While the financial industry is struggling with its relationship with digital assets, some companies already build the necessary bridges. For years, a deep abyss has separated the worlds from the traditional bank and cryptocurrency, leaving companies that have trouble moving between Fiat and Digital Realms. XBD groupA global conglomerate on digital assets, attacks this problem with a compliance approach designed to gain the confidence of institutions and regulators.
In Money 20/20 Europe, we spoke with Zeeshan UppalCOO and director of compliance with XBD Group, to understand how the company breaks the friction cycle between old and new financial worlds.
Solve the dilemma on the ramp
Core Problem XBD addresses are familiar for any company operating in cryptographic space. “If you just want to add funds to your Coinbase wallet from a Barclays bank account, you can’t do it,” said Uppal. “It made life very difficult.” This institutional reluctance creates important operational obstacles even for the most legitimate companies.
The XBD solution is both elegant and effective. The company, which began as an over -the -counter office for institutional customers, realized that it could resolve the problem of the ramp and the exit by becoming a single window. “We are able to issue virtual IBAN accounts to our customers,” said UPPAL. “Use this IBAN virtual account to collect their Fiat funds, on and out of the rise according to digital assets, and if they then settle in Fiat in this IBAN virtual account, they are able to associate with all traditional financial institutions because it is a bank account named towards a named bank account.”
This model effectively creates a regulated and transparent route, giving institutional customers confidence and the ability to transform transparently between Fiat and Crypto.
Conformity like cornerstone
In a sector often seen with suspicion by traditional players, XBD has anchored its strategy in the regulations. With a Canadian MSB license, a Lithuanian Vasp registration and water-waiting licenses (VARA) and the United Kingdom (Acquisition of FCA EMI), the company’s global imprint is built on a regulatory approval basis.
“We focus a lot on an approach led by conformity,” said Uppal.
“We understand what banks want.”
“We are talking about the same language as financial service providers.”
By building robust frameworks from KYC, KYB and transactions monitoring, XBD provides the security and safety that traditional institutions require, by deactivating the entire process. This objective has propelled business growth, now managing 50 to 75 million monthly volumes and has exceeded a billion dollars in total volume since its creation.
The power and the paradox of the stablecoins
The stablecoins are at the heart of the XBD offer, in particular for sending international funds. Uppal has highlighted their main advantages: speed, profitability and traceability. “Some examples of trying to move money internationally through traditional financial institutions, (you have) t + 1, t + 2, even t + 3 settlements,” he noted. “With the Stablecoins, it’s instantaneous.” This changes the situation for their business level customers, who must effectively move funds through borders. Stablecoins also serve as crucial coverage against exchange volatility in developing economies.
However, Uppal offered a nuanced view of the stablecoin landscape, describing it as “good, bad and ugly”.
- Good: Unbeatable payment and low transaction costs.
- The bad: The slow rhythm of adoption by traditional financial institutions, which still find it difficult to move from the adoption of the Fintech to the understanding of the web3.
- The ugly: The significant risk of money laundering and the challenge of applying regulation without stifling innovation.
The regulatory environment itself is a double-edged sword. While executives like European mica provide clarity, they also create barriers. “The USDT and the Tether simply do not play with (Mica), so it suppresses a massive potential of this market,” said Uppal. This creates a complex dynamic where regulation can both help and hinder adoption.
For the future, Uppal considers the rise in power of the digital currencies of the Central Bank (CBDC) as an “interesting concept that we do not speak enough”. He expressed his concern that this could represent traditional institutions co-opting technology to “monopolize the elements of the industry for themselves”, potentially leading to a society without species where each transaction is followed. The central tension, as he sees it, is the attempt to “centralize decentralized finance”, a concept that goes contrary to the original ethics of Defi.
For the moment, companies like XBD sail on this complex field by providing the essential and regulated infrastructure which allows companies to use today the power of digital assets.
