In the dynamic world of cryptocurrency, one of the earliest and most enduring memes is “HODL,” which originated from a typo by an investor in 2013 who intended to express his commitment to holding onto his assets during a market downturn. The phrase has evolved into an acronym meaning “hold on for dear life,” encapsulating a fundamental investment philosophy embraced by many in the crypto community. This principle served as the foundation for Nexo, co-founded by Antoni Trenchev, Kosta Kantchev, and Kalin Metodiev in 2018, aiming to provide immediate credit lines to users who can use their cryptocurrencies as collateral while still benefiting from their potential price appreciation.
Today, Nexo has established itself as a regulated digital asset institution in London, catering to over five million users. Its offerings include savings accounts, a sophisticated trading platform, and an institutional prime brokerage. In April, Nexo partnered with Mastercard and DiPocket to introduce the Nexo Card, a pioneering credit card that allows crypto holders to access their liquidity without needing to sell their digital assets. Currently available in Europe, the card aims to expand and introduce new features in the near future.
Trenchev emphasizes that as a company rooted in the HODL philosophy, the greatest advantage for cardholders is the ability to enjoy the financial freedom that cryptocurrencies provide. The Nexo Card allows users to spend their crypto without liquidating it, facilitating borrowing against their assets. Trenchev, who has a background in fintech and has advocated for blockchain legislation as a member of Bulgaria’s Parliament, views this innovation as a significant leap forward that demonstrates the practical utility of cryptocurrencies in everyday life.
The Nexo Card supports over 40 leading cryptocurrencies and stablecoins as collateral, enabling users to manage their portfolios by adjusting the amount and type of assets used. There are no credit checks involved in the application process, and cardholders can access up to 90% of their collateral’s value with flexible repayment options. This aligns with Mastercard’s initiative to foster the integration of traditional finance with the burgeoning crypto space, making it simpler and more secure for crypto aficionados to utilize their assets, according to Jorn Lambert, Mastercard’s chief digital officer.
In a recent conversation with Mastercard Newsroom, Trenchev elaborated on the initial hurdles faced while establishing Nexo, the company’s regulatory strategies, and its plans for expanding the Nexo Card’s services. When asked about his entry into the crypto lending arena, Trenchev explained that Nexo emerged to address the liquidity gap in blockchain finance, offering a solution that did not require the sale of cryptocurrencies. With over 15 years of experience in financial services, he and his team aimed to create a practical and innovative solution for crypto users.
Trenchev recounted some of the challenges encountered during Nexo’s early days, particularly in scaling technology and product offerings to meet user demand. One of the first obstacles was sourcing liquidity for their popular collateralized loans, which led to the development of the Earn Crypto Interest product, enabling them to provide sustainable credit even during peak demand periods. Recognizing the need for automation to enhance efficiency and minimize human error, the team worked diligently to fully automate Nexo’s offerings, a goal they have successfully achieved.
When asked if a crypto-backed card was always part of Nexo’s vision, Trenchev noted that it was a natural extension of their services, as having a payment card linked to securely stored digital assets made sense. He also highlighted that fostering mainstream adoption of cryptocurrencies was integral to their plan, with the Nexo Card serving as a significant step in that direction.
Looking ahead, Trenchev expressed his ambition for the Nexo Card to transcend its role as a payment tool, envisioning it as a gateway to a new lifestyle and financial independence enabled by cryptocurrency. The company aims to make the card compliant and accessible beyond Europe, while continuously enhancing it with new features and promotional offers based on community feedback. Additionally, they are exploring partnerships with major global brands to enrich the user experience and are considering the introduction of metal cards to cater to customer preferences.
Given the inherent volatility of cryptocurrencies, Trenchev addressed the risks associated with crypto lending and how Nexo manages them for its clients. He highlighted the importance of prudent risk management, particularly during challenging market conditions, such as the ongoing downturn in the crypto sector. Overcollateralization, which requires that collateral values exceed the loan amount, is crucial to mitigate potential losses in the event of defaults. Nexo prioritizes regulatory compliance and has partnered with a leading U.S. accounting firm to implement real-time reserves attestation, ensuring that the value of managed assets is always at least double the liabilities owed to clients. This commitment to transparency through reserves attestations, a practice gaining traction in the industry, positions Nexo as a pioneer in demonstrating financial accountability.
