Coinstash wants to let Australians spend, earn interest on, and borrow against their crypto holdings

Coinstash founders Ting Wang and Mena Theodorou.
  • Coinstash has just wrapped up a $2.8 million crowdfunding raise as it gets ready to launch three new cryptocurrency products.
  • The cryptocurrency platform plans to allow Australians to spend, earn interest on, and borrow against their digital coins.
  • “People are actually going to use the digital currency for what it was actually purposed for,” co-founder and chief technology officer Mena Theodorou told Business Insider Australia.
  • Visit Business Insider Australia’s homepage for more stories.

Exchange platform Coinstash has bold plans to usher Australia into a new cryptocurrency era, one where individuals will be able to actually use their digital coins as they would fiat and physical assets.

In an Australian first, the ambitious expansion would allow users to spend, earn on, or borrow against their cryptocurrency holdings, transforming digital coins from a purely speculative asset to a practical currency and recognised asset.

“The reason why we’re going to see even more growth in this space is because people are actually going to use the digital currency for what it was actually purposed for,” co-founder and chief technology officer Mena Theodorou told Business Insider Australia.

A surging Bitcoin price and increasing institutional recognition have helped drive that, but Theodorou points to Tesla’s acceptance of Bitcoin as a payment option for its electric vehicles as one of the biggest shifts.

“Tesla is basically the first big company to start holding Bitcoin as a store of wealth instead of converting it directly into fiat currency when you purchase the vehicle,” he said.

He expects it’s just the beginning of a trend and wants Coinstash to enable such payments more broadly. The intention is to find interest among investors, with a crowdfunding raise on Birchal hitting its maximum target of $2.8 million with 10 days still to run.

Coinstash’s proposals are straightforward. Users will be able to earn interest on their cryptocurrency the same way they might be paid interest on their savings at a retail bank.

They’ll also be able to spend it directly, Coinstash promises, via a specialised credit card. Much like a regular card, users will be able to rack up a balance to a limit and pay off their monthly statement using their holdings.

The attraction is clear. Currently, if you want to spend your crypto holdings in Australia you would need to sell them for Australian dollars first, a transaction that would in turn be taxed.

A third proposal may be the one to raise the most eyebrows from both the public and the regulator. Coinstash wants to enable customers to borrow against their cryptocurrency the same way they might use a physical asset such as a house as collateral.

In one example Theodorou gives, someone holding 10 bitcoins might use them to take out a loan worth half their value – say $400,000 – paying a hypothetical interest rate of 6% to do so.

“By allowing you to borrow against it, it enables you to do something with the asset rather than having it sit there stagnant,” Theodorou said.

“The idea is it becomes an automated process where if the value of the coins falls below a certain point, we start to notify you that part of the loan might need to be paid back. If it gets below a certain valuation, we would begin liquidating the asset in order to make up the amount you’ve borrowed.”

While the idea of collateral is not new, the prospect of using cryptocurrency is novel. The inherent volatility of cryptocurrency means the value of the asset on Coinstash’s books could swing wildly while a loan is still outstanding. It is a risk the Coinstash co-founder acknowledges, though Theodorou argues that it is manageable with borrowing limits.

He cautions that “generally speaking” liquidation shouldn’t happen, citing a faith in the price rising over time and the idea that, with significant notice, customers would simply choose to pay back part of the loan instead or increase their collateral.

Theodorou and co-founder Ting Wang will still need to convince the regulator, with all of these ideas subject to regulatory approval.

“We’re based in Australia and we’re going down the correct regulatory path so if shit does hit the fan, we’re very much liable for anything that goes wrong. That protects the customers,” Theodorou said.

But while he admits there are plenty of obstacles to overcome, he maintains this is the future.

“The world is moving into a digital revolution. We’re seeing everything become digitalised and we want to be the ones creating the best products for that.”

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