I recently spoke with Christophe Lassuyt, co-founder of Request Finance and a Y Combinator alumnus, about the future of crypto payments. Request Finance has been building a platform to simplify crypto payments for companies. Today, almost 2,000 companies use the platform to manage payroll, billing, and more in crypto.
I wanted to know what companies today are using crypto for and get his thoughts on the future of crypto payments and DeFi in general.
Hello Christophe, I’m excited to chat with you today. For those who may not know, please give our audience a brief introduction about yourself and walk us through your journey to the world of crypto.
Hello! Thank you for having me.
I am Christophe Lassuyt, the co-founder and CEO of Request Finance. Before starting my entrepreneurial journey in the crypto space, I worked as a CFO and international financial manager for various multinational companies, agencies and startups.
In 2014, I took a leap of faith and quit my job to work on my blockchain startup full-time. At the time, we were using Bitcoin to make remittances faster and cheaper. That was what got us into YCombinator.
During that time, my team and I saw the opportunity for DeFi to transform the landscape for payments and corporate finance. Existing banking infrastructure left much to be desired in terms of efficiency, transparency and cost. That’s what led to the creation of Request Finance today.
What a journey it’s been. Since Satoshi’s white paper, payments have been a major use case driving the technology. According to you, where are we on the adoption cycle for crypto payments to go mainstream?
Right! I mean the Bitcoin white paper literally states the goal of creating a “Peer-to-Peer Electronic Cash System” based on blockchain technology. We celebrate Bitcoin pizza day because it marks the first use of a cryptocurrency to purchase something in the real world.
I’d say we are somewhere between the early adopters and the early majority, in the technology adoption lifecycle for crypto payments. We aren’t at a point where most people will choose crypto over fiat for everyday transactions. Several key reasons for this include the lack of clear regulatory frameworks, safety concerns, and more importantly, user education.
But at the same time, we’re already seeing non-trivial volumes of crypto payments being used in real world transactions. Request Finance alone has processed over $200m in enterprise crypto payments, for various things like payroll, and professional services. Globally, the volume of cryptocurrency transactions grew to $15.8 trillion in 2021, up 567% from 2020. While those figures pale in comparison to global GDP, it is clear that mainstream adoption of crypto for payments is not a question of if, but when and how.
Indeed, the payments shift to cryptocurrency has been revolutionary, especially for businesses. Why do you think making payments in crypto is sensible in the long run? And is it possible for fiat and crypto payment systems to co-exist?
End users really don’t care about technology. They never have. You do not care about how your smartphone works - only that it creates possibilities that you could not otherwise enjoy.
Crypto payments are becoming attractive to businesses because they offer a cheaper, faster, and more innovative way to pay, or get paid - particularly for cross border transactions.
Traditionally, business payments take at least three working days for clearance, assuming there are no delays from the bank’s side. But crypto networks can process payments in a matter of a few minutes. And we see positive developments in layer two payment rails, making crypto transactions even faster, with shorter settlement times.
Besides making payments faster, the peer-to-peer nature of blockchain ledgers makes it possible to have cheaper cross-border transactions. Network gas fees can cost less than a dollar. In contrast, banks charge an average of 6% to 15% in total fees. So, businesses operating at high volumes have to pay a lot in fees alone.
Now, to answer your second question, I do think fiat and cryptocurrencies will co-exist. But private currencies need not replace incumbent fiat currencies in order to change the world for the better. In the same way that ride-hailing apps have not completely replaced taxi companies, the threat of competition from a credible, private cryptocurrency will motivate central banks to exercise more fiscal prudence, and also for financial regulators to improve the cost and speed of existing payment rails.
The efficiency of crypto truly surpasses the conventional payment methods. But there are certain problems individuals and enterprises face when dealing with crypto. What are they? And how does Request Finance address them?
That’s true. Managing crypto payments is an administrative headache for Web3 companies. But there were serious problems that needed to be solved before businesses would start using crypto.
For one, making crypto payments by copying and pasting wallet addresses from an Excel sheet is frightfully vulnerable to human error, and needlessly laborious too. Many of us personally experienced the tedium of double, triple checking each payment before signing each transaction with our private keys.
On top of that, keeping proper financial records of our crypto transactions was also a nightmare. The pseudonymous nature of crypto wallet addresses, the long alphanumeric strings of transaction hashes, combined with volatile prices made it nearly impossible to know how much we had spent or received in fiat prices.
We struggled to know exactly how much we paid out, or took in crypto - and for what purposes. We had no easy way to keep records of our own crypto transactions, much less categorize them. Virtually every finance or operations manager at other crypto projects faced the exact same issues we did.
That’s why we built Request Finance, to address common pain points with enterprise crypto payments, with features like batch payments, integrations with accounting software like Xero, and multisig wallet integration. We also make billing in crypto easier with recurring invoices, pre-filled invoice templates, and real-time payment confirmation.
While automatic crypto payments sound pleasing to the ear, companies still have to tackle compliance issues. What are your thoughts on that front? And is there a compliant solution?
Yes, companies dealing with crypto face certain compliance challenges. IRS and FinCEN’s latest requirements need crypto-oriented companies to dedicate more resources to report crypto transactions under Form 8300. Further, they need to spend additional time converting historical crypto transactions into fiat for accounting and tax purposes
To save time and money, companies can use Request Finance to automatically denominate crypto payments in fiat prices, labeling them with accurate market prices using oracles. It also helps tremendously with tax reporting.
We see stablecoins are on the rise across different blockchain ecosystems. If we are to achieve mass adoption for crypto payments, are stablecoins the way to go?
I believe so. Stablecoins are gradually becoming the most usable form of cryptocurrency, just as we currently pay for most things in fiat currencies and not with shares of listed companies. About 55% of payments on Request Finance involve stablecoins. So it is evident that individuals and businesses are more comfortable dealing with stablecoins than other volatile cryptocurrencies.
But if we want to see mass adoption of crypto payments, we need wiser regulations that foster the growth of stablecoins in a trustable, yet privacy-preserving manner. And if that happens, stablecoins can become a core component of a novel financial architecture alongside smart contracts and other crypto-native innovations.
Finally, let me ask you what crypto means to you? And where do you see it go in the next five to ten years?
For me, crypto means freedom. It will unlock a new era in the development of markets - from capital markets, to labor markets. Remote-first Web 3.0 companies use Request Finance to hire and pay global teams in crypto, regardless of where they live. That’s a historic transformation in labor markets.
Other crypto companies we support like RealT, are enabling the tokenization of real world assets like real estate. What’s more, they allow people to take out secured loans against these fractional assets. That’s another step forward for the democratization of access to capital markets.
In the next five to ten years, I expect to see more interoperable and scalable solutions in the crypto landscape, with lower entry barriers, and better user experiences. I also believe we will see emerging trends, like the metaverse in action with real-time payment integrations.
Thank you, Christophe. It was a very insightful session. I’m sure the audience felt the same. Best wishes for Request Finance’s future. I genuinely hope that this project will achieve the success it deserves.
Thank you very much for having me here. It was a pleasure speaking with you. And yes, I’m pretty bullish about seamless crypto payments being the future.