Stephen: This is Stephen Sergeant, host of Around The Coin podcast. Today we have Jas Randhawa, the founder and managing partner of Strategy BRIX. A small but powerful unique boutique compliance and strategy and technology focused consultancy. Jas is the previous former head of compliance for companies like Stripe and Airwallets, and he's worked in financial hubs all over the world, including New York, Chicago, and London, UK.

We talk about third-party risk management. The consequences of these buy now, pay later programs. We talk FinTech payments and crypto, and a little bit about how regulation is impacting a lot of his customers. We even have a little bit of a treat where we discuss a little about some connections and interactions he had with FTX prior to their collapse.

Listen in, this is a must listen to podcast. Enjoy.

This is Stephen Sargent and welcome to another episode of Around The Coin Podcast. We're here with Jas Randhawa. Jas, you're the founder and managing partner of Strategy BRIX. Which is kind of a cool name. It sounds like a name for like a blockchain consultancy company versus someone that provides risk and compliance consulting.

Stephen: Tell us a little bit about yourself and what you do.

Jas: Thanks Stephen, for having me on the podcast. I've been a huge fan of the podcast for years from now. And this was one of my educational points about a decade ago. Then Faisal and Mike were working on this. It's. It's great to see this going to your hands some more, more more success for you and your team.

About myself, so, I've been in the risk and compliance space about, I'd say about give or take 20 years. I am an engineer by background. So an accidental compliance officer is what I would call myself. I started my career developing a lot of financial crimes and fraud detection systems, more on the tech side.

Started interfacing a lot with lawyers back in the days and business users, really understand what was the purpose of these systems. Moved to London for a couple of years, then moved to Chicago and New York. First 10 years focusing heavily on banks and my role at that point in time was just helping them understand how to leverage technology.

to solve compliance problems. So at that point in time, I was working with folks like Ernst Young and PwC and deep into the whole process of, you know, getting these banks out of their remediation efforts, lookbacks, and regular, you know, several regulatory issues that they were dealing with moved back to London to build PwC's financial crimes practice this time and then.

I think this was like 12 years in my career. I pretty much decided that banking is not for me. I mean, I love banks. I think they're wonderful and fantastic, but in order to really solve technical problems, I wanted a newer industry and someone needed help on the fintech side. Just moved to San Francisco with baggage and family and decided to break into this market, spent about seven, eight years trying to understand, you know, the players the problems and made some really good relationships.

I then bounced from Stripe, joined, sorry, from PwC and joined Stripe as their head of compliance. Was there for about two, two and a half years and then moved to Airwallets.

Jas: And then at that point in time, we didn't, I didn't have my green card, so I could not start Strategy BRIX. But this is something which was front and center of what we guys really wanted to do.

The moment the green card happened, took about six months and cooperated. And he, in the, I think in the seventh month, we had our first customer. So we've been existing for the last about two, two and a half years. We guys focus primarily on fintechs, bank sponsors, crypto companies, solving risk and compliance problems, and technology is our number one strength.

Stephen: That's amazing.

Stephen: Why not start maybe like a tech SaaS compliance product? There's hundreds of them out there. High valuations that sometimes too. Is there a reason why you didn't go that route instead of using technology to better support the risk and compliance programs that you're working on with both fintechs, banks, and crypto companies?

Jas: My team's going to love this question. They give me so much, like the amount of hard time they give me every day is like, why are we not, why don't we have our own stack? Most of our customers come back and they ask us, what technology should be used for KYC, KYP, transaction monitoring, sanction screening, case management.

We have all the answers. We know every player out there in the industry, not just from a product standpoint, but from a team, founders, product people, you know, perspective. I understand the question and I also understand my team's perspective. I feel like I've spent. Firstly, I think that business is hard as hell, like that, it's, it's not an easy business.

And we've had thoughts about, you know, should we go and build a packet solution that is going to be everything compliance in a box, a white label solution, should we build it? Should we white label, you know, different solutions and put like our logo on it? There's definitely market for it. My background predominantly is compliance and tech.

We understand systems doesn't mean that we should be, or we are ready to build systems. I think he's got that idea. I feel. If we have to go down that route, which we've done a lot of exploration on, we need the right product people. We need the right engineers. We need the right growth and sales people to be able to do it.

