Nexo’s Antoni Trenchev on CNBC Weighing in of Libra, BTC’s Intrinsic Value and Tokenizing Gold


Let’s bring in Antoni Trenchev,
co-founder of Nexo, to weigh in on the latest when it comes to Libra. Do you think that Facebook badly miscalculated,
in terms of the regulatory push-back they’re seeing? I think it’s a classic situation of
glass half-full, glass half-empty. What is for sure that it has gotten much more complicated than the last time we talked about it
when I was on here. I think that the value proposition
of the project is still there – low-cost cross-border payments
that settle almost instantly, I think the world is going
to profit from a cryptocurrency that is backed by a basket of currencies
and short-term government securities. Obviously, there are
few clouds coming up, and we’ll see after those clouds clear
how exactly the product is going to look. But if it comes to be, we at Nexo will
instantly on-board it for our loans and as a payment
instrument that we accept. I try to be optimistic, but there was some
miscalculation as to the regulatory push-back. When you talk about things having become more complicated since the announcement of the launch, what’s actually changed? Well, it’s all about perception. I think that people in my space,
I personally and we at Nexo expected the Libra leadership and Facebook to have done the proper legwork of securing, if not consent,
then at least a nod from the regulators, because that’s not some mom-and-pop
shop doing something, this is Facebook with a user
base close to 4 billion. So, this is a massive,
massive grand project, which obviously has to comply
with AML and KYC procedures, and if you are against that, then
you’re on the wrong side of things. I think what Facebook is trying to do here
is to clearly replicate some of the success you’ve seen with WeChat
and Alipay in China, and Libra is clearly their
instrument to do that. As you say, they have a big advantage
with the install base that they have of nearly 4 billion customers
across the globe. But they have to be very careful not
to step on the central bank’s toes and their ability to
influence monetary policy. How do you not step on
the central bank’s toes? It’s a really good question, but I don’t know how they cannot step
on their toes given the install base, I don’t know how many Facebook users are there, but I know it’s over a billion. I think that’s why this is very different
to other cryptocurrencies you’ve seen launched because this will be far larger
in terms of potential scale. So, the influence it potentially has is much greater than many of the other
cryptocurrencies you’ve seen launched, and I think this is why you’re seeing
some of the regulators push back. Why would central banks
allow this to happen? I mean we had a central banker in here earlier, Stefan Ingves from the Riksbank, and I got the impression that central banks would have a response,
but it would be them leading a digitalization of
money rather than the private sector. Well, that does make sense. However, we’ve got to think of
the composition of Libra as a cryptocurrency, it’s not going to be akin to Bitcoin, Ripple or Ethereum
where it has little intrinsic value. It’s going to be a cryptocurrency which
is actually pegged to fiat currencies; Pounds, Euros, Dollars,
all of them and short-term governmentally issued
debt instruments. So, I don’t think that’s necessarily
a challenge to the status quo, it is just bundling it up and
backing the cryptocurrency, which is not inherently creating a new currency,
which could be seen as a challenge to central banks. This brings me back to the conversation
I had with a property developer around this desk a couple of years ago,
and that lady will remain nameless, she tried to explain to me why it was great to buy
this property in cryptocurrencies. I said: well, I don’t understand how you can pay
your bills and your builders in cryptocurrency, oh no, it’s fully convertible to dollars. I’m like: well, why would anyone change
their dollars to crypto back to dollars again? What’s the point of the crypto if
it’s backed by a fiat currency? Well, a few things. Bitcoin is the best
performing asset of the past decade. It’s a volatile performing asset, it’s a sure recipe for people who
don’t know what they’re doing. Whenever people ask me about Bitcoin,
I always say to them, do you understand the product? And they say no. Then the second question
I’ll say, can you afford to lose the money? And they variably say no. So, I say, well, then these are
the two criteria, you shouldn’t touch Bitcoin. Well, that’s a risk management and money management and a strategy of how everyone addresses that in their personal portfolio. Do you know what Bitcoin is worth? I know that if you take the longer view over the past decade, it has outperformed any other assets, hands down. And then second thing I know,
it has a small part, it has a place in everyone’s portfolio
for the sole reason that putting it… When it went down from 12,000 to 8,500
or the 8,311 that it is now, did you understand why it went down? Well, everything that goes 4x in
a few months is bound to have a correction. When it went to 8,300 fall from 12,000,
do you understand why we’re not… What I’m saying is that people don’t understand why it’s moving one day to the next, up or down. I’m not an advocate for it and
I’m certainly not a detractor. If you don’t understand why something’s
moving, why would you touch it? You would proceed with caution
because having BTC in your portfolio actually improves your Sharpe
ratio by a serious multiple and this is a measurement
of risk adjusted returns. For instance, at Nexo,
we also give you the means of holding on to your
Bitcoin over the long-term and accessing the value of your crypto via loan, which
could be in 45 different fiat currencies. That’s my next question.
I know that you’re one of the leading instant
crypto-backed loans providers. In the world of free money, why do
we need a crypto-backed loans provider when there is money sloshing
around at a negative rate? I had a central bank here with negative
rates for his banks earlier on as well. Why do we need crypto-backed
loans in a world where we have, Why do we need crypto-backed loans in
a world where the private equity got trillions? Trillions. Trillions around at the moment. Well, apart from the obvious
reasons that we’re heading towards a disaster with the
expansive monetary policy, but that’s a whole other topic — why we need a crypto lender is because the space is very vibrant, it’s moving, it is propelling innovation and there are a lot of people
that hold on to their crypto and exactly so that they
can take the longer view. We are there to provide them
short-term financial instruments, which they can borrow against their
holdings, meet their short-term liabilities. Your interest rates are much cheaper
than other people’s interest rates. We go as low as 5.90% per year. So, you’re lending money at 5.9%. What is the lowest interest
rates UBS provide? I’ve no idea, but I know that you can
have negative rates in Switzerland? So, why would I borrow money from
you at 5.9% when I can go to UBS? Because you get to keep your
Bitcoin at the same time. It’s very similar to what
UBS for instance is doing with Lombard credits against gold,
where you can have physical gold, and put it with UBS, they would then give you cash and you can go on and buy even more gold. We’re now doing the same thing
with tokenized gold – we do that with all sorts of cryptocurrencies. It’s just a different product
that people are utilizing. That’s why in the past 18 months,
as a startup just launching, we have processed over
a billion dollars. On that point, if the regulators want
to know how you’re creating leverage, can you track that? Can they see that? Can the governments and the central bank see how much leverage has been created? We actually encourage under-leverage
because if you have $10,000 worth of Bitcoin, we only going to give you
50 cents on the dollar. So, we encourage under-leverage,
much like what you guys do with gold. We’re going to leave you there.
Great conversation. Thank you very much indeed.
Nice to see you, Antoni Trenchev, co-founder of Nexo.

