Bridging Crypto and Conventional Finance: YouHodler CEO Ilya Volkov's Imaginative and prescient for the Future

BeInCrypto had the chance to take a seat down with Ilya Volkov, CEO and co-founder of YouHodler, a Swiss and EU-based Crypto FinTech firm. YouHodler gained recognition for its crypto lending, borrowing, and yield providers, which cater to customers seeking to amplify their idle crypto holdings for numerous buying and selling methods.

Throughout our dialog on the Web3 Banking Symposium in Lugano, Volkov shared his philosophy behind constructing a lean, self-sustaining firm within the crypto area, in addition to his ideas on the way forward for blockchain and crypto’s position in conventional monetary methods. From the challenges of integrating decentralized finance (DeFi) with legacy banking constructions to how YouHodler is pushing the envelope with new applied sciences, this interview presents beneficial insights into one of many trade’s most dynamic leaders.

Ilya Volkov on Constructing YouHodler With out Exterior Funding: How Private Values and Beliefs Formed the Journey

It was at all times on my thoughts and the minds of my companions that we would have liked to make use of a lean method. The advantage of this method is definitely quite simple. When you give attention to a lean method, you give attention to effectivity.

Meaning you construct merchandise that will probably be welcomed by your clients, and clients will vote with cash in your merchandise.

Whenever you examine this method to others within the area, particularly between 2017–2018, the distinction is evident. Many corporations raised massive sums of cash by way of ICOs, and whereas not all of them wasted or misused these funds, a big quantity did. It was simple cash and simply as simple to spend.

So the cash was invested in questionable advertising channels and all types of influencers, and really not often did cash go to actual product improvement.

And once more, the important thing factor is that many corporations that raised a variety of simple funds weren’t centered on product improvement. They had been centered on being happy with themselves, and that’s why a lot of them failed.

Once more, disclaimer, not all of them failed, however sufficient to make the purpose. So that is the good thing about operating your organization with a give attention to effectivity and give attention to the standard of your merchandise.

There are two downsides, really. So the primary one is that if, like, in a number of months after the launch of your organization, you’ve got tens of hundreds of thousands of cash raised by way of ICO or some VCs. After all, you possibly can instantly put money into every little thing, together with advertising, which is essential. Advertising and marketing could be very costly within the digital space.

Really, it’s attention-grabbing that these days, digital channels are dearer in comparison with conventional, offline channels, and sensible corporations who raised some huge cash obtained an enormous push at first. I might not point out names, however I imagine you already know some good examples of corporations that raised tens of hundreds of thousands by way of ICOs, and now they’re fairly good, and so they hold, hold working. I can solely say bravo to them. So the primary profit for them is a fast good begin.

The second profit of getting exterior help, notably when collaborating with top-tier VCs reasonably than by way of ICOs, is entry to actual experience. Whenever you work with extremely skilled, VC-focused companies, you’ve got some extra experience. I can listing a number of VCs like a16z. They’re very sensible guys with their very own give attention to effectivity.

So, when you work with professionals like them, you get the good thing about accessing a data base and a wide variety of market experience. However in fact, you can too lose your freedom.

After years of exhausting work, I believe we nonetheless have an opportunity to begin working with some sensible companions. However on one other stage, we aren’t a startup anymore. We’re possibly greater than scaled up. And yeah, we’re open to working with sensible, strategic traders. However once more, the important thing profit nonetheless is that you’ve your give attention to the standard of merchandise, and you’ve got your focus in your clients who’re paying cash for actual worth, not simply hype or empty tokens.

Promising Crypto Applied sciences and YouHodler’s Position in Shaping the Way forward for Blockchain

There are numerous completely different sorts of dimensions and completely different sorts of use circumstances in our area. So, investments in buying and selling, funds, and shops of worth, proper? As for investments and buying and selling, we give attention to itemizing all beneficial cash and tokens for getting, promoting, lending/borrowing, and buying and selling. Our market division is at all times maintaining with the markets, with all of the traits.

After all, we now have all of the classics, and we’re following with one thing new, like the latest instance is the TRUMP coin. We monitored intently what was occurring in the marketplace, and we launched the Trump token inside 24 hours after the announcement of Trump. We obtained a variety of appreciation from our clients as a result of they had been pleased to commerce with it.

There are a variety of questions on the way forward for tokens like TRUMP, however anyway, it’s one thing very attention-grabbing and really participating for purchasers. So, strategically considering, I imagine that we are going to haven’t simply cryptocurrencies on our platform but in addition some conventional belongings within the mid-term future primarily based on partnerships with different monetary establishments.