Our business is bootstrapped, but we feel pretty confident that we do have enough cash in the bank, that that's if that's where we need to invest. We're going to go down that route. We've started building out smaller applications. We have our own L&D platform, which we don't make any money off of it.

A lot of our clients again came back and said, Hey, we need like, can you do some training? Then we have, you know, we've got the content and we've got a platform. We put the content on the platform. We put their logo on it. They love it. We have a screening solution, which is very tactical. We build tactical transaction monitoring systems for our early stage businesses.

I think we have the acumen to productionize these systems and take them to market. I think that's Generally hard. I also have the

Stephen: Just have a 20 hours a day for seven days a week, right? As you know, better than anyone in Silicon Valley. That's pretty much the dedication you have to put in. Why are some of these, you know, anyone that's in fintech crypto, even people like entrepreneurs, patchwork, right?

You have this app for that. This app kind of overlaps the other app. You're paying for all these apps. You know, everything's gonna be, you know, subscription basis.

Stephen: Why is the solutions for fintechs, crypto compliance in general? Why are they so fragmented? Why can't one of these companies just, you know, start pulling the levers on all the solutions that companies need?

Because they have such a great base already.

Jas: I can speak on this topic for hours, I guess. So again, not a ding on any of the regtech vendors out there. I probably preface my response by saying This industry, this space is insanely hard. Five years ago, there were probably only two RecTech businesses which had been backed by VCs. And if you look right now, I think during the pandemic and afterwards, Probably every month I was hearing about a new investment going in, a new company emerging. Everybody wants to solve the faster onboarding problem today. Everybody wants to solve the blockchain analytics problem today. A lot of the founders who are solving these problems, I, I feel and I believe that they have probably not seen the pain on the other side.

It breaks my heart. Every time I get a reference saying, Hey, my friend's starting a company. Do you mind spending some time with them? I'll take that meeting and I sit down with them. And you see like these two insanely smart people and they want to dedicate their youth to building out, you know, some solution.

And you don't have the heart to tell them like, wow, that sounds great on paper. I'm not going to buy that shit. Right? Or a CCO typically is not going to buy it because of X, Y, Z reason. And if you look at late stage RecTech founders, when I say late stage, I mean like series. B, C maybe type of a situation.

I think they've figured out their market now. And they're trying to hone in and go even narrower. So back in the days you had providers who would go and do everything and become like an enterprise solution, which I feel is probably the right way to go about it, but the investments, they have increased in this space, but they have not increased to a point where somebody can become a sales force of compliance.

Investments are pretty much to the effect where they're saying, Hey. Can you become the best case management system somebody else? Can you go and become the best transaction monitoring system? Can you become the best blockchain analytics system? And then for compliance people, you're kind of picking and choosing these options and strapping them together to make something work for you.

I do, to your point, sorry. I do fear and believe maybe that is the right structure. I feel that's the right structure because back in the days, if you look at these traditional providers, them being more enterprise, the one distinction between them and the businesses of today is banks were very steady and stable.

If you look at a Citibank and a J. B. Morgan and, I don't know, a Credit Suisse and an HSBC, Potato, potato, they're a little bit similar. Like if you look at the lines of business, they provide similar services. So if I had like an Akamai's kind of a system, which is considered very traditional and very rigid.

If it works at one bank, it's going to work at the other bank, right? The products are not very different, but if you look at like two fintechs, which could be, let's say, comparable, Stripe and Adyen. I don't think the same, product compliance, you know, tech stack that applies to a stack to Stripe is going to be the same that you can lift and shift and apply to an add in.

So I feel like if you can do something really well in your own space, but you need to build a system in a way that it's modular, which means that I can, you know, pick that system and plug it into my stack, pretty seamlessly, that would be great. So it gives the CCOs a better choice of. picking what they want and creating their own bundle. If you see what I'm saying.

Stephen: No, I, I definitely agree. Yeah. It's not one, it's not gonna be a one size fit all, so it has to be easily customizable. And, you know, as someone that's seen quite a bit of demos myself, the technical prowess is there, but to your point, they've never seen the pain of doing an investigation and the administrative work and the compliance requirements.

And only a true person that comes from that field could understand. And they try to hire in that help, but I still think they, they they fall a little bit short in understanding the true pain. Speaking of pain, you know, we talked earlier about Faisal former host of this podcast. And he was a payments guru.

You work with a lot of these organizations around the U. S. and globally.