14 thoughts on “Nexo’s Antoni Trenchev on CNBC Weighing in of Libra, BTC’s Intrinsic Value and Tokenizing Gold”

  1. The guy asking Antoni questions doesn't give him a chance to finnish his replies! Wonder why he does that probably dont want people to understand the advantages of investing in crypto. Hate people who that🤬

  2. nexo memang pantas di percaya cuma saya saja yg tidak punya dana untuk i nvestasikan keren nexo bagus dan mantap ,ayo kalian yg punya dana jangsn salah investasikan di sini

  3. Hmm "Low cost cross-border payments, that settle instantly" Ya don't need Libra, we already have RippleNet & XRP for this, Ripple is already doing this. By the way Libra is just a white paper. But hey, if Libra pumps up the prices for crypto, good on them, I'm all for it 😉

  4. See your humbleness conquers crypto ignorance I’ve been a supporter for 3 years and I literally use your guys loans for everything bills trading food life period increasing my wallet is a everyday thing let’s get this paxg in there

  5. That older guy is so ignorant, admits that he doesn't understand it, but at the same time has such a strong opinion that Bitcoin is useless.

  6. That old idiot keeps interrupting because he can't accept his understanding of the financial industry is obsolete.

  7. I cringe every time that guy says he doesn't understand price movement of bitcoin… The crypto bashing is real with him… He's the kind of guy that fomos on at the top and trashes the asset for his bad but in

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