Compliance Is the Moat: Why Walapay Owns Its Licenses Instead of Renting Them

Okay. We are back. We are live here in Mexico City, day two of Bitso's Stable Fund Conference. We're here in the booth powered by Agora. Shout out to that team. StableDash live is sponsored by Agora, built for global institutions moving money at the speed of the Internet. You can learn more at agora.finance. And we are here with one of our just original guests of our podcast. Tom, you were you were one of our first guests on the show over yeah. Almost feels like two years ago, almost now.

We have not caught up since then. So I'm excited to hear about Wallapay, what the latest is, but maybe we start off with, yeah, cofounder, CEO, what what what your intro is and Yep. What a little bit about the company high level. Yeah. For sure. So my name is Tom Borgers. I'm one of the founders of Wallapay.

You know, we're a company that's been around now for about two and a half years. And what Wallapay does is essentially money movement infrastructure centered around stablecoins focused especially on moving money in and out of emerging markets for b two b in prime like, primarily. Right? So we deal with a lot of businesses, fintechs, PSPs in regions like LatAm, Africa, Middle East, and and APAC as well. And we help them move money, manage money, etcetera, using stablecoin based technology.

Cool. Maybe to kick off a little bit of, like, the stack that you have built, you know, a lot of the audience we have is pretty native in some ways to the industry. How have you, like from from an infrastructure standpoint, how have you built what you've created? Are there, like, key partners or infrastructure partners in the stack that you're using versus, like, maybe more of these, like, first party proprietary Yeah. Things that you guys would like, help us, like, maybe we start unpacking the difference there.

Yeah. For sure. I think maybe where I can start is

everything that we've built is kind of centered around two basic theses. One is that the future of financial services and certainly cross border payments is centered around wallets as the heart of a company's financial operations and public ledgers as the way that value gets moved around. Right? So stablecoins being obviously very, very, you know, dominant in that framework. So that's number one.

And then, you know, number two, we really fundamentally believe that if you're going to derive the biggest advantages and benefits out of using stablecoins and wallets, you need to own as much of the infrastructure that you're providing to your customers. Right? So we have really taken that to heart in the markets that we consider strategic. So those include, you know, especially countries like Mexico, actually, other parts of LATAM and and APAC.

And and we've gone and, you know, tried to get licenses wherever we can. We've built direct relationships with banks, bank partners in, you know, countries like Mexico, The US, etcetera. And then we've built our own liquidity engine on top of that. And then we've connected that infrastructure in both sides of the corridors that we serve, to be able to really provide this, like, disintermediated experience for for our customers. Right?

So we try to own as much of the infrastructure as possible so that we're not kind of eroding a lot of the benefits you get from using Stablecoins on public ledgers. Cool. But then of course, like, you know, you're always dealing with partners in in the payments world. I think that's still very much a reality. So we work, you know, with companies like Kappa, for instance, for liquidity.

Our liquidity engine in every market is is based in part on our own liquidity, but obviously, we're also pooling in from various different providers that are both, like, crypto native and then not crypto native. Right? So we might work with the bank on FX, but we might also work with, you know, a a more kind of, like, an OpenFX type liquidity provider. And and all of that kind of gets aggregated into our our liquidity stack. The liquidity stacker engine that you're talking about. Yeah.

How would you break that down in, a playbook? Like, how have you do maybe the first time we got introduced was through was was it the podcast season we did with Defense? Yeah. Was that it? So it's like the is the core infrastructure that, on the wallet side, are they still, like, a key part of that? Or how have you are still, how are you thinking about that? Yeah, I think,

you know, I say we're trying to own as much as we can, but there are certainly parts of the stack where we've clearly said this is not our core competency and we're not going to, you know, build our own or roll out our own, that obviously applies to the chain itself, to the bank layer and then also to the wallet. So in terms of wallets, like, today, we work with defense primarily.

We also work with Privy, and we may work with other providers because ultimately, you know, we're we're trying to give options to our customers where

we're not kind of building our own tech. Right? So if they already use Privy or they already use Defense for that decision, would is that like a does that make integrating or using WalletPay that much easier? Like, you can kind of have integrations in in some ways, or am I thinking about it incorrectly? Yeah. No. You you can bring your own wallet, right, if you if you have, like, one of these providers,

or you can leverage ours, and there are a few different configurations where you might go, like, fully self custodial a la Privy or, work with a more custodial setup Okay. Where we use defense. Cool. So

it's been a year and a half ish, I think, since we talked. What are you most proud of that you've built since then? Like, what what what have you where have you been spending your time? It sounds like you're you're getting licensed in some local regions. You're building some of this, like, liquidity tech. What are some of these key, like, proud founder pillars when you think back on the last year and a half that you guys have done?

