Treasury management within web3 ecosystems has been tepid at best.
In most cases, most treasury management solutions haven’t catered to the unique needs that fiat-crypto solutions have.
In the DeFi industry, for instance, solutions haven’t taken into cognizance the many forms of utility in existence.
That is changing.
New treasury management solutions give the web3 industry the required edge that will enable further use-cases.
We reached out to Sophie Guibaud, who is the co-founder at Fiat Republic to provide a proper perspective on treasury issues and more.
Sophie was more than generous with her time and provided unique insights into the fiat-crypto conundrum which has kept the industry on the edge since Satoshi wrote his whitepaper.
Here are her insights.
Sophie Guibaud Co-Founder Fiat Republic
- What is the central concept behind the crypto consortium?
As we have seen with the FCA and EU initiatives such as MiCA, the crypto industry is under increasing scrutiny from traditional financial regulators.
Our crypto consortium represents responsible crypto providers, and works closely with regulators to lead standard-setting for the asset class.
We work with traditional banks to enable them to take on crypto-fiat flows safely, which ultimately benefits the whole industry and most importantly, the end-users.
We believe that if crypto providers can stick to a single, predictable standard of compliance and transaction monitoring, this should help change the perception of crypto among traditional financial institutions.
Ultimately, we want to give the crypto industry a unified voice, and an identity, when interacting with traditional finance.
- Who are the partners behind the consortium?
We successfully launched the Fiat Republic API to the European market in March.
There are a few users currently trialing the network, and we are openly inviting crypto platforms to try Fiat Republic for themselves.
- How do you classify crypto-friendly banks?
These are the traditional (or more commonly, challenger) financial institutions that view cryptocurrency as an opportunity to do more business, rather than a threat.
They can offer access to crypto markets in multiple ways;
- Directly offering the option to their users to buy and sell crypto. This would typically be through well-designed user experience and a single access point that allows trading of multiple cryptocurrencies.
- Via investments in web3 companies and exploring synergies within the department of their bank.
- Exposing themselves to crypto directly through trading these currencies, as we have seen Goldman Sachs do recently.
- Alternatively they may take on crypto-fiat flows from a transaction banking perspective, by onboarding crypto platforms as customers.
- Fiat Republic offers these crypto-friendly (to be) banks an even stronger proposition, giving them access to the crypto–fiat flows of these leading crypto platforms by working with a single platform. There is no need to onboard them all individually, and banks can generate substantial revenues from crypto-fiat flows securely and transparently. They get a better understanding of crypto-fiat flows by being closer to data, while limiting commercial, reputational and litigation risks by using a (soon to be) regulated entity, Fiat Republic, in the middle.
- What’s the backstory behind Fiat Republic?
Put simply, we want to unlock the growth of the crypto industry and we believe it starts with contributing to the alignment of the crypto industry with traditional payment providers.
Our platform aims to bridge the gap between crypto and fiat currencies so that more new (and existing) users can access crypto markets through their fiat funds.
We have all worked in the banking-as-a-service space in the past and, while servicing crypto platforms, we realised how big the problem of accessing reliable banking rails was for them.
Worse still, they need to rely on multiple contingency plans should they lose access to a rail abruptly. It means multiple integrations to perform, banking relationships to maintain and, ultimately, unnecessary costs for the crypto platforms.
Given how fast crypto is growing, it is not sustainable to continue this way, and so we created the crypto consortium.
Banks fear the lack of visibility on crypto-fiat flows and, by offering real-time crypto-fiat flow data for our banking partners, we are able to create more trust between them and our crypto consortium members.
- What is the Fiat Republic sandbox?
Our sandbox allows developers to easily and quickly integrate the Fiat Republic API into their existing platforms and test flows without moving real money.
We have an extensively documented Developer Center to assist with the integration.
We have ensured that our Sandbox and Live environments behave exactly the same so that platforms can confidently go-live and start servicing their users.
Crypto platforms can access our sandbox within minutes.
- How has Fiat Republic improved access to web3 assets for fiat holders?
We are a B2B player which enables crypto platforms to offer the best in class fiat on/off ramp experience to their users.
We believe that by drastically reducing the friction in the fiat deposit and withdrawal journey, crypto adoption will increase and ultimately go mainstream.
To make it easier for crypto platforms to offer such an experience, we have developed our platform with the view of becoming the only fiat-as-a-service API our members need by integrating with a variety of banking partners that are able to support them across the globe.
This is only the beginning of our journey and we are constantly adding new rails, prioritised depending on the needs of our members.
- How do you think the fiat-crypto dichotomy will be resolved?
Our narrative has, and always will be, about aligning responsible crypto providers with the regulators and the traditional banking players. Trust will be the main driver going forwards; crypto is dependent on fiat as this is how a large number of potential crypto users can enter the market easily.
The onus is on crypto to align itself with fiat, rather than the other way around.
The challenge is with the regulators getting to grips with the nuances of crypto and moving fast enough to ensure that sufficient protection is in place for customers – we’ve seen plenty of issues recently with the FCA struggling to approve crypto firms operating in the UK within a tight deadline and firms very publicly announcing they’re moving offshore rather than having to deal with the FCA.
