• Romanian fintech blockchain startup Elrond has obtained approval from the National Bank of Romania to acquire Twispay.
• Twispay is a financial institution in Romania, licensed and authorized to provide payment services and to issue electronic money, according to the legislation in force.
• Elrond seeks to further develop the e-money payments framework and complement it with its scalable blockchain technology, as well as explore new use cases such as stablecoin issuing.
The intention was first announced in October 2021. After several rounds of discussion, the National Bank of Romania concluded in favor of the acquisition.
“For Twispay, the acquisition opens up several opportunities that will allow us to follow our company’s internal mission: fostering innovation while offering top features to end-users. The resources that will be available to us will enable us to expand projects on which we have been working for the past years but have been advancing slowly, such as card issuing. The additional capital and know how-how will allow us to invest in two critical areas – our team’s expertise and our technology,” Augustin Dobre tells The Recursive.
E-money is a digital alternative to cash, designed to automate financial transactions in areas such as e-commerce and payments. Electronic money issuing is regulated under the European framework. In addition, e-money institutions are entitled to provide payment services.
The next step for these institutions, according to proposed regulation by the European Commission, is the issue of stablecoins (Ed.note a type of cryptocurrency that relies on a more stable asset as a basis for its value, e.g. fiat money, precious metals etc.). These could be offered to the public or admitted on crypto-asset trading platforms. The regulation comes in the context of the EU’s promotion of blockchain technology.
Bringing blockchain and the financial system together
Elrond counts on its novel blockchain architecture with a competitive edge in terms of speed, scalability, cost, and energy efficiency to provide it with a strategic position to offer a sustainable infrastructure for a new payment system that can influence the evolution of digital finance in Europe.
With the acquisition, Elrond aims to strategically establish itself as a bridge between the crypto space and traditional finance across Europe. Founder Beniamin Mincu further says they will explore use cases provided by the new regulatory framework, such as issuing stablecoins and crypto-enabled debits cards.
Twispay can operate in the entire EEA (EU, Iceland, Norway, and Liechtenstein); they are also a member of Visa and Mastercard, which allows it to issue Visa cards, as well as issue and acquire MasterCard cards.
“From what I know, Elrond is the first crypto player to have a regulated financial institution in-house. With our traditional finance expertise, technical resources, and appetite for innovation, we will play a crucial role in bringing legitimacy to the blockchain world. By pioneering a compliant ecosystem, we will change the industry standard and provide a best practice example. We are working on putting procedures and structures in place, so, by the time the EU adopts MiCA (Markets in Crypto-Assets Regulation) or even earlier than that, we will have a fully operational business model that complies with the new landscape,” Augustin further adds.
Key milestones for the two companies
Elrond was founded in 2018 by Beniamin Mincu, Lucian Mincu, and Lucian Todea, and is headquartered in Malta. At the beginning of 2021, the startup was reaching a $1 billion market cap, becoming the second unicorn in Southeast Europe after UiPath. This capitalization was based on the value of their cryptocurrency, EGLD. The rise of the project was largely based on a positive market evolution – bitcoin grew by 700% between march 2020 and January 2021.
Elrond first stepped in the payments sector with launched a mobile wallet and global payments app, Maiar, as an alternative to apps such as PayPal, Revolut, and Google Pay. The app uses the Elrond blockchain, which is capable of supporting over 100K payments per second. With Maiar, the founders wanted to bring the benefits of blockchain technology in financial services and help the user send money faster, more affordable, and safely.
Last year the company was also exploring the option of opening an office in Miami, following discussion between Beniamin Mincu and Francis Suarez, the city mayor. Now Elrond is on a shopping spree in Europe, looking to consolidate its position in the payments sector.
At the beginning of the year, Elrond acquired crypto payments firm Utrust, based in Portugal. Together, the companies will be working on Merchant Yield, a DeFi-first payment processing solution that will provide a more efficient return to mechanics, instead of requiring a percentage of the value traded.
Meanwhile, Capital Financial Services SA, which operates under the Twispay brand, was launched in 2016. In August 2019, Twispay was becoming the only payment service provider from Romania to process transactions in currencies such as GBP, USD, SEK, DKK, and CHF. The introduction of new currencies eliminates the cost of foreign exchange borne by the buyer and the conversion cost for the trader.
“The Twispay payment gateway and core banking infrastructure have been created in-house, so our innovation is credited to our excellent development and engineering teams. The possible synergies between them and the tech team at Elrond are endless. Our team will be ramping up in order to launch surprising and state-of-the-art products, so our goal is to double up on team talent, by the end of the year, focusing on tech, operational, and business structures,” Augustin Dobre shares.