Like all things blockchain-related, fintech company Novatti Group (ASX: NOV) has moved very quickly to expand its digital payments ecosystem, which may soon involve more pairings and networks for their compliant and secure AUDD stablecoin.
Attending the Consensus 2022 conference in Austin, Texas, Novatti’s blockchain payments team was on full show at the 4-day event, one of the world’s largest digital currency conferences. Consensus featured appearances from major players in the crypto and payments spaces including Coindesk, Binance, FTX, PayPal, Circle and more, as well as US Senators and Treasury delegates.
Novatti’s attendance came just one month after announcing their AUDD stablecoin (previously named AUDC), which although is yet to be formally launched, has already secured partnerships to be issued on the Stellar blockchain as well as Ripple’s XRP Ledger. These partnerships will leverage Novatti’s existing ecosystem of financial services licences and regulatory fintech.
“The message in Austin was clear – the future of payments is digital,” said Novatti Managing Director, Peter Cook.
“This of course, continues to be great news for Novatti as we already have the technology and ecosystems in place to enable businesses to pay and be paid wherever they may be, with Novatti’s own AUD-backed stablecoin also on the way to add to these capabilities.”
As a digital currency that Novatti will issue, AUDD will be 1:1 backed by $AUD which will ensure its value is pegged but provide Novatti, its partners and customers with the ability to instantly transfer AUDD via unique blockchain networks in a regulated environment. Such technology allows individuals and institutions to make secure transfers across international borders in seconds without foreign exchange fees. Such transfers would take days to process through traditional banking networks.
Taking a long-term perspective to adoption of stablecoins, customer benefits accumulate, as volumes increase and cost-savings are amplified. In addition to these benefits, the utility of AUDD extends into the fiat landscape where Novatti can integrate its blockchain payments network into its global ecosystem, seamlessly providing clients with their preferred currency for payment.
While Novatti’s confirmed partners in Stellar and Ripple are both blockchain networks, Cook suggested that there could be more partnerships announced in the future. We understand that Stellar and Ripple are supporting Novatti with significant funding of technology costs.
“It was a very productive week in the US where we met with potential customers and partners including exchanges, global institutions and some extremely bright minds in the blockchain payments space.”
Partnerships with crypto exchanges first emerged on Novatti’s agenda in 2021 when collaborating with CryptoSpend to issue Australia’s first debit card for transactions in BTC. Since then, payments partner Rent (ASX: RNT) has also confirmed they are collaborating with Novatti to facilitate rental payments that would be integrated through crypto exchanges.
Like the world’s other stablecoins – Tether and USDC – being the most widely utilised with a combined market cap of USD $112 billion, exchanges play a large role in customer adoption of stablecoins.
Amid the current market downturn in cryptocurrencies including Bitcoin (BTC) and Ethereum (ETH), the two largest crypto investors that quickly converted their BTC or ETH to a stablecoin within the exchange have been able to preserve the higher value. The price of Bitcoin for example has fallen 30% in the past month from $30k to $21k which has prompted some investors to convert their BTC to USDC, preserving its value during market volatility.
In previous commentary, Cook has suggested that AUDD will initially be revenue-generating for Novatti via its secure onboarding and off-boarding between fiat and crypto. This would make it effortless for Australians to purchase AUDD online and then be instantly issued AUDD that can be transacted on partner networks and crypto exchanges. Novatti will also gain revenues from the interest earnt on the underlying funds held in bank accounts.
Such revenue from secure and compliant onboarding and off-boarding would increase the portfolio of digital payment products Novatti already offers that has contributed to the $10.4m in revenue generated in the March 2022 quarter. Further strengthening Novatti’s balance sheet will be a special dividend delivered from their 19.9% stake in Reckon whose $100m asset sale was recently approved by the ACCC and Foreign Investment Review Board to proceed unconditionally. Novatti have indicated that this dividend should be at least $8m.
Jarryd is an experienced Investment Adviser at Emerald Financial Group
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