So, we’re crypto native, however we’re partnering with conventional establishments. And truly, the occasion – Web3 Banking Symposium in Lugano, the place we’re talking is an efficient illustration of collaborations, of crypto and conventional establishments. So, we’ll hold including crypto and even some conventional devices to the buying and selling and funding half. That is primary; quantity two for our strategic focus is funds.

We make investments rather a lot in all pockets and cost infrastructure for purposes. With us, you may get your devoted checking account opened in your identify contained in the platform. After all, we depend on our banking companions to supply the service. You possibly can hyperlink your playing cards, Visa and MasterCard, you possibly can simply prime up and withdraw with only one click on, and you’ve got your cash in your card, to pay your payments, purchase groceries, and all these sorts of every-day issues.

We’re on the last, I might say, stage of releasing our personal card, a YouHodler branded card. To simplify the consumer expertise much more, in fact, we now have every kind of banking protocols built-in into the platform. We do all that with a view to help a 360-degree method for cost round crypto.

Additionally, we’re investing in some new options. And I’m so pleased that we’re one of many first members of the Common Cash Tackle (UMA) community constructed on Lightspark in Europe and Switzerland. That is a tremendous characteristic. I can provide you a number of hints.

Lightspark is an organization that was created by tier-one entrepreneurs from corporations like PayPal, and Fb. David Marcos, Lightspark’s founder and CEO, is PayPal’s former president and Meta’s ex-Prime Supervisor. He introduced into Lightspark his experience in constructing PayPal and Fb’s cost options.

Do you bear in mind the well-known story of Libra and Diem? They discovered rather a lot from it. So, they launched Common Cash or UMA. That is just like PayPal, but it surely’s the subsequent stage. It’s a easy, human-readable tackle, just like electronic mail, however related to any type of cash – crypto or fiat. You possibly can ship any cash and in a matter of seconds, your recipient will get his or her most popular foreign money.

So, with us, you need to use this tackle for crypto, any crypto, and Fiat. You should use Euro, {Dollars}, British kilos, and pesos. When you’d wish to ship cash to another person, you merely ask your mate about his or her tackle.

And in your aspect, let’s say you despatched Euro. However on their aspect, in the event that they’re, let’s say, in the US, they obtain USD. And the wonder is that within the US, they’ll even obtain it in USD, actually to their checking account in any financial institution in the US.

And it really works with completely different nations. So we’re taking good care of Switzerland and the European Union, and different members of the community care for different nations. We have now companions in Argentina, the Philippines, and Turkey.

Whenever you ship cash, as an illustration euro on our aspect, it’s being transformed immediately to Bitcoin. It’s being transferred utilizing Bitcoin Lightning Community, and on the companion aspect, US, Argentina, no matter, it’s been transformed to native foreign money instantly contained in the platform.

So that you don’t want SWIFT or protocols, some other financial institution protocols. You don’t want any sort of different cost trails. You don’t even want stablecoins as a result of Bitcoin is used as a cost rail right here.

And due to the Lightning community, it occurs simply in a matter of milliseconds and seconds. The typical time for the transaction is three seconds. Sounds superb, and we now have it, and it really works.

We are actually operating some testing campaigns like we’re focusing on, for instance, communities of Filipinos working in Europe. These days, they’re transferring cash utilizing Western Union, or Clever which is clearly costly.

We inform them, like, use us on the European aspect. Three seconds, a small fee, and that’s it. So that is simply an illustration of how devoted we’re to the pushing of, you already know, boundaries of the expertise with once more, a give attention to key values for the tip consumer.

YouHodler CEO on Ripple and Cross Border Funds

Again in 2016 or 2017, I used to be an enormous fan of Ripple’s concept. It was to problem SWIFT, proper, and I liked it. The query is, did they handle to problem SWIFT in any case these years?

I don’t assume so. As a substitute, we now have stablecoins, Circle, and Tether, that are principally coping with the identical problem. We even have UMA focusing on the thought of cross-border funds.

Coming again to a query about our contribution to that time, we additionally actively take part within the improvement of your complete trade.

The market is so huge. As a substitute of competing and combating with somebody, it’s higher to companion. And that’s why we try to carry collectively completely different corporations, even from completely different websites.

Three years in the past, after I stated I wished to attach banks and crypto corporations, individuals thought I used to be loopy. They instructed me it will by no means occur. However It’s occurring now.

