FinTech Futures sat down with Rita Liu, CEO of UK-based digital wallet Mode, at Money 20/20 Europe in Amsterdam to discuss crypto adoption, regulation and stablecoins.
FinTech Futures: What’s the biggest challenge facing the adoption of crypto among the wider population?
Rita Liu: Two things. One is education. And the other is regulatory clarity. Education is important because it’s such a new industry and there’s so many new concepts.
It’s very important to, as we say at Mode, to demystify Bitcoin and crypto more generally to the general public if we want to see mass adoption of crypto. The general public get their information from media outlets that are more concerned with eyeballs and they therefore give a lot of attention to the space when things go wrong. Whether that is scams or crashes, the general public don’t always get the full picture.
There are real use cases for crypto, it’s backed by lots of smart people such as economists and technologists and it’s certainly the most exciting innovation of this century. So, education is essential to provide the full picture of crypto in order to ensure its mass adoption.
We see it is as our obligation to educate the market and get the right regulations in place so that when people are ready, we can offer them the right help to get them started.
Regulatory clarity is very important for the crypto industry in general. And collaboration between regulators and market players, especially in such a fast moving industry, is particularly important.
The market players know what the people want, what the customers want and what they’re looking for. They’re facing customer demand and issues such as fraud on a day-to-day basis.
These experiences should be fed back to regulators on a very frequent basis so that we can together find that ‘sweet spot’ for the industry. Some governments are definitely doing that right, including the UK with its FCA-organised Crypto Sprint, which Mode was a part of and which is very useful.
Collaboration between regulators and innovators, private market players, that’s the way to get to a point where the space can be both safe and secure.
You’re moderating a panel on stablecoins at Money 20/20 Europe. What are the benefits of stablecoins when it comes to the mass adoption of crypto?
As the name suggests, with stablecoins the price is stable. They were created because there’s a need for a kind of crypto token that had a stable price and doesn’t have the problem of volatility in order to fulfil certain roles in the blockchain-based economy.
This stability allows stablecoins to be used for payments, for example. But the adoption and development of these, just like anything else in crypto, is still very much in the nascent stage.
For many of those in the general public, or even for people who have been in the crypto space for a while, not everyone understands all the differences between various stablecoins and how to use them.
Nonetheless, the key advantage of stablecoins, with their stability, is they can be used as a unit of account where there is an exchange of value.
We are heading to a blockchain-based economy and Mode is here to drive that adoption for the general public. So although we are currently only doing Bitcoin, if stablecoins become a payment mechanism that’s adopted by many people we will also add that to our wallet. It’s about giving our customers that option.
We don’t know how long it’s going to take and how the industry is going to take shape in the next few years. But no matter what level to which stablecoins get adopted, I think it’s going to be useful in terms of driving efficiency, especially around payments.
What methods or tools are you using to speed up crypto adoption?
Our Bitcoin cashback product means you don’t really need to invest your own money to own Bitcoin. You shop and pay with the Mode wallet and receive cashback in the form of Bitcoin. It’s almost a form of smart gamification, a first step towards mass adoption.
We have a deep conviction that adoption will grow, with some data showing adoption of Bitcoin will reach a few billion individuals in a few years’ time. The adoption speed is actually faster than the adoption of the Internet back in the 90s.
Bitcoin or crypto is not just a technical innovation, it’s a cultural movement. Many people get into it because of the culture behind it, the ideology behind it.
I suppose the first step’s always the hardest, isn’t it? You’re doing some work on blockchain, using the technology to reinvent customer loyalty. Can you tell me a little bit about that?
An area we are looking at is using crypto tokens or blockchain to drive transparency. In the loyalty space traditionally you get a points card which you can take to different merchants to receive points and discounts which you then spend.
The difficulty of that is it’s very hard to track a user’s behaviour. But with blockchain, everything is traceable. And it’s immutable.
Leveraging that to drive more transparency in the loyalty point system, that’s also something that we’re very much interested in. In our view, loyalty or rewards is a very important part of commerce or e-commerce because ultimately businesses care about how they get more customers, more loyal customers.
For Mode, as a wallet that connects merchants and users, solving that problem around reward and loyalty is a key part of our value proposition.
How does open banking fit into all this? How does it help spur the mass adoption of crypto?
Open banking is essentially the mechanism that represents decentralisation in the fiat world. With PSP, I can use any bank account I want to use to pay without going through a central intermediary.
There is that interesting overlap, but in terms of the application of the technology, what we’ve seen is open banking can be used as an on-ramp for crypto.
It’s cheaper as a mechanism because it doesn’t have all these fees charged by intermediaries. And second, it has less fraud, because you basically authenticate the transaction with your banking app and your biometric authentication.
Open banking has therefore been utilised as a really good route for crypto and that’s actually one of the things Mode did quite early on in the industry.
You can check out with Mode and pay with open banking, and then get cash back in Bitcoin. So we have connected the two through Mode. But on the payment checkout front, we’re also thinking about adding crypto as a payment method as well.
In terms of data, the overlap between open banking and Web3 could enable businesses or service providers to find customers who are interested in crypto, leveraging open banking which has always been used for understanding customers.
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