With bitcoin dominance on the rise where does that leave altcoins?
The truth is that the ones that cansurvive the continuing altcoin winter and are in the right sector and have thebacking of a successful established business with a driven team, are those mostlikely to succeed in the future.
Which is why the Moneybrain platformand the BiPS token is such an interesting proposition. It is a projecttokenising peer-to-peer (P2P) lending, a sector eminently suitable for theblockchain treatment.
I caught up with Lee Birkett, founderand chief executive of UK-based P2P lender JustUs, just after news had brokenthat Bakkt bitcoin futures would be launching this month and of course beforethat, the Facebook Libra bombshell.
From credit crunch to crypto
The main impetus to enter thecryptocurrency world came to Birkett after his first publicly traded companyfailed as a result of the credit crunch . “I had a public company thatcollapsed as our lenders such as Lehman Brothers, Morgan Stanley and HBOSbasically went bust”. I vowed then thereafter never to be reliant on banks andmy love for Peer to Peer grew to establishing my own crowdfunding platform.
We had people all over the world thatwanted to participate but the banks wouldn’t move the money,” bemoans Birkett.
Today his JustUs business is growingorganically with the support of the crowd and after months of formal dialogue withregulators on both sides of the Atlantic, the token is ready for prime time.
Like many others in the industry hethinks recent news flow around Libra and Bakkt will help the industry. “Thereneeds to be some sort of custodial service for mass adoption.”
“Obviously, the more adoption – andusage of things like the Visa rail – it’s a great evolution. [Visa announced inJune that it was using blockchain to speed up cross-border transfers – Bia B2BConnect].”
P2P and crypto made for each other
But for all that optimism he isfrustrated by the state of cryptoasset regulation, in the US in particular,where BiPS was looking to roll out. “The SEC has kicked it up to the senioreconomists,” he says with exasperation as the SEC tries to work out whether thetoken is a security or not.
However, despite the regulatory uncertaintieshe thinks most fund managers are now at least considering picking up somebitcoin exposure, if not exposure to any other crypto.
“Most fund managers consideringcrypto as an asset class will be looking for exposure of between 0.5 to 1% for prudent risk management.”
Birkett is confident about BiPS’prospects even though he readily admits that areas of the normal P2P market aresuffering.
In the UK we have seen high-profileclosures, such as Lendy, which saw ?165 million go up in smoke. In China 70% ofthe firms operating in the sector are expected to go out of business. “Half thepeer-to-peer industry could be gone by the end of the year,” claims Birkett,only half joking.
“We are in retail lending toconsumers which is a highly regulated activity, but many others are innon-regulated lending and that’s where the problems are.”
He continues: “We are even seeingsome firms in the crypto space that have been lending with no loan contracts –all purely on trust.”
“We haven’t done our first crypto loan yet via the MoneyBrain BiPS platform. We are in beta testing awaiting for the system to go live.”
FCA’s regulatory perimeter and ‘stablecoin-plus’
BiPS has been designated as a non-regulated asset class because it lies beyond the UK Financial Conduct Authority’s “regulatory perimeter”.
As such BiPS is designated as an exchange token (a currency but with no access to services as with utility tokens) as per the FCA Policy Statement PS19/22 on the 31/07/2019 and not a security token.
“We considered issuing BiPS as asecurity token with global transfer rights to the underlying assets, but thelack of legal clarity across multiple jurisdictions led to the legal teamestablishing a foundation supported exchange token. So we went down the digitalcurrency route after discussions with the regulatory authorities in UK and US.”
BiPS are backed by the underlyingasset in the form of real estate, bonds and cash-equivalents.
“Libra plans to have a similar economic and legal structure to BiPS but we mined and issued ours on 31st October 2018 -10 years to the day of Satoshi Nakamoto White Paper ,” says Birkett. The Moneybrain platform was founded [in its non-crypto form] in 1999.
“The two days that Marcus [Facebook’s head of payments, David Marcus] was on the stand was great for BiPS. The guys on Capitol Hill said we need something like the GDPR for the US which is the global gold standard for data protection.”
The General Data ProtectionRegulations (GDPR) of the European Union is the most rigorous privacyregulatory framework globally. BiPS is GDPR compliant.
Birkett discerns three categories ofcryptoasset – stablecoins, e-money coins and security or utility tokens. “Thereneeds to be a new type of ‘stablecoin-plus’ that has exposure to an element ofvolatility through trading. That’s where BiPS comes in.
Birkett breaks down how BiPS can be collateralised: “Say you have one million BiPS – a third could be cash liquidity, a third say Airbnb and another third fixed income blue-chip bonds.”
“JustUs is deposit-taking therefore highlyregulated and MoneyBrain is regulated like a broker dealer.” Confusingly,although Moneybrain is regulated as credit broker, its BiPS activities are not.
Beating Facebook Libra to the punch
Although Birkett readily admits that Facebookdidn’t copy BiPS, he does see Libra as a vindication of the path Moneybrain hasploughed with its version of a stablecoin.
“Unlike Facebook which is all for theboys, this is the people’s currency.”
As with Libra there is a foundationthat will hold the underlying assets bought when BiPS are exchanged for cash orother crypto. Again, as with Libra, there’s also a wallet in addition to theMoneybrain platform that provides the exchange services to trade BiPS.
He also emphasises that team membershave skin in the game. “All our team members are BiPS holders.”
The minimum loan amount is ?1,000 andall KYC and AML rules are adhered to by Moneybrain.
Moneybrain is placing itself at thecentre of building an “open and fairer financial system for all”. That willsound familiar to Mark Zuckerberg.
BiPS supply, circulation and where to buy
With a passionate and committedleadership that was won to crypto from personal business experience, you wouldbe foolish to ignore this project.
Admittedly, BiPS is entering acompetitive arena where the leading players are fighting hard. Among the best known– going by the profile of its token – is SALT, but there are others such asNexo, BlockFi and crypto credit card pushers such as Crypto.com, where you can earn up to 8% interest on deposits.
It is those sort of tasty yields in alow-yield world that has made P2P appear especially attractive for someinvestors, but if the interest rate looks too good to be true, it probably is.
Total supply of BiPS token is 500 million and there are currently 25 million in circulation at a mid-price of ?10.24 ($12.32), as at 3 September 2019 (95% of sale proceeds is spent on acquiring assets to back the token). For more information go to Buybips.com or bips.moneybrain.com
Image: courtesy Flickr and belgolb
