Banxa, a global on-and-off-ramp solution provider for crypto, recently announced that it’s doubling down on its US expansion project. Powering fiat-to-crypto conversions for some of the biggest crypto companies including Binance, KuCoin and Huobi, the firm has now lodged 40 money transmitter licenses and set up an office in Reno, Nevada.
Banxa first entered the US market on an experimental basis in 2020, when its primary markets were the UK and Australia. The firm conducted a soft launch in the US using a third-party provider to gauge consumer demand, operational requirements, and regulatory compliance for an eventual full-blown launch.
“It was a classic case of ‘try before you buy’, and what we discovered was that there was an unrealized demand for the exact types of payment solutions we provide,” Banxa’s CEO, Holger Arians, told Tearsheet. “Within a short space of time, our US-based customers grew so significantly that it quickly became one of our major markets.”
What does Banxa do?
To put it simply, Banxa’s out on a mission to make cryptocurrency and NFT purchases simple and accessible for more people. Since 2014, it has been providing payment solutions to Web3 companies that enable consumers to buy crypto easily, quickly, and securely. The firm’s checkout solution allows the purchase of cryptocurrencies and NFTs using a range of global and local payment methods – such as Visa, Mastercard, Apple Pay, and Google Wallet. Banxa claims that it offers more local payment methods than any other provider in the market, and has the greatest global reach with extensive operational licensing.
The firm’s Web3 payment solution takes care of the full payment cycle, starting from the facilitation of a transaction from fiat to crypto, KYC and AML checks, all the way to fraud chargebacks.
2021 was a big year for Banxa, as crypto reached new heights in trading volume as well as mainstream popularity. “We achieved 99% year-on-year growth and expanded our product suite from our flagship on-and-off ramp solution, to our NFT Checkout and Corporate Onboarding products,” Arians said.
As the crypto winter extends and the world enters a likely recession, Banxa remains growth-focused. Is it a good idea, though?
Is H2 2022 the right time for a US expansion?
Banxa launching in the US when it did was all about timing, Arians insisted.
The firm’s entry into the US in 2020 was a bit of a bumpy road, as US banks were initially hesitant in facilitating cross-border crypto transactions, which affected conversion rates – one of the firm’s USPs. In subsequent times, this has improved dramatically as US regulators understand that crypto is no longer living in the shadows, but is being embraced massively throughout the world, thus setting up for Banxa’s full-scale launch.
With the US release, the firm has moved beyond simply debit and credit card-based payments, adding local payment methods like ACH and wire transfers to the mix without the need to go through a third-party provider. Acquiring domestic US card processing has allowed the firm to avoid high costs from foreign exchange fees and payments to intermediaries.
Furthermore, Banxa has lodged 40 money transmitter licenses of a possible 43 — with the remaining 3 to be submitted in early 2023. Establishing such a regulatory presence in the US helps it surpass the need for intermediaries, and henceforth cut costs.
The firm’s new HQ in Nevada is being headed up by its former chief legal officer, Richard Mico, who has assumed the role of US CEO. Banxa has also recently appointed a CTO, COO, and CFO in the US, with plans to expand the team across multiple business units in order to grow its share of the US market.
Next on the agenda for Banxa is the continued roll-out of local card acquiring, which will sit alongside the new payment methods it will offer.
“For the remainder of 2022, even though Banxa already has the most local payment methods of any other provider in market, we are focusing on providing even more local payment methods across the world in order to improve the accessibility of crypto for our partners’ customers, while maximizing the value they receive as a Banxa partner,” Arians said.
Post-Covid crypto adoption and the recent slump
2021 was a massive year for crypto adoption. Chainalysis’ data shows that crypto adoption boomed by more than 880% last year, with the US among the most responsive economies. Adoption in America came not only from consumers, but also institutions, setting the path for regulators to step in and contribute further to the maturity of the Web3 industry.
“This signaled a major change in how the world saw crypto. No longer was it a niche offering for ‘those in the know’, but rather, the whole world started to jump in,” Arians said.
Additionally, emerging economies like India and Vietnam also contributed to an uptick in crypto trading volumes. What’s perhaps most exciting is that massive corporations decided to enter the Web3 space, and tried their hands at different offerings. The NBA, Microsoft, Samsung, Gucci, Nike, and other category leaders started to get involved in both the metaverse and NFTs. This, in turn, exposed their customer base to the world of crypto and all its possibilities, and not only intrigued their audience, but captivated their attention.
Banxa has been around for a while now, and is used to the ebbs and flows of crypto as the market experiences bull and bear cycles, Arians argued.
“The only difference this time around is the consideration for macroeconomic factors such as the war in Ukraine and potential recessions in certain markets, which may lengthen the crypto winter. Ultimately, these factors are outside of our control as an industry, and the current bearish sentiment isn’t so much a crypto problem as it is a more broadly economic one with rising costs of living and interest rates,” he said.
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Tearsheet is the only media company obsessively focused on technology’s impact on the financial services and fintech industry. Read by decision makers across product, marketing, and digital, Tearsheet connects with its audience across web, email, podcasts, the Outlier membership program and in-person events.
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