But we also see very strong moves in the right direction with the UK announcing yesterday that they will put a strong focus on ensuring the sustainability of the crypto industry in Britain by providing greater clarity on regulations and indicating that it’s open for business.
Biden has also ordered the entire government to look at the risks and benefits of crypo in the US, with the view of it being a global leader, and the EU is inching closer to passing the Markets in Crypto Assets Directive (MiCA) to harmonise crypto regulation across the EU.
- Can you tell us about Fiat Republic’s relationship with your banking partners?
We work with our banking partners to help them capture crypto fiat flows in the most compliant and transparent manner.
There is a lack of crypto expertise amongst traditional financial institutions and, as a result, they often adopt crypto averse policies. The opportunities in the crypto market are substantial for these institutions; every year we see more than $1.1 trillion in crypto-fiat trading volume.
Through Fiat Republic, they are able to tap into this market while being sure that the platforms they service through the Fiat Republic consortium adhere to the strict AML and compliance regulations they already have in place.
Again, and apologies if I repeat myself here, but it is all about aligning crypto more closely with traditional finance.
- How has Fiat Republic leveled the relationship between traditional and crypto banking?
One of our value propositions is fiat-as-a-service, which is basically banking-as-a-service with a complete focus on solving challenges faced by crypto platforms, through the aggregation of several global and local banking rails and providing them through one single access point, which is an API.
- How do you think cryptocurrencies and other web3 digital assets will help financial inclusion?
Cryptocurrencies and web3 assets offer an alternative financial and technological infrastructure that transcends any borders, both geographically and demographically.
It is the democratisation of finance, and is the ultimate pillar of financial inclusion.
More than 1.7 billion people across the world are under or un-banked, and yet anyone reading this article can immediately participate in blockchain technology; it removes the reliance on centralised institutions that are often inaccessible to those who most need it.
- What expectations do you have concerning crypto compliance?
The same expectations that any other financial services firm has of its customers, particularly around AML.
The requirements are the same as any traditional firm and the challenges will be the same.
But we appreciate that crypto firms are new to regulation and may need a little more hand holding and that their business models are unique.
We want to help them get there and are willing to work with them to ensure that they operate in a compliant way, which is different to most providers in this space.
- What do you expect in the response of the crypto and web3 industry to the global discussion concerning regulation?
The response is already split between those who want crypto to remain decentralised and private, out of the control of any government, and those who recognise that regulation is pretty much a necessity for widespread trust and the mainstream adoption of crypto.
We would expect these robust debates to continue – especially around the very legitimate concerns of privacy of information – would you want your whole banking history on the blockchain for all to see?
These questions are vital and there are plenty of smart people on both sides.
- How have cryptocurrencies changed humanity?
There is obviously financial freedom, but also a cultural change in the way in which we view concepts such as ownership.
Blockchain technology has transformed our view of this; data in the blockchain cannot be destroyed or tampered with, and so we see an entire ecosystem that is, hopefully, beyond the realm of corruption or manipulation.
- What are your plans for fiat-crypto capabilities for the DeFi space?
Unless users are mining or being paid in crypto, the most likely entry point into DeFi still remains from fiat currencies.
Therefore, our platform is perfectly placed to be able to serve the fiat needs of upcoming DeFi projects.
- What are your expectations for the Bitcoin 2022 conference?
It is going to be a huge event that connects the entire industry, and there should be plenty of opportunities to connect with likeminded people.
I am really looking forward to seeing how Bitcoin products will be built with the end-user in mind.
I believe this is a key driver in helping Bitcoin, and every other cryptocurrency, go mainstream; we need to make products as accessible, and appealing, to a global audience in order for them to be adopted.
In particular, I’m interested in seeing the presentations from CoinCircle and Fold; both are building crypto products specifically with the end user in mind.
There should also be plenty of discussion on how to scale Bitcoin businesses; this is also critical in creating a successful future for cryptocurrencies. As more banks begin to offer access to crypto markets, crypto businesses will need to cater for this demand.
- How can users optimize their fiat treasury operations?
Complexities arise in fiat treasury operations when platforms are forced to work with multiple banks and payments providers to offer a full range of currencies and payment methods to their end users.
Moreover, a large portion of treasury operations involve FX for which platforms typically have yet another provider in the mix.
With Fiat Republic, this becomes simple because crypto platforms can access several payment rails as well as FX via a single platform with unified data formats which vastly simplifies reporting.
Our internal instant settlement network, EagleNet, allows Fiat Republic members to move funds between themselves in real-time.
- Will cryptocurrencies replace fiat? Please, can you tell us the reasons for your answer?
In the short term, no.
Despite its disruptive nature, crypto will still need to rely on traditional currencies in order to attract new customers, as this would be their best access point.
Of course, as the space evolves, it will be interesting to see how the two interact and if crypto currencies can completely detach themselves from fiat.
- Where do you think the industry is headed? Any pointers?
Our hope is that the crypto industry continues to align itself more closely with traditional financial institutions.
There are plenty of responsible crypto providers out there who are keen to do this; early adopters who are already aligned well with compliance and AML regulations.
Web3 is the next iteration of the web, putting the power in the hands of the people that use it.
It makes so much more sense now it is at this point, and it looks like the only way forward.