ICOs Are Already Revolutionizing Fintech, Moeda CEO Says

EXCLUSIVE—Investors don’t need to wait for Initial Coin Offerings to reach their full potential: ICOs are already redefining how businesses in certain markets operate, Taynaah Reis, CEO for cooperative banking system company Moeda, told Bank Innovation.

Moeda conducted an ICO in August 2017, raising $20 million for its blockchain banking platform. The company has offices in the U.S., but operates primarily in Brazil, where it works with cooperative banks Cresol and Unicafes to provide digital banking services, such as loan origination through the blockchain.

“Most of the [ICO] funding came from young people in China,” Reis said. “I do see it as an amazing opportunity to create better opportunities for finance, for people like me and people in [countries like] Brazil with the least access to normal financial services.”

ICOs use blockchain and digital currency to crowdfund a company, with potential investors buying a company’s “tokens” via cryptocurrency (typically ether), which is then turned into capital for the company. The method enables those outside traditional investing to contribute, but has also raised concerns in the financial community due to a lack of regulation.

While many in banking remain hesitant about ICOs, the method could have profound effects on Moeda and similar businesses outside of regions like the U.S. that may have lacked other fundraising opportunities in the past. The company is putting its new funding right to work, Reis said.

Moeda is using its recent $20 million of capital to expand its platform, as well as to help facilitate micro-loans and credit services through its partnership banks. Of this total amount, $10 million of its new capital will be put towards these loans, Reis said.

The hope is that these loans, which will be originated via the banks, will enable more financial inclusion especially in the rural areas of the country, where there are only about “two ATMs for 20,000 people,” Reis said.

These microloans range from $10,000 to $100,000, she said.

“The government is really the only one giving microloans to these rural areas, so there are lots of people that suffer,” Reis said, adding that the average interest rate for a loan in the region hovers around 140%. For credit cards, that interest can vary from 400% to 3,000%, she said.

Moeda will also be using the funding to look for more partnership opportunities as it moves forward, according to Reis.