BVNK is the new name for the City of London. Co-founded by ex-TradFi Chris Harmse, Balfour Group founder Jesse Hamson-Struthers and ex-TrueLayer George Davis, the company provides a single platform to bridge fiat and crypto.
Combining crypto and fiat banking in one place, the platform covers payment, 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 to Jonathan Cumberlidge, newly appointed chief sales officer for its FX business, to learn more about the crypto startup which raised $40 million in the second quarter in a funding round led by Tiger Global at a post-money valuation of $340 million.
Jonathan Cumberlidge started his FX career at GFT, then became Gain Capital, and after a few years at Saxo, he became Sales Director at TradeTech Alpha (now Finalto) providing solutions for brokers.
He will now leverage his expertise and network to meet the emerging needs of brokers amid crypto disruption.
What exactly does BVNK have to offer forex traders and brokers?
BVNK helps forex brokers integrate cryptocurrencies into their standard operations by helping them accept crypto deposits from their end customers who are traders.
We do this by making crypto payment processing easier for merchants in regions where crypto is the preferred payment method. Additionally, we enable cross-border crypto payments, which improves internal capital efficiency for brokers. Our business accounts help brokers who want to convert crypto to fiat to post fiat trading margin with major liquidity providers. BVNK can process all incoming crypto payments and settle in fiat without brokers needing to hold the crypto on their balance sheet, if that is preferred. All of this is made possible through built-in APIs or managed through a user-friendly portal.
Using stablecoins and cryptocurrencies for payments addresses other very real issues for forex brokers and traders. Client deposit options are often time-limited by the working practices of traditional 20th century finance. If a trader receives a margin call at 5 p.m. on a Friday when their bank is closing, the broker often has no choice but to extend a line of credit or reduce positions to accommodate the call. In contrast, crypto payments are typically sent, received, and settled within minutes, which can significantly improve the outcome of this risky event for both parties.
Ultimately, this will help brokers expand their global reach, increase deposits, increase trading volumes, and operate more efficiently across multiple jurisdictions.
Are there use cases other than after-hours margin calls?
I have just joined the company and am in the process of evaluating where BVNK’s capabilities can be deployed to address some of the inefficiencies in foreign exchange trading. We see a wide range of opportunities.
Let me give you another example. Cross-border crypto payments can also help forex brokers 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, T+3 settlement times are still common when it comes to moving money between certain jurisdictions. This means that the capital is tied up and the protagonists will use their own balance sheets while waiting for the funds to be released. Using cryptocurrencies and blockchain as the basis for international settlement eliminates these inefficiencies and associated delays.
The EU has finally agreed on the regulatory framework for crypto asset markets. What is your opinion of MiCA and will it benefit your business?
It is worth evaluating the MiCA settlement against what is happening in other regions.
The United States is home to huge amounts of innovation, investment, and talent, as well as being the home base for global crypto businesses. But so far the regulatory stance has erred on the side of caution, meaning some companies may get caught up in the processes as regulatory issues are resolved. And crypto companies often have to work state by state, rather than being able to work cohesively across the country.
The situation in Europe is much simpler with a pan-European approach. The EU may not be able to match the entrepreneurial energy and investment strength of the US, but by adopting a consistent approach to regulation across the continent, it has the potential to create an environment conducive to the future development of the sector.
For us, as an organization focused on developing and delivering crypto financial services for businesses, the requirement is to build a regulated future that is still taking shape, even though we can make increasingly strong assumptions about what it 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 an investment of $40 million. This investment will help us expand into new markets, including the United States, accelerate our acquisition of regulatory licenses and support the expansion of our product capabilities.
These are the goals we are currently working on and we will keep you posted on our latest developments as they occur.