Welcome to The Ask, where each week Crypto Investor interviews essential voices doing the work to make crypto 'mainstream.' Exchange lightly edited.

This week, editor-in-chief Michael Bodley spoke to Bill Baryhdt, CEO of crypto wallet and lender Abra. Baryhdt, a serial entrepreneur and veteran of the VC space. He touches on Abra’s expansion plans in South America and regulatory hurdles.

It’s my understanding that as a company you've had some success and growth in users and also partnerships in South America. Are there sectors where you're seeing a particular amount of growth or pullback? Is regulation at this point playing a role in that?

BARYHDT: Sure, I'll give you an interesting anecdote here of what we're seeing — this is kind of surprising. I would say to most people there’s a surprising dichotomy of interest across very high net-worth users across the world, and developing market users across the world  

Now, keep in mind we have one app. … There may be features and things you can do, like you mentioned South America, or for example, Southeast Asia, where you can actually use Abra cash networks, for example, which we don't offer in the United States.

And there's legal ways to do it (in the U.S.), It's just there's no demand. And we work with regulators on the ground in places like the Philippines or Guatemala, launching in the next couple of weeks in El Salvador, where licensed entities that are allowed to touch cash via remittance-type transactions are able to process deposits and withdrawals. 

What's really interesting about that is we have users that have over a million dollars, earning interest in Bitcoin and stablecoins in their Abra current account, and the exact same app is being used to process five and $10 deposits in these developing market countries. And now in the aggregate, we probably have more money. 

In the aggregate, we also have more individual users in those developing markets. Their reasoning is incredibly similar …  it's just coming at it from a very different perspective if you're in one of those countries I mentioned. You've experienced firsthand the devaluation of your currency, the destabilization of your governments, and you really don't trust any third party especially governments to protect your wealth or help you grow your wealth, or you feel a certain amount of personal responsibility.

And if you talk to our high-net worth customers they believe that we're in this mode where you know we've we've printed, what, 30% of the money supply in the last 15 to 18 months … It's clear that some number in that range is probably true and so they intuitively understand that the value of what those calls risk on assets is right now becoming a proxy for inflation. Yeah, which that's not really the way it's supposed to work. 

Let’s stick with El Salvador, I think that's an interesting example. How do you win over trust with retail investors who have been burned on potential investments and by their own government time and time again? Where do you start?

BARYHDT: Yep. So, a lot of it is for partners on the ground, who have a strong physical presence. So, if you're in Manila, or Guatemala City, there's probably just as good brand awareness for Abra there than there is for Coinbase in San Francisco.. And that's not due to advertising on our part; it's due to the strong retail presence that we build through our partners, you know these licensed entities that process Western Union and MoneyGram remittance-type transactions, and are now doing the same thing. 

And they would strongly prefer to process these transactions, because with remittances the money moves in one direction, which means that your return on equity is fixed because once you process a remittance cash pickup. You can't process another one with the same cash until it's replenished by Western Union. 

Right, follow, so, so, with our transaction model, they can process transactions in both directions, which means, assuming there's some kind of balance or, you know, the money isn't just being used for buys, and some buys and some sells — which looks like a deposit or withdrawal depending upon your terminology_ your return on equity potential becomes infinite. 

Let’s talk about competition. If we had this conversation a couple years ago, I would have thrown out names like Coinbase, Binance, at least in the crypto-lending department. Now I might throw into the equations the likes of Goldman Sachs and JP Morgan. Do you view investment banks as competition and how does that differ from more crypto native names in terms of how Abra approaches the business and stays abreast of the competition?

BARYHDT: Yeah, it's definitely a competition, from my perspective, I think.  We run a lending lending desk, which is part of how we generate yield. And that's a competitive environment. Yeah and there's all kinds of prop desks and other loans and structure products. We don't do securities, but, but there's other products that would be competitive and, you know, that's good for the overall business, because it ultimately makes cash cheaper for people in the crypto space, which is why yields are so high, right.

And I think that, as that competition grows, the yields will come down, but it's probably okay for the space. I mean, on a Bitcoin basis it's unsustainable anyway because, obviously we don't print Bitcoin infinitely so at some point you can't just keep doing interest and saving. So, nobody's really figured it out.

So, to your first point, (Wall Street) is definitely competition on one level. Crypto is still a retail phenomenon for the most part, and institutions get a lot of press because they're big and it's what The Street understands. It’s what it knows.. Yeah, when you really think this is a retail business, I don't mean Abra — I mean crypto in general, is still a retail business. 

Welcome to The Ask, where each week Crypto Investor interviews essential voices doing the work to make crypto 'mainstream.' Exchange lightly edited.

This week, editor-in-chief Michael Bodley spoke to Bill Baryhdt, CEO of crypto wallet and lender Abra. Baryhdt, a serial entrepreneur and veteran of the VC space. He touches on Abra’s expansion plans in South America and regulatory hurdles.

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