Restructuring Rpay: Embracing Challenges and Adapting for a Global Vision¶
From Gabriel Jiménez, CEO of Rpay¶
In 30 days, on August 3rd, Rpay will indefinitely suspend deposits and withdrawals in local currency in Argentina, Colombia, Peru, Venezuela, Ecuador, and Panama.
Operations in Mexican pesos will not be affected.
These decisions are a result of:
- Sustainability issues associated with crypto banking challenges.
- Rpay’s global vision.
The updates are explained in detail below.
How this will affect Rpay users:
Deposits and withdrawals in Argentine pesos, Colombian pesos, Peruvian soles, Venezuelan bolívares, and US dollars from Ecuadorian and Panamanian banks will remain available until August 3rd at 12:00 PM (VE time).
After that date, deposits and withdrawals will be limited to stablecoins (eUSD, USDC, USDT, and DAI), cryptocurrencies (BTC and ETH) and Mexican pesos (only available for users in Mexico).
We have created an FAQ document about the transition.
Despite the short-term inconvenience of this reduction, our team is making progress on multiple fronts to consolidate our global strategy.
As CEO of Rpay, I sincerely apologize. This has been an extremely difficult decision.
Venezuela is my home. Witnessing my people struggle breaks my heart. For they are my fuel. My determination to build tools that enable a better future is unyielding.
The reasons behind the decision do not remove the frustration that I feel in my heart. To my fellow Venezuelans: Perdón. I share the exasperation and annoyance of feeling trapped in an unjust and broken financial system. You, like anyone in the world, deserve access to stable currency, and I will not give up until we find a way to make that happen globally, including in Venezuela.
Please know, this is an indefinite pause, not a full stop. We are not giving up, but at the same time, we do not have a timeline for re-enabling fiat deposits and withdrawals in Venezuela, Argentina, Colombia, Peru, Ecuador, and Panama.
We have relentlessly searched for a path over the past year trying to avoid this outcome, and we will continue fighting to restore and enhance our services in Latin America. But today, our best option is to recede, rebuild and come back stronger with new alliances and more reliable footing.
Although this news is hard, our team stands united and is continuing to work hard every day to improve people's economic accessibility under a new strategy. This new strategy was designed in response to all of the roadblocks we have encountered, and I’ll explain more about it below.
Regarding the suspension¶
Why Rpay is closing fiat liquidity in some countries¶
Essentially because of sustainability issues associated with cryptobanking challenges.
Cryptocurrency businesses relying on banking partnerships are facing significant challenges, particularly after the FTX incident. Banks are now inclined to offboard crypto customers due to concerns about regulatory scrutiny.
The present model we utilize hinges on independent liquidity providers serving as transaction intermediaries. Unfortunately, in the prevailing conditions, this setup hampers our capability to establish direct integrations with banking institutions. This limitation negatively impacts our potential to deliver reliable services to broader audiences, and constrains our ability to launch new offerings requiring banking partnerships. Maintaining this model incurs costs that are unsustainable, considering the scalability issues we're facing under the existing circumstances.
In response to these challenges, our team has embarked on a mission to revamp our approach towards fiat on- and off-ramps by building direct relationships with banking institutions. Realistically, this transition requires time, and a critical step towards cementing these partnerships involves phasing out the model that relies on independent liquidity providers in favor of secure banking relationships. By adopting this strategy, our objective is to directly interface with banks, fostering greater trust from these institutions, while simultaneously extending our service reach to a larger audience.
While we realize the setbacks these measures entail, we are also excited to share some good news with you. We are thrilled to report that Rpay has secured an important license from the Office of Foreign Assets Control (OFAC), U.S. Department of Treasury, enabling us to provide our services in Venezuela.
This equips us with a more reliable and sustainable way to serve Venezuelan users onwards. Thus, our key focus in Venezuela will now be to establish a direct banking partnership, aligning it with our revised, overarching strategy. Without it, we won't offer bolivar liquidity.
Despite the fact that a license isn't a prerequisite to operate in Venezuela, the present U.S. economic sanctions prohibit servicing any Venezuelan government employee. With an increasing user base in Venezuela, any financial company can find that the risks of non-compliance begin to surpass both the economic and humanitarian advantages.
This license doesn't relieve Rpay of its compliance obligations, but it does considerably reduce the compliance risk. This significantly reduces risks, allowing Rpay to continue operations in the country confidently.
We are deeply appreciative of the assistance provided by OFAC throughout this process. This achievement is a landmark not only for our project, but also for the Venezuelan people we aspire to serve.
The new strategy¶
Paving a New Path: Our Focused Approach¶
Over the past several months we have developed a new strategy that we believe can overcome the challenges we’re facing with our current model.
We've previously outlined the rationale behind the first phase of our updated strategy, which involves the direct integration with the banks in every region we aim to serve.
The second part of our new strategy is to initially concentrate on a US-centered use case. You may ask: why the US?
The US is one of the financial hubs of the world. Many people in LATAM send and receive money to and from the US, and the US also has ties with pretty much all other parts of the world.
We think we will be able to offer a great way to move money between the US and LATAM, based on all our experience and expertise so far in both regions.
If we can do that, then we think we can replicate that in many other countries that send and receive a lot of money to and from the US. When people receive money in an app, they become a user of that app. So we think we can start to grow in many places around the world, where our users are sending and receiving money.
This could build initial user populations and liquidity infrastructure on all continents. Once that is happening, we could decide what to do next.
- So in summary, the US feels like the best bridge between our LATAM expertise and infrastructure and getting to the rest of the world.
Thus, by establishing a strong foothold in the US, and working tirelessly to excel in this market, we believe we are creating a pathway for global expansion.
This puts us back at a stage we have been in before, but in a new market: pre product-market fit. We’re designing, building, setting up banking partnerships, handling regulatory requirements, and carrying out many other steps in the background to bring a new version of Rpay to market in the US, along with bolstering functionality in latam that facilitate money movement between the two regions.
You may think that the challenge we face is too great. Perhaps it is. But we didn't start this project because it was easy.
We’ve figured out the complexities of a new market before, and I believe we will do it again.
With infinite determination,