In an exclusive interview, Justas Paulius, the CEO of crypto payment processor CoinGate, shared how the payment space for digital assets has responded to the prevailing market downturn. Paulius also highlighted the new role of stablecoins as cryptocurrencies such as Bitcoin (BTC) continue to correct.
At the same time, the executive pointed out some of the key factors that can promote the adoption of cryptocurrencies by elaborating on the important role companies can play in driving the overall adoption of cryptocurrency among the masses. Furthermore, Paulius stressed the importance of focusing on the technology of the crypto sector rather than focusing on the prices of specific digital assets.
With the cryptocurrency space marred by fraud cases, CoinGate's CEO described the measures the platform has taken to mitigate the risks. Finally, the executive dove into CoinGate's expansion plan across the United States and the regulatory hurdle.
First, congratulations, as CoinGate has been given the green light to enter the U.S. market with licenses to offer payment processing services in 21 states. Do you have any special offerings or products available only to customers in the United States, and how soon do you expect to add support for customers in the other states?
"Thank you; it is just the beginning of our journey in the U.S. market. Our goal is to serve 21 states on our registration documents. We have heard back from a few state regulators and are still waiting to hear back from most of them, and hopefully we will hear back from them soon.
The remaining states are going to be added during 2023. We are a regulated company, so it takes time to get all the approvals we need."
Do you see a clear shift in the adoption of cryptocurrencies, such as increasing enthusiasm among not only tech traders to accept crypto, but also more and more traders in other sectors?
"We find that cryptocurrencies continue to be most popular among tech companies. As a recent example among tech merchants, Lithuania-based unicorn Nord Security started accepting cryptocurrencies through CoinGate. In a way, this shows that tech giants are ready for crypto-adoption, with Nord Security leading the way.
One particularly interesting observation this year is that our solution is also being used in a B2B environment. Companies are taking advantage of borderless distributed ledger technology (DLT) technology to greatly reduce settlement time to their suppliers compared to a centralized financial system. It's as simple as emailing an invoice to your partner and then receiving the desired currency directly into the bank account; the merchant doesn't even know DLT was used to make the payment."
Amid the crypto winter, have you seen a difference in the number of customers interested in making payments in cryptocurrency when making online purchases?
"We definitely notice a change in people's behavior. Of course, the crypto winter is just one of many things affecting shopping trends. For example, tighter regulations continue to build trust between the crypto industry and the general public, which also contributes to behavioral change.
That said, there were a few different insights during this year - despite the crypto market shrinking by more than half, people didn't really reduce the frequency of their purchases. They did shift a bit from free-float coins to stablecoins."
Can you provide a figure or example that illustrates how much the number of merchants using CoinGate payment services increased by 2022?
"Our active monthly merchants grew about 80% YTD. I hope we reach 100% growth by the end of the year, but 90% growth is more realistic with our current pipeline.
Meanwhile, we have fine-tuned our solution to be ready for a different kind of customer - financial institutions. By removing technological and regulatory barriers for them, we hope this new product will enable even more companies to take advantage of the DLT."
Do you see the growing number of companies embracing cryptocurrencies as evidence that the industry is maturing, and what work remains to be done to increase adoption?
"The growing corporate interest in crypto is just one indicator that the industry is maturing. The formation of supporting industries, greater public awareness and understanding of how crypto is used, and other factors also show that the industry is maturing. Step by step, but we are getting there."
In light of the growing amount of fraudulent activity surrounding cryptocurrency transactions and what tools and processes does CoinGate use to prevent illegal payments from being processed?
"There are many tools that we use to evaluate the risks of the cryptos that touch our infrastructure - from device research to behavioral studies to blockchain analysis and it's all done behind the scenes.
How difficult is it for the typical retailer to accept cryptocurrency payments on their online store, and what level of cryptocurrency expertise is required to do so?
"The difficulty depends on the tech-savviness of the customers and how motivated they are to start using the CoinGate solution.
This process can be broken down into two separate parts - technical and compliance. In my opinion, both are fairly easy to do, but do require some time investment. Technical integration can be done through plugins on most popular e-commerce platforms - it's as simple as clicking a button.
The second part requires our clients to fill out a know your business (KYB) questionnaire and submit some business documents. This is usually more extensive for our prospective clients because they do not necessarily have the required documents immediately and collecting them takes some time."
Do you sense a trend of people buying more gift cards than ever before using digital assets as cryptocurrency grows rapidly as a form of payment?
"Our gift card business is growing every month. Of course, there are many different factors at play when it comes to growth, and adoption is one of them.
Nevertheless, the daily work we put into UX improvements, increasing our gift card inventory and focusing on customer satisfaction are also key points of our growth."
Finally, what lies ahead for the crypto market specifically Bitcoin in 2023?
"I'm not qualified to make those predictions and don't want to speculate on the price of any assets. And I don't really think it's possible to predict the price with any degree of certainty.
With that said, we are betting on the technology itself rather than the price. There are more startups coming into the market every day that help support the crypto ecosystem, and because we can leverage their technology, we can also offer our customers better solutions and experiences."
Thanks for the conversation!
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