It's a lot of time. Yeah. It's of days. I mean, it's like I can't tell you how different the company is today than than a year and a half ago, but we've made, like, really big strides from a licensing and banking infrastructure, perspective. So I would say I I'm most proud of of serving the customers that we do today. You know, we we have an incredible array of customers that range from, you know, folks like Nuvae on the PSP side to more stablecoin neo banks like Cast and ZaraPay and Ugly Cash.

And so I'm very proud to be serving these customers, which are really bringing the technology into the hands of people in a very tangible way. Right? That's kind of more on the results or like outcomes. Right? But with respect to the tech that we've been building, I'm really proud of the work that we've done to bring these corridors together, especially across LATAM and APAC, right?

This is probably the biggest source of growth for us and where we've spent the most amount of time making sure that these corridors, for example, you know, Mexico to China or Brazil to Hong Kong, you know, Colombia to Singapore, these kinds of corridors, we've made them very, very easy and streamlined, right? So it's now faster, cheaper and more transparent to send money across borders in those corridors. And a lot of that has been because of the work we've done to build up our infrastructure on both sides, right?

And especially, I would say in the China Hong Kong kind of region, we've done a huge amount of work to make sure that we can do this in a compliant way, working with all of the best

licensed providers and banking partners over there. So, yeah, I I think that that's enabled a huge shift in kind of what we're able to do and what we're able to bring for for these customers. Yeah. So let's let's double click on We love Cast, and, you know, they're a proud sponsor of the show, and we've had rags on, I think, more than any other guest. So dive in dive into maybe how Wallapay practically serves a company like them Yep. And maybe the the value add in terms of how you guys are providing.

Like, what what does that look like? And we can kinda use that as, a case study for a little bit. Sure. And and I'll talk about Kast, but, you know, this applies to a lot of other similar kinds of companies that are building in the space.

But Like, what problems did they have that you solved?

The the range of problems that we see from from Kasten and some others are typically around, a, getting access to named virtual accounts in USD, euro, pounds, you know, some of the key kinda g seven currencies, And then connecting that with stablecoin infrastructure that enables on and off ramping in emerging markets. Right? I think it's, you know, at this point, like, it's it's not particularly difficult to do the the more traditional FX corridors like USD to Euro. Right?

This is not something where stable coins need to come in and and disrupt the market, but stable coins definitely can help in emerging markets and moving money across emerging markets, right?

So where we're really adding value for customers like Cast is especially in terms of off ramping from stablecoins to local currencies in markets like Pakistan, Egypt, Nigeria, UAE, Colombia, and even more developed markets like Japan, which are you know, they're they're very different structurally, but actually, they're they're also, you know, from a regulatory perspective, very, very complex to work with and to do right.

So those are the types of markets that, you know, we're we're enabling for folks like us and others. Okay.

I I'd imagine there's, an an evolution of, like, the users of something like this. Like, Cast is an interesting example because they they have they have end users that have a relationship in their mind, whether it's retail users or, I think, increasingly so, businesses who are using Cast. And when they think about moving money and getting these accounts, it's with Cast in their minds. Yep.

Have you considered the like, what it would look like to to do the first party kind of direct approach with with Wallapay, or are you got, like, similar to CAS, like, something like that where you would actually own or create customer relationships directly, or are you intentionally and strategically remaining

under the hood, like, in all like, how do you think about that? Yeah. Look. We we see ourselves very much as a licensed infrastructure provider, and that's our role in the ecosystem. And we don't wanna compete with our customers. Right? So we're making a a strategic choice to focus on the infrastructure, focus on the licensing, and being an enabler of a lot of these fintechs and PSPs who have the direct relationship with their end users.

But we're starting I feel like we're starting to see, at least from our perspective, more and more of these more of those types of companies Yeah.

Want their own licensing and want to do I'm I'm it's just like an interesting con consideration of, like, I would like, I don't know if Cast is in this camp, but just, like, companies who like them are wanting to also say what you're saying, like, have have the the licensing and relationships and not have the counterparties that they need to orchestrate and do all that stuff. Like Yep. And then on the other side of the coin, we're also hearing people under the stack across this is not just specific to you guys.

There's some something we hear is, like, what does it look like to go direct and, like Yep. Own the relationship and the differences there. And we've we've it's just it seems like an interesting evolution. Yeah. Like, how how are you thinking about that?

Yeah. I think, you know, it's funny because, like, in the long run, we're almost all kind of gonna be competing and and overlapping on the various different, you know, things that we do. But we don't live in the long run. Right? And I think what what we've seen is, for sure, there there will be, you know, apps like Casen and others that will go and get their own licenses in in certain markets and and, you know, power to them for that. There there's absolutely no no issue from our perspective with that.

