Thanks in part to the explosive entry of play-to-earn games such as Axie Infinity and celebrity hype from the likes of Elon Musk, cryptocurrency adoption has been skyrocketing recently, especially in Asia.
Emerging markets such as Vietnam rank high in cryptocurrency usage, thanks to high transaction volumes on peer-to-peer platforms, according to a report by Chainalysis.
“We’ve never been more excited about [the crypto] space,” Jeffery Liu, co-founder and CEO of Hong Kong-based fiat-to-crypto platform XanPool, told Tech in Asia. “I’m confident that within the next 10 years, cryptocurrency and [decentralized finance] will cannibalize traditional finance.”
To help ride this momentum, XanPool raised US$27 million in a series A round led by Valar Ventures, alongside investors such as CMT Digital and Wise co-founder Taavet Hinrikus.
XanPool co-founders Jeffery Liu (left) and Artem Ibragimov / Photo credit: XanPool
Established in 2019 by Liu, former COO of Hong Kong-based edtech firm Snapask, and Artem Ibragimov, founder of a marketplace for extreme activities called Thrilio, XanPool provides exchanges, wallets, and other cryptocurrency businesses with fiat on-ramp liquidity and software, allowing them to tap into Asia’s growing crypto market. The company was part of the second cohort of early stage VC Antler’s Singapore program in the same year.
Since its establishment, Liu said that XanPool’s network has grown into one of the region’s largest decentralized liquidity pool with over US$200 million of liquidity. It currently offers its services across 12 countries in Asia, with Vietnam, India, and Hong Kong having the most transactions among its markets.
The company also offers XanPay, a payment gateway for small and medium-sized businesses expanding across Asia. It works similar to financial intermediaries such as Mastercard or Visa.
But a key difference is that XanPool has an open network of individuals and businesses whose idle capital is used to settle cross-currency and cryptocurrency transactions. The service uses cryptocurrency routing to let business partners receive payments via their local payment methods and currency in real-time.
According to Liu, cryptocurrency routing works similarly to how money is moved around the world. Banks’ database entries are updated to reflect money leaving and arriving, he noted.
“The inefficiency here is that only the banks and their small group of their partners are allowed to create such entries. This makes the respective banking partner very powerful, and this power reflects itself in the fees that individuals and businesses have to pay to send money,” he explained.
By using cryptocurrency to move money, Liu said that individuals and businesses can send funds to anyone without approval from a third party, lowering fees and delays in transactions.
“Without the traditional 3% merchant fee and customer foreign transaction charge, this benefits both businesses and consumers significantly,” Liu said. Citing internal data, XanPool revealed that its existing business partners have seen increases of over 30% in revenue and profits.
With the new funds, the company plans to expand its product offerings, onboard new users, and consolidate its presence in Asia Pacific. The startup said it currently has over 500,000 users and aims to increase that pool to 10 million by the end of 2022. XanPool also looks to boost its number of XanPay business partners from about 400 today to 10,000 businesses within the same timeframe.
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