Bridging the Hole Between Web3 Anonymity and Conventional Finance’s Regulatory Calls for

There are two points. One is about anonymity and the oldest level of KYC and AML practices. One other is self-custody. Let’s contact base on each.

So, as for KYC, I believe once we discuss simply frequent individuals, common individuals, common individuals, like we’re. It’s not an issue, really. So I don’t see any points.

And we now have, imagine me, an enormous expertise with the KYC processes and instruments. So we’re talking about 1,000s of individuals coming every single day. We don’t see any points with the frequent individuals, as quickly as you’ve got actually good UI, so in case you have resolution to add and course of your paperwork, to make selfies and all these sorts of issues, it’s not an issue.

The issue seems with unhealthy actors who’re attempting to trick the system. And it’s not nearly huge fraud circumstances, but it surely’s additionally about some small frauds, like card fraud, for instance. Imagine me; there are a variety of fraud circumstances occurring every single day all over the place, like hundreds of thousands in the marketplace with stolen playing cards, faux identities, and all these sorts of issues.

When you examine the worth of safety and protection from fraud with the complexity of KYC. And when you look from the angle of the everyday center class, KYC shouldn’t be an issue.

However once more, we must always focus, and we’re focusing rather a lot on simplification of the UI/UX of our app. So, in fact, there may be one other level related to KYC and AML, which is taxes once more.

So it’s not nearly Web3. Folks have at all times regarded for methods to optimize taxes. If it’s finished legally, no drawback. If it’s finished illegally, that’s not okay.

And that is, once more, not concerning the trick of crypto. That is concerning the state of affairs normally. My level is that crypto shouldn’t be a method to trick taxation, in no way. If something, money remains to be the simplest method to keep off the radar, proper?

My brief reply is that anonymity shouldn’t be an issue, really, particularly when you’ve got polished consumer interfaces.

Once we discuss self-custody, it’s very attention-grabbing as a result of our evaluation reveals that there are two huge teams of customers: somebody who wish to handle keys and somebody who wish to have somebody taking good care of it. Once more, like with conventional banks, you’re relaxed as a result of you already know that when you overlook your password, you possibly can name buyer help or go to the department, and it is going to be fastened.

So the identical habits we see on the crypto aspect, which is ok, in order quickly because the service supplier is reliable, it’s completely high-quality. That’s why it’s necessary to have regulated service suppliers who’re serving you with these sorts of issues. Not everybody on this world can care for themselves, proper?

In order that’s why centralized establishments are nonetheless wanted, however in fact, there are customers who wish to handle their very own belongings themselves with noncustodial method, which is completely high-quality, and really, we’re following up with this method. We began as a centralized establishment.

Now, we’re integrating Web3 connectors and pockets connects. It’s not dwell on the platform but, however it is going to be obtainable quickly, very quickly. The concept right here could be very easy. We’d like to mix each side.

So, when you’d wish to nonetheless use your ledger, {hardware} system, and even MetaMask, that’s high-quality, however in some unspecified time in the future, it’s worthwhile to get a mortgage, or in some unspecified time in the future, it’s worthwhile to convert your Bitcoin to native foreign money.

We give you a simple plugin. Click on the button, and also you hyperlink your pockets to our software the place you possibly can pledge crypto and get a mortgage, or you possibly can simply prime up your Visa or MasterCard. So we are actually testing the connector, and it’s fairly promising and by that, I believe we’ll fulfill each teams of people that don’t wish to care for their keys and individuals who’d wish to handle keys by themselves.

YouHodler’s Strategy to Balancing Crypto Anonymity with Conventional Monetary Laws

I can go deeper as a result of, really, it’s a really attention-grabbing query, once more. So, you already know, it’s like you’ve got at all times acted quick,  to remain compliant with all laws In some circumstances, they’re skilled. In some circumstances, they’re following completely different targets.

Simply to present you an concept, simply in parallel, with our interview, there’s a PwC keynote occurring on the stage of the Web3 Banking Symposium , and so they’re talking now about CARF (Crypto-Asset Reporting Framework).

It’s a new crypto asset reporting commonplace that’s going to be carried out within the European Union in 2026. In order that implies that, like, now we now have to be compliant with MiCA regulation, and we’re at, like, last phases of coping with MiCA and DORA, and now regulators dropped CARF, so that you at all times have to speculate rather a lot following up with this, all these sort of issues.

