptions on what that will look like.
What blockchain technology powers BVNK’s cross border payments solution?
We are blockchain agnostic and choose the network that has the most liquidity to solve for our use case.
What does BVNK have in store for the foreseeable future?
In May this year, BVNK announced the completion of its series-A fundraising, which secured USD 40m of investment. This investment will help us launch into new markets, including the USA, accelerate our acquisition of regulatory licences, and support the expansion of our product capabilities.
These are the goals we’re working on currently and we’ll keep posted on our latest developments as and when they happen.