Stephen: That have, and are using some archaic payment systems, like, how are they dealing with the challenges of cross border payments? Obviously, with so many fintech, crypto, and neobanks in there, how are some, how are they successfully dealing with these archaic payment rails?

And how are they working around it, knowing that regulation still plays a huge impact on some of the payment processes that we see today?

Jas: Yeah, so I think The common phenomena that we see is Fintechs going the, you know, the bank sponsorship route which basically means, I mean, Fintechs are really, you know, I love Fintechs, you know, I can't say that enough.

I think mostly for the hackiness of going around, like you don't take no for an answer. So if I'm a fintech based in India and I want to serve corporates in the US and I'm not licensed in either jurisdiction, I'm going to go find a partner to somehow move money. I might not be the one moving the money.

My unit economics might suck, but can I go and build a product that looks pretty seamless? The answer is yes. If you had a system and these rails were robust and solid. AKA, you know, plug in crypto somehow, you know, stable coins, make them work. A lot of these hacks and going around, you know, the obstacle, I mean, that problem gets resolved fairly quickly.

But in, in practice, what's really happening today is players trying to find who can they piggyback on and how can they provide that service to their customers and move their funds from one point to the other. But you have to use the banking rails and also think about this whole example that I spoke about, like this, you know, customer in India trying to service somebody in the U.S. You're looking at one fintech, but you're also looking at two different banks. Typically J. B. Morgans of the world, they're, they're playing very hard in this cross border money movement space now, at least in the last about two years. And they're trying to go and project a very, you know, a global fintech supportive image.

But when you start dealing with a bank the size of JPMorgan Chase, you're also looking at like, hey, you know, now you have to deal with the India entity and the India compliance team and the U. S. entity, the U. S. compliance team and the global entity and the global compliance team. And you have to like, you're literally working with three different companies.

But they make it work for you. And if you don't want to have go through that excruciating pain, you're looking at like a bank in India that partners with a bank in the U. S. and then you have agreements with both of them and they somehow talk to each other. But it's a patchwork. Could this be better?

Does crypto solve this problem? I think so. I think there are some really solid practical use cases. But again, I think you all get stuck behind the regulatory barriers and the acceptance of, you know, this new form of payment.

Stephen: How about FedNow? Does FedNow, you wrote an article about this or posted a few months about FedNow.

Kind of break down, has FedNow been working? It's been up and running for a bit, but I think by any, you know, government led project, there's going to be some kind of kinks in the hose, for lack of a better metaphor. Is FedNow helping organizations? Are you seeing more of the big players go through FedNow, or are they still looking for alternatives?

Jas: No, no, no, absolutely. I think FedNow is working, for sure. Like, and I, before, before I maybe answer that question, I'm a true believer in, you know, the power of the free markets. I genuinely believe that if private entities need to compete with each other, and if the government also wants to step in and compete, May the best product win.

And I, you know, again, I genuinely believe that customers drive the demand. If FedNow as a product sucks, they'll know fairly quickly. Is FedNow trying to compete with things like Stablecoin as a product?

Stephen: Circle, yeah, Circle, Tether.

Jas: Yeah, I mean, by the way, it took them five years to make FedNow happen. Maybe a little bit more, I could be wrong So they weren't thinking about this when they started, like, when they, you know, when the idea was probably conceived on the government side. I feel, I feel it's a, I think it's a great product for smaller banks, for sure. Smaller institutions. It gives them a humongous advantage that they don't have to go and bundle their payments and then go to a JPMorgan and then ask them to move the money on their behalf. So I think unit economics for smaller banks and then the customers, they work really well. They do, they do overshadow, I have to say, a lot of use cases that the stable coins solve. So if you look at instant settlement, those kinds of issues, I mean, you know, that's the same thing that the Fed now is doing.

But I feel like there is definite space for both of these products to coexist. And again, as I said, may the best product you know, win. But I don't think if, and I'm pretty bullish on stablecoins, I feel like even if stablecoins end up becoming a de facto method of money movement, I don't think FedNow is going to go anywhere.

They'll still have a use case for money. So, yeah, coexistence.

Stephen: Just like the traditional financial system is not going to go anywhere just because Bitcoin and cryptocurrency come into play. We've seen here, especially in the United States, where you're based. The end of the san sand Bankman free case.

We also saw Binance getting huge pen penalized by the US government.

