Buenos Aires — In the middle of the so-called ‘crypto winter’, and contrary to what is happening locally, Argentine cryptocurrency exchange Ripio has announced its expansion into the United States.
“There are times when some decisions seem inopportune, but they are the result of processes that were faced a long time ago and while being aware of the upcoming scenario,” Alejandro Rothamel, Ripio’s chief legal officer, told Bloomberg Línea in an interview.
“We are not naïve at all: we know that the crypto winter is going to last, and that the global situation is also very uncertain at a macro level,” Rothamel said, while expressing his confidence that the company, which has 4.5 million users, will be able to face the adversities because “it has its own funds, and raised a round last year, which gives it enough peace of mind”.
Rothamel also predicted that 2023 will be a more favorable year for the world of cryptocurrencies, after the “loss of confidence” this year, and falling values of crypto.
The following conversation was edited for length and clarity:
Bloomberg Línea: Why have you decided to expand into the United States at this time?
Alejandro Rothamel: We always approach product development in a global way. We are aware that crypto is a borderless product, so one specific country always falls short. Whenever possibilities open up to evaluate companies in other jurisdictions, we do so. We also bought a development company a little over a year ago that had part of its structure in the United States and Argentina. We are always trying to expand to attain that global reach, which by its nature has its own technology. The United States is a very complex market from a regulatory point of view, and has a lot of competition. We know the local landscape and we know that there is a certain customer base that is interested in operating in the United States, so that is the main driver for opening our operations there. We have a Latino clientele in Miami. We have the added value of speaking the same language, and using the same terms. In principle, our operations will be limited to Florida.
So, we are targeting the US-based Latino public.
It seemed to us the most natural first step. Of course, there are other states from which we can expect more volume, but they are also markets that are more saturated with supply. The fact that we are targeting Miami has to do with that, with the Latino market. Being able to provide solutions to problems that, in general, only Latinos know about.
What is the balance of this year?
2022 has been a difficult year for crypto, not only in terms of traded volumes and prices, but also in terms of the loss of confidence following the debacle that started with Terra and continues with FTX.
And how do you see 2023 for the crypto ecosystem, in general?
Next year we are going to see technological solutions that aim to make trust unnecessary or, to put it another way, to solve the problem of trust with technological tools. Expect a slightly better year in terms of volume and pricing. The price of Bitcoin and other assets changed a lot, but in the case of Bitcoin, it has already shaken off all the frost and seems to have said, “This is as far as I’ve come.” There is a trend that would seem to indicate that ‘crypto tourists’ have already left out of fear or because they don’t trust the technology, while those who have a long-term vision and recognize the potential remain. This whole year has been a big purge of the market globally and what is coming for 2023 is probably a better scenario, with technological solutions that encourage more people to trust technology and not people.
In this context of falling prices and crisis of confidence, how is Ripio’s profitability evolving?
We are a very crypto company. That gave us a lot of tailwind. The company has its own funds and raised a round last year that gives it enough peace of mind to get through the crypto winter. Currently, it is a difficult market and in which there is more and more competition, so the profit margin is much lower, but we are very well prepared to change what came and face what is coming in the next months. We are not naïve at all and we know that the crypto winter is going to last and that the global situation is also very uncertain at a macro level.
Does it seem prudent to you, then, to expand in that context?
Yes, as you can imagine, all these things require a lot of planning and there is also a lot of execution of processes, behind the scenes, that take time. There are times when some decisions seem inopportune, but they are the result of processes that were undertaken a long time ago and being aware of the scenario that is coming. Today, I think it is good to have operations in more than one country because, sometimes, clients themselves are looking for it, but also to diversify the local risks that may arise in countries like Argentina, with policies that are not clear in terms of where they are aimed.
How much market share do you expect to gain in the United States?
I am not looking at those numbers, but the idea is not to go out and compete with the big players in the US. We have a very conservative vision. It is a market we are just getting to know. Time will tell how that turns out.