“At that point people didn’t want to spend crypto - they wanted to buy more crypto.”
Cryptocurrency exchanges have popped up all over the world in recent years to facilitate that.
But Faury said the focus has now shifted to spending the digital assets.
“What’s happened recently is now you have got this trillion dollar asset class and it’s a lot harder to spend the crypto and there’s been a few bad actors - FTX, Celcisus, Voyager - that have not done the sector any favours.”
So 18 months ago he came up with the idea of building a bridge between the digital wallets which hooked directly into the Mastercard network, allowing people to spend anywhere Mastercard is accepted.
The service is due to launch in New Zealand in April and Immersve has a global rollout in its sights.
“We are in the final stages of getting our licence for Australia and we have started the process with North America, the UK, EU and we have also started across Southeast Asia as well.”
Faury said he hoped to launch the service in Australia by June and expand to other markets by the end of this year.
How does it work?
Digital wallet holders must first convert their cryptocurrencies into USDC - a digital currency that is fully backed by US dollar assets and is known as a stablecoin. Stablecoins are designed to be stable rather than fluctuating wildly in value like other cryptocurrencies.
Faury said some tech workers were now being paid in USDC while others also earned interest on cryptocurrency savings in USDC similar to the interest paid on a term deposit at the bank. Another option was to put cryptocurrency up as collateral and get a loan that was lent out in USDC.
The USDC will then be converted to fiat currency and settle on Mastercard’s network. From a retailer or merchant’s perspective, it will appear the same as any transaction done through Mastercard.
The digital wallet holder will have control over approving the purchase and will be able to set limits on how much can be drawn down.
Faury said the bridging technology provided by Immersv was a world first.
“There is nothing like it in the world - I haven’t come across any other company even thinking of the idea let alone figuring out how to solve the challenges around the technology and experience to make it elegant and easy.”
Faury said the service had a potential market of tens of millions of people.
“The challenge is obviously from a regulatory perspective for a company like ours looking to expand this into other markets is ensuring that we comply with local legislation - there are global standards around KYC [know your customer], AML/CTF [anti-money laundering, countering the financing of terrorism].
“Technically it works globally from day one but in order to onboard citizens in a particular country we need to comply with local legislation. The key to us being successful is getting those local licenses so we can onboard citizens in those countries.”
What about fraud?
Faury said it did not hold onto an individual’s cryptocurrency.
“If something happens to Immersve nothing would happen to your crypto because it’s in your wallet secured with your private key and the only time it can be spent is if you sign a transaction.”
He said the system used one-off virtual card numbers so people don’t need to know their card number and if it was compromised from the website or otherwise, it wouldn’t work anywhere else.
Using the Mastercard network also meant users had the usual protections of using a card service of being able to charge back spending if the product or service doesn’t turn up.
Immersve earns its money through the interchange fee.
“We are the issuer of the card and we charge the acquirer - the acquirer is the entity that provides the merchant - the retailer - the facility to accept Mastercard - so that’s where we earn our revenue.”
Immersve is 46.5 per cent owned by Faury and its 28 staff are currently based in Auckland but he said eventually its top management would be US-based, with the product development and innovation team based in New Zealand.
Last year it raised $17 million through a seed capital raising, attracting venture capital support from the US and UK which valued the company at around US$70m.
Sandeep Malhotra, Mastercard executive vice president, products and innovation in Asia Pacific, said in the past three years, the number of people using blockchain-based wallets had doubled to more than 80 million.
“Digital wallets are likely to become as ubiquitous as email addresses. Mastercard remains committed to partnering with like-minded organisations like Immersve to scale and secure the blockchain ecosystem to make simple, safe cryptocurrency transactions, and even payments in the metaverse, easily accessible to billions of consumers.”