So, the brief reply to your query is that it’s not about discovering an ideal steadiness as a result of you’ve got at all times saved your methods updated.

We have now our head workplace in Switzerland. We have now a number of authorizations and licenses within the European Union.

Additionally, we’re absolutely dedicated to MiCA compliance and have invested rather a lot on this MiCA method. Our European crew is rising. We have now some extensions, for instance, we now have our authorization in Argentina to work with Latin American markets. And, in fact, we now have some plans for different markets.

Even with frameworks like MiCA, you continue to have to observe up with completely different areas, and we do this. And it’s not simple. However that is the truth, proper?

How Growing Blockchain Laws are Shaping YouHodler’s Future and the Crypto Trade

Within the morning, on the Symposium, I offered one slide with easy charts just like the complexity of laws and their significance for the financial system. And we see that nations are looking for their place there and attempting to compete, compete with one another.

Let’s take the US, for example.

A 12 months in the past, we noticed an absolutively restrictive, loopy setting, with a variety of lawsuits. However, the monetary sector, the monetary expertise sector, and the banking sector had been at all times essential to the US.

The Trump administration is attempting to decontrol the trade to help the significance of the trade. However on the similar time, the European Union determined to take a heavy method to regulation with MiCA.

So, I used to be saying that completely different areas and completely different nations are looking for a method to regulate crypto. Some try to decontrol and simplify with a view to improve worth for the financial system. Others try to manage to defend finish customers closely.

We’re in Switzerland, and Switzerland is at all times sensible to find a steadiness, and to this point, it’s balanced, and I hope it is going to be balanced the identical manner sooner or later.

After all, possibly blockchain received’t return to the way in which it was 10 years in the past, the Wild West days of whole freedom. However that is at all times how each trade evolves.

Particularly once we discuss monetary markets. Are you able to identify me any of the monetary merchandise with out regulation? No, and it was at all times like that, like bank cards.

You bear in mind earlier than, bank cards had been primarily based on paper slips. It was not likely regulated, and that’s why they had been a variety of fraud, proper? Then regulation got here in, fraud went down, and but we nonetheless use playing cards at the moment. It’s simply the pure evolution of any main monetary product. And that brings me again to my earlier level.

So once we discuss common customers, not unhealthy actors, that is high-quality as quickly as UI is nice, however UI goes to be good simply because we now have a variety of aspect instruments, even ChatGPT, we simply talked about, proper? AI helps to simplify interfaces. AI helps to work together with completely different methods.

Plus, I imagine there may be one that can have some digital identities. There will probably be no have to resubmit your KYC on each single platform. So, once more, again to your query. Sure, it is not going to be the identical as earlier than, with no Wild West, however nonetheless, it is going to be fairly high-quality for absolutely the majority of customers, and the businesses will probably be specializing in the simplicity of UI.

Ilya Volkov Discusses How Crypto is Reworking Conventional Finance (TradFi) and What the Future Holds

 As you possibly can see, we have already got a variety of conventional banks actively working within the crypto area. I simply introduced this instance at the moment on stage. On the final 12 months’s Symposium was an instance from one of many oldest state-owned Swiss banks, one of many Swiss Cantonal Banks, with round 200 years of historical past.

They’ve determined to introduce crypto as a result of they’ve two teams of shoppers, the rich conventional clients and the younger and adventurous clients, and so they stated that rich conventional clients have already invested in every little thing.

So that they invested in gold, they invested in numerous sorts of commodities. They already purchased Tesla shares, Apple shares, and Google shares, all high-tech issues, and now they’re demanding crypto as a result of it’s clear that it’s the subsequent step.

And the financial institution instructed us that it was clear that had they not launched crypto, they might have misplaced the standard viewers that had been banking with them for the final 200 years,

On the opposite aspect, younger clients.

They had been saying that it’s clear that if they don’t provide their younger clients crypto, they may merely not come. So that is the most effective clarification of why conventional establishments are becoming a member of the crypto area.

One can say that it’ll improve competitors for corporations like us, however I might say no, as a result of it brings extra alternatives for partnerships. FinTech corporations are at all times one step forward, as we’re exploring some new horizons, and we will create one thing new that’s in a while being adopted by conventional establishments. Such collaboration is completely high-quality.

As I stated, blockchain might not be the Wild Wild West anymore, however there’ll nonetheless be one thing new as a result of corporations like us are at all times engaged on pushing the boundaries. So, it’s a relentless evolution course of.