German financial technology company Wirecard filed for insolvency following a US$2.1 billion accounting scandal. The collapse of Wirecard, which established itself in the blockchain community as a major cryptocurrency debit card issuer, sparks concerns about the potential damage to the crypto industry.
Wirecard issues crypto debit cards for users of Hong Kong-based cryptocurrency firm Crypto.com, and Wirex, a London-based startup offering mobile-based payments services.
Pavel Matveev, CEO of Wirex, also recently told EJ Insight in an exclusive interview, that they don’t see any interruption on Wirex’s cards from Wirecard’s scandal.
“Our dependency on Wirecard is tiny,” said Matveev, “all clients’ money is safe.”
Matveev told EJ Insight that Wirex, founded in 2014, is a UK-based fintech company licensed by the U.K. Financial Conduct Authority (FCA).
Positioning itself as an alternative to conventional financial institutions, Wirex allows cryptocurrency users to spend both their crypto and fiat currencies using a dedicated Visa card and mobile app.
Wirex has now over 3 million registered users in more than 130 countries, with its major markets in Europe. Backed by Japanese SBI Group, formerly part of Japanese mega investor Softbank, Wirex has offices in London, Dublin, Atlanta, Toronto, Tokyo and Singapore.
The firm offers multi-currency accounts and transfer and exchange services accessible via its app and a Visa debit card, supporting fiat currencies including British pounds, US dollars, Euro, and cryptocurrencies such as Bitcoin, Ether, Ripple, Litecoin, among others.
Last year, Wirex launched its “Cryptoback” rewards programme, which pays card users 1.5 percent back in Bitcoin on point of sale retail purchases, transport and entertainment.
“Cryptocurrency may still be very scary for some people,” said Matveev. Wirex’s Visa card and Cryptoback rewards feature allows users to get crypto without buying crypto. “As soon as we introduced this, we started seeing more people from the mass market who are not familiar with cryptocurrency at all [to use Wirex].”
Coupled with the rising interests in holding cryptocurrencies as alternative investments, overall transaction volume of Wirex in this second quarter went up 100 percent quarter-on-quarter, according to Matveev.
“We are the largest cryptocurrency challenger bank in Europe,” said Matveev, and the firm now eyes aggressive geographical expansion. In Asia, Wirex’s customer base has grown by about 50 percent month over month since its launch in Singapore last November, said Matveev, adding that they have plans to expand to Hong Kong later this year. It also seeks to enter Canada, and the United States in the fourth quarter this year.
The Monetary Authority of Singapore has granted an exemption from holding a license to Wirex, among other peers such as Binance, Coinbase, Gemini, and Bitstamp, allowing it to operate in the country under Singapore’s new Payment Services Act, which aims to regulate cryptocurrency service providers in the nation state.
As for Japan, Wirex already holds a type 2 licence for virtual currency, and expects to obtain a full type 1 licence from Japan’s Financial Services Agency as early as the third quarter.
“After that, we do have plans to obtain licenses in other countries,” said Matveev, asked about Wirex’s interest in applying for a license in Hong Kong, as the city’s financial regulator, Securities and Futures Commission, published last November new rules to allow crypto exchanges to receive an operating license.
“Many crypto exchanges in Asia are usually not regulated, and they have very limited functionality in terms of traditional banking infrastructure, so that’s why our potential is in the middle,” said Matveev, emphasizing its Visa card feature.“We give people a choice: If you don’t like crypto, you can use traditional [fiat], and our card offers zero fee on foreign currency exchange and ATM withdrawals. If they don’t like traditional [fiat], you can use Bitcoin.”
Wirecard is the entity behind Wirex and Crypto.com’s debit cards. According to reports, a majority of these cards are issued by two subsidiaries of the Wirecard Group: Wirecard Singapore and Wirecard Solutions (based in the UK).
After the scandal broke out, Crypto.com CEO took to Twitter to claim that customer funds are safe.
Wirex uses the Visa license of Wirecard, which is a BIN Sponsor i.e. a member of Visa payment network with right to issue cards, according to Matveev.
“We don’t use Wirecard’s Stored Value Facility (SVF) license in Singapore, while other companies use it, so Wirecard keeps all the funds [of their customers]. Our card was different because we have our own regulatory approval to operate in Singapore. So Wirex’s dependency on Wirecard is tiny.”
Matveev told EJ Insight that none of its clients at the moment are affected, all clients’ funds are safeguarded in segregated accounts, adding that the firm continues to closely monitor the situation with Wirecard.
“For some crypto companies, it’s very difficult to get a license, for various reasons,” said Matveev. “In our case, once we obtain a license under the new Payments Services Act in Singapore, we will most likely apply for our Visa principal license directly.”
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