Ease of Use, Clarity Needed for Crypto to Gain Popularity

Q: DolarApp has announced a US$5 million seed round led by KASZEK and its participation in Y Combinator. How do you see these steps driving the company closer to its objectives?

A: We will use the funds raised in our seed round for three main goals. First, we will improve our product by hiring the right people to help us push things forward and create the most compelling product. Second, as we aim to become global, we also intend to launch our services in additional markets to help more people in Latin America. Finally, we want to grow the business to deliver our product to the market in new ways.

Q: If everything goes according to plan, where do you see the company in five years?

A: Our vision is not only based in one country; we aim to span the entire Americas. Our goal is to reshape the global financial system until every single participant wins. We strive to make finances in Latin America fully global and we aim to achieve that by being present in most countries in the region, allowing our users to send and receive digital dollars instantly. We aim to bridge the world in a fast, secure and simple way. In five years, we want to be the go-to global financial tool for millions of people in Latin America looking to make the most of their everyday finances - whatever their ambition.

Q: What are going to be the main challenges to achieve that goal?

A: Compared to the EU, Latin America is an extremely different ecosystem. In the EU, if you get a license in one market, it can generally be passported to the rest of the region, making penetration easier from a regulatory standpoint. In Latin America, everything is more fragmented, especially within the crypto space, which is one of the most greenfield areas under development. This fragmentation requires a deep understanding of regulations in each market, and adds significant products and go-to-market complexity, as each market is slightly different.

In Latin America, there is a great deal of demand to bank in US dollars but the process changes significantly for each country. For example, the currency devaluation that affected other countries during the past five years has not been felt as strongly in Mexico. The central bank here has done an excellent job, allowing the peso to become a strong currency that people save in - and demand for dollars is more transactional. However, in other markets, people may want dollars to protect their money from inflation or other problems.

Q: What role will cryptocurrencies play in national economies in the short and medium term?

A: The role of crypto depends on how good it becomes at solving problems. One problem that crypto solves well is remittances: through crypto, money transfers can be done in the blink of an eye and for a fraction of the cost than regular remittances.

The rest depends on two things. The first is adding more capabilities for crypto to do more than traditional finances and to do them efficiently. The second is the go-to-market. In general, those who use crypto are willing to dig deeper into its complex production. A part of the challenge is making crypto available to the mass market by explaining its value proposition in a way that is compelling and easy to understand and use.

Q: How does the company combine the user experience of the best fintechs with blockchain technology?

A: Users simply download DolarApp and follow the onboarding process, which requires them to undergo a know your customer (KYC) process and submit their unique registry population key (CURP). With DolarApp, people can buy and sell digital dollars or USDc with local transfers in US dollars for just US$3 or with transfers in Mexican pesos (SPEI) for free and at the best exchange rate. Users can also keep their balance in USDc and earn 3 percent annually. They can pay with the DolarCard in pesos, dollars, or any other currency, earning up to 4 percent in cashback.

We will develop this product further to continue building a financial ecosystem. We will achieve this by partnering with the right people. We have a partnership with MasterCard for large financial operations.

Q: What is the utility you see, as a company, to “dollarize” Latin American finances through crypto?

A: The answer depends on the country. In Mexico, for example, customers use US dollars for transactions. They want to do card payments in US dollars when they travel and buy online and to receive and send transfers in US dollars at reasonable prices.

With crypto, we can enable people to pay with a card with complete transparency. Around 50 percent of our current payment volume is international. We also offer another way to receive US dollars. For example, those who work from Mexico for US entities sometimes need to go through intermediaries who apply an exchange rate, which is not what the user prefers.  With us, they can get US dollars immediately through a wire or ACH transfer and exchange it to pesos or keep it in USDc.

Q: What does DolarApp’s “Spend like a local everywhere” motto bring to users and how has this become one of your differentiators?

A: When Mexicans travel to the US, they can use a local bank card but if the card uses pesos, they can get a bad exchange rate or pay high fees. This process is not transparent because users cannot see the exchange rate in real time.

Being unable to trust a financial partner and pay in a fair, seamless way is not paying like a local. Paying with cash also stops people from paying like a local, putting them at risk of theft. Another problem when using cash is converting the money that was not used. These experiences show how the financial system prevents some participants from winning and we aim to give them the chance to win.

Q: How do you approach the volatility of cryptocurrencies and how is this presented to clients?

A: Our product development aims to give consumers the ability to make the right choices by offering a simple product. To make the right decisions, we do our due diligence to understand the pros and cons of each cryptocurrency. For example, during the due diligence process, we discarded stable coins that did not adjust to our risk appetite, like UST, and yield mechanisms that did not follow our risk management policies. This process enables us to build a product that is truly tailored to everyday finances and without any crypto jargon. We just use crypto because it helps us to build a more efficient global financial app.

In particular, we chose to operate with USDc, which is issued by Circle (backed by Goldman Sachs, one of the largest investment banks in the world). For every USDc in circulation, there is a US dollar or 1 US dollar worth of US Treasury notes in backing. Those backing assets are audited on a monthly basis, and the audits are made public on Circle’s website. This is the best-in-class transparency and security we build on.

Q: Why did the company decide to start operating in Mexico?

A: We strive to solve problems and Mexico has many transactional problems with the US. We believe that we can make Mexico a better place by enabling people to pay in a way that encourages them to travel rather than to stay at home. We can encourage people to work globally without barriers. We thought that Mexico was a massive opportunity to help people.

Q: What are the company’s plans for remittances in Mexico?

A: People want to move money across borders, which is a painful process. Transferring large amounts of money through an expensive intermediary does not make sense when one considers that it can be done cheaply with crypto. DolarApp is transparent, free and instantaneous. Our vision is not so much based on the idea of remittances. We want to make sure that everyone can have a global financial experience.

DolarApp is a digital dollar (USDc) wallet for the hundreds of millions of people in Latin America that want to do their finances in dollars. The company’s mission is to reshape the global financial system until every participant wins, regardless of where they were born.