But fundamentally, you know, when you're serving end users versus serving a fintech as an infrastructure provider, you have kind of different constraints and different priorities that come up, right, very naturally. And we think that we're better served focusing on the challenges that come with getting a license, but even more importantly, maintaining these licenses and these relationships with with bank partners. And we we've seen this firsthand. Right?

Like, both from our own experience building with these bank partners and so on, but also building, you know, in the past on top of other infrastructure providers who will not be named here, but who have had their own issues and, you know, made it very clear to us that if we're gonna do this well and reliably over the long run, we need to pick our battles and we need to pick our focus, and our focus is on the license infrastructure.

Yep. What is what is so difficult about this and what have you learned in the in the journey of, yeah, the challenges that are faced with maintaining these these relationships and getting them to begin with? It does seem like a unique focus versus what, you know, maybe a platform like a neobank or a fintech specifically, which in my view is way more on the customer acquisition Yep. Go to market Yep. Specific brand. Like, that's a very different focus than what you're what you guys are building.

So what what would you say is, like, the most misunderstood or underappreciated Yep. Part of what you what you're seeing?

Well, first, I think you put the you you got that exactly right. Like, you hit the nail on the head. And at the risk of putting your listeners to sleep here What? They like, compliance is the most underappreciated thing in our industry.

And I think if you're not, like, investing a huge amount in building your compliance program and, again, maintaining and growing it, then you're going to hit a point at which your growth kind of goes head to head with what your bank partners and your regulators are basically comfortable with. Right? It's going to it's going to it's going to come to a head, and it's gonna be very ugly.

And, we've seen that with with some of our, early infrastructure partners and we've taken those lessons and really built out a program that we think can scale. And that's a, you know, that actually, one of the things that we did very differently early on is a, invest heavily in compliance, but b, build compliance, like, directly into the product in a way that can be a little bit more automated.

Obviously, AI helps a ton in in this respect, but in a way that, like, really enables it to scale with the number of our customers and their underlying end users. And like you said, like this kind of focus and what it takes to get that right at scale across different, you know, jurisdictions from a regulatory perspective, it's a totally different set of, like, capabilities you have to build versus the one that you talked about, which is, like, building up this customer acquisition engine

for end users. Right? Super different. Super different. Talk a little bit about we when we were outside, you were excited about some, like, specific fixed income products and, like, what that means.

What what did you mean what are you excited about there? What are you looking into with that? Yeah. So I think, you know, another big change over the last, like, year and a half is that we've we've evolved a little bit from being kind of purely focused on payments to now being this infrastructure provider across different, you know, parts of the the financial services, like, value Sure.

Historically, that's like moving in and out of fiat to stablecoins, but there's more there's, like, more to that reliance

that you're realizing that you can deliver. 100 A percent. Interesting. Okay. And and it's the you know, our customers are are asking us for these other products. Right? So we're we've moved essentially from really a money movement company to a money movement and management company. Interesting. And so that means, like, money in and out in terms of, you know, on ramps, off ramps, fiat to fiat, stablecoin to stablecoin to now adding treasury products that are on chain.

And we think, like, this this idea of being able to bring on chain tokenized products to the world is is super powerful. And, again, it's the same set of customers that are asking us for this. And so we started this. Actually, you know, we we worked with folks like Agora and Braille and others to do yield or maybe I should say reward bearing stablecoins that we can issue for our customers.

And over time, you know, we've started to expand on that initial kind of product to include other fixed income, you know, tokenized products. We're also, you know, looking at, like, money market funds. And then also, you know, hopefully, bringing in tokenized equities, tokenized funds, and things like that over time that our customers can deliver to their end users either as, you know, distinct instruments or as strategies that come in in the form of a vault. Right? Okay.

And, you know, you you guys are are super familiar with the the EtherFuse team. We we haven't worked with them yet, but we're we're super big fans of what they're doing to bring these kinds of, like, bonds on chain.

I think this this is airing right after the the chat with Dave. So Yes. Yes. Exactly. That's great. So inspired by that. So so in that in that reality, like, well, one, I wanna ask about AUST and, like, what that means. But with this, you would how would you, in theory, work with EtherViews? They would be able to kind of bring access to specific fiat markets and maybe bonds or yields from those assets natively into this, like, fixed fixed products,

fixed digital Yeah. Product? Like, I guess in some ways, you can you can you can see it as EtherFuse can bring Wallapay to their customers, and Wallapay can bring EtherFuse to our customers. So in the in the latter format, we would basically give access to our customers to to EtherFuse

These stable bonds could be living and and kind of embedded. Exactly. And, like, completely abstracting

the interface of having to, like, stable coins or or crypto moving into these tokenized bonds, moving out, you know, that that com well, you could say, like, that complexity. Hopefully, it's it's getting less and less complex over time. But from the point of view of some of our web two customers or or, like, non crypto native customers, abstracting a lot of that interface is what we're able to do through our API infrastructure.