Stephen: You had wrote in about a blog about, you know, third-party risk management. The risk seems to be highlighted by the collapse of things like FTX, Celsius and other companies. How can traditional or Web3 companies better manage these risks, right?

I've seen, you know, companies that don't really know who their customers are, don't have a really good understanding of their customer's profile, trying to onboard KYC vendors really, really quickly. But it's hard to explain to the KYC vendors the trends that they should be seeing when you don't know your customers very well.

Talk to us about these third party management risks, because I think these are coming up more in conversation, even vendor risks as well.

Jas: Yeah, I think, so firstly none of these none of these consent orders, none of these judgments that are coming out are anything, they don't surprise compliance people who've been in this space for a while.

The reason is if you look at everything that happened post 2008 after Lehman collapsed and then Citibank got in trouble and J. B. Morgan. If you read these consent orders and these judgments, you're like, Oh, this seems like somebody just copy pasted stuff from, back in the days. So, the issues are not very different.

If you, if you talk about third party risk management and you talk about your customers being platforms and then their customers, like, who knows who has the KYC files, who knows who you're doing business with. If you think about this in the banking realm of things, Correspondent banking works exactly on the same principle.

And you need to have, like, a bank is working with a smaller bank and then they have customers. And you might not have KYC files of their customers, but what kind of oversight can you have on your partner? To know, A, understand what their business is. You have to understand who their customers are. You need to have confidence and faith in their compliance program.

The one common challenge or a theme that we see in this industry is I think maybe it's a point of evolution. So the majority of the payments industry in the United States, let's say, even in parts, you know, significant parts of the of Europe, they're largely unregulated. They work on the back of sponsor banks.

So, which means that, hey, I could be. The biggest payment processor in the U. S., but if 90 percent of my business is unregulated, which means that, hey, it's my bank partner that is the actual bank, and they've kind of passed their obligations on me, but they're not really checking if I'm really doing my KYC or transaction monitoring and sanction screening or not.

So, so that's the whole, I think that's the whole setup that, you know, these folks are getting into trouble with. Now, if the product builders. Move from this payment space, the unregulated payment space. And you have that mindset that, " Oh, I, my program can be a little hand wavy compliance program, and I don't need to worry about my customers and their customers, all I worry about is building a platform and giving my users a straight through processing user experience", which is super slick. I don't have to ask for any documents. I need to give them. You're, you're walking into the assumption that your customer is clean. I think which is great. But when you walk with that assumption into a heavily regulated industry, it just doesn't work.

Because the problem is That platform that you've created for good people is now actually being used by bad people. Even if that bad people percentage is about a quarter point, half a percent, a percent, that's pretty significant. That's what gets you in a shit. So, for you to be able to go back and feel really good and confident about, you know, customers you're onboarding, making sure you understand their businesses, your beneficial owners, you understand.

You've done KYC and you understand the intent and source of funds. I think you're going to be fine. That's largely, there's in that whole new multi agency guidance that has been issued, there's nothing new in it. There's nothing, all that they're saying is, thou shall know who their customer is, or their customer's customer is.

And be able to like demonstrate the controls that you have to understand you know, that paradigm. So that's what it is, but has that, is that changing in the industry now? Everybody is getting into trouble because of that. The second thing is some of the strongest state examiners. New York specifically, to call them out, this is the one thematic topic that they're going hard on in just understanding, and SEC is doing the same, and a lot of these folks are just trying to understand like, hey, so how exactly are you, what is your program related to third party risk management?

Show us, how, not just, it can't be a program just in paper. Show us the actual controls, show us the governance, show us exactly what technology you're using to be able to do this. And and that's what the industry was stumbling on for the last about year, but I think everybody understands, at least the big players that we work with, they understand the importance of having this program.

Everybody's either working towards it or they've already built out a program. So I'm quite confident that this is going to end up becoming mainstream and one of the important components of a typical compliance program and something that we talk about more often.

Stephen: How much you're in San Francisco, you're, you're wheeling, dealing, talking with founders. How much does money blindside a lot of, you know, these due diligence processes that a lot of the organizations, we saw a lot of investors invest in FTX. They weren't really getting the information and documentation that they're used to. But there was the hype, there was the tickets to the Miami Heat games, right? Like how much does, you know, using your own customer funds, the hype in the market, refusing some investors to be in your seed rounds, you know, drawing up that kind of excitement and mystique, how much does that play in a lot of the due diligence that's going on? Or does it play it at all?