And then it's really just a matter of, like, swapping from any currency to these kinds of products and then back to any currency. And when I say any currency, I mean both stablecoins and fiat currencies.

Really, really interesting. How do you like, when you're thinking about the work with Agora, what was the consideration of what made what was what was attractive about working with them, or how did you like, why did it make sense to bring AUSD into this part of the stack? What did that look like?

Yeah. I think, you know, again, here as a infrastructure provider, we're we're trying to be fairly agnostic in terms of, like, the the different infrastructure providers that we work with, but we love the Agora team, first and foremost. You know, super strong team with with a great track record.

And the the approach that they took to get Agora and AUSD off the ground really appealed to us And just the way that, you know, it's easy to work with them and and so on made it really attractive as as one of our first partners. And then over time, we also started working with a few others as well. But it it's a very in a way, we we are moving we're we're we're essentially targeting a certain outcome with our clients, which is being able to swap in and out of treasury products instantly from and to any currency.

That is that is an extremely powerful thing. Right? It just doesn't exist in the incumbent kind of banking landscape. Right? So we're trying to move backward from that. And, you know, companies like Agora and what they're doing with AUSD are are, like, very, very straightforward ways of of of getting to that. Yeah. Any other, like,

companies in the stack or partners that you wanna give flowers to? Or, like like, just peep companies that are building and yeah. Any anyone's that you just feel like are core pieces to this working that

Yeah. Look. I'll I'll I'll give another shout out to to our friends at Capa. I think they're doing amazing stuff on the the the Mexico side.

This is the liquidity engine Yeah. Piece. So so what does what does that mean? How do you work with them?

So, essentially, you know, what what Capa does is is they're enabling this seamless liquidity between MXN and and Stablecoins. Right? And so they're one of our liquidity providers for for that, and they just fit right into our liquidity engine there, and they enable us to to serve the the market in Mexico. And so there could, in theory, be, like,

Capa like, Capa like players for all of the markets that you're trying to go after. Are there similar companies in other

countries or regions that are taking similar approaches? Yeah. For sure. I mean, look, you know, in Brazil, we work with folks like Avenir and Blindpay who who both do a great job. In countries like Nigeria, we work very closely with Juicy Way who who's, you know, we think one of the better or or perhaps the best liquidity provider in in that market. And we we've really built this out in across, like, all the markets that we serve. Right?

So it's gonna be a similar kind of structure in the various different markets with the caveat that there are still some markets that are from a legal regulatory perspective, not super easy to serve with stablecoin specifically. So in some markets, we have to kind of work on a purely fiat basis and then work offshore to make conversions essentially between fiat and and stablecoins.

But that's all part of the underlying infrastructure and and the magic of of basically being able to deliver this without our customers having to deal with the the the friction and complexity that comes with that. K. We gotta wrap here. Yes. Dude, I know I know we're, like, in the we're in the weeds of this. Keep going all day. Give me one last question. Like, what

we have a chat a year and a half from now. Yep. Hopefully, it doesn't take that long, but what is the what is the main focus for you as, like, cofounder? What is strategically top of mind, like, number one priority from now as you think think ahead into the future to continue to win? Like, what does that mean for you guys?

Look. We're we're expanding in in two ways. One is horizontally in terms of our financial service products. So can't say too much, but we're definitely not stopping with payments and treasury. There's a lot more coming down the pike from that perspective. And then we're expanding also from a geo perspective, you know, adding more and more banking partners in different parts of the world. We've acquired a few licenses that we haven't yet announced, but that will become part of our our licensing stack.

And really, our our goal is to get to that vision that I talked about earlier where all the financial services are basically built around wallets and public ledgers with stablecoins really at the heart of that. Right? We think that there's some amazing companies that have taken this, the early steps on the road to that vision, but we're definitely not there yet. Right? And so we're very much looking forward to to get there.

We think it's gonna take a few years, but that's that's what we're all Yeah. Building building a network takes some time. Well, Seth, thank you for the time. It's always a pleasure. Nice to We'll do it again soon. I hope so. Yeah, man. Alright. We're gonna take a quick break. That was our live conversation with Tom from Wollapay. We will be right back. You're watching Stable Dash Live. We're in Mexico City. Keep it going.