Jas: No, no, I think it's a very significant factor. So I have seen some of the strongest and the most well respected founders fall for folks like FTX. Which was, you're, you're sitting through with, you know, you're sitting on the due diligence side and suddenly the, the CEOs walk in, they're like, we need to make, you know, FTX happen. They're like the next big thing on the block and you're like, all right, you know, we're going to, we're going to, we're going to ask for the regular EDD checklist.

You can ask your policies and procedures and tech. And I remember meeting with the FTX team a acouple of times and to my dismay and shock, you know, when we got the documents, I have to tell you the policies, like they felt like, you know, a college kid wrote the policies and these are like policies riddled with it just felt like it was a first draft of a policy and you kind of scratching your head thinking, you know, fintechs, pre seed round fintechs have policies way more superior than this one.

You could have just copied something off the internet. You could have had a better policy. When you talk about systems, they have none. And there was a sense of harsh aggressiveness in the teams when you, when you met them. And as a compliance person, Not thinking too much about the growth side of things, not thinking about the monetary value.

You're kind of scratching your head thinking this doesn't seem right. And the problem at that point in time with all of these fintechs wanting to partner with them was primarily their banks saying no. If the banks would have given them a pass, I think FTX would have had a much significant exposure to a lot of these fintechs.

So to answer your question, in short do founders get blindsided by They want a seat at the table. They want a piece of the pie.

Jas: Does money and investments, do they become a driver? I think they become a very, very significant driver. And that pressure and that fire goes down on the compliance teams very quickly.

And compliance officers generally who are typically, let's say, yes men, they would say yes to these partnerships. Fairly quickly, but people hold their ground, you get pushed back a lot. And I think that's the one fundamental thing that differentiates, you know, good compliance officers versus the upcoming one, I would say. Which is that the good ones know, they've kind of seen this heat pretty consistently in their life. So they know what kind of arguments to make, what kind of questions to ask, how to basically slow down the process or even say no at times and then stand their ground. So I think those things are very important, but you know, these drivers are real and this is what defines, I believe, like a good compliance officer versus you know, the not so great ones.

Stephen: A new compliance officer or one that's making 3 million a year. I think those people will have the same frame of reference of like, we're not saying no to anything. You know, you know, what's interesting. You wrote an article about, not credit risk, not compliance risk, not fraud risk, but actually the risk of buy now pay laters, which have quietly come on the market.

You know, the, you know, compliance officers aren't really saying too much about them, but you, you talked about, you know, the impact it could have, especially on a, you know, influential generation, right? Kylie Jenner makes a tweet and all of a sudden Snapchat could lose billions of dollars. Ronaldo pushes away at Coke, and all of a sudden they're coming out of a $10 billion hole.

So the very influential society that we have, and now you have these things where you can pretty much buy anything now and pay later. Talk about what your, you know, over or. Overarching point was for the reason for article and what you're seeing the risks to be for not even fintechs and crypto companies But a maybe companies offering these type of services and maybe the you know The thought they should have and obviously the marginalized communities are probably gonna eat up these type of services

Jas: Yeah, so I think that's probably my only gripe with the fintech industry largely when I say fintech I mean like fintech and crypto this is more with the product and the business people, less with like, you know, my, my compliance community.

I think on the product and the business side, then we need to have an ethical framework where then we are supporting different products. We are coming up with absolutely crazy, funky ideas. I think we need to pause for a second and really think about how these products can get misused. And you want to be able to define if that's the part of history that you want You know, you want to be associated, but when you think of products like, you know, BNPL, largely the TLDR on BNPL is you're paying off your loan in four or less installments, so it doesn't get attributed as a credit product, which means that I don't have to go and check your eligibility.

And I can basically give you a loan for you to buy a pair of Air Jordans or a scrunchie or whatever you want, like, which is anywhere from like, you know, maybe, I don't know, 15, And then the average ticket price is about 250, 300 is what I read a couple of months ago. And you have to pay this back. If you're not able to pay back in four easy installments, your APRs could be as high as 36%.

And Even more important than the higher APR is the fact that this this default sits on your current file for a very, very long time. As a miner, You're, you should not be able to apply for this kind of a loan. But there has been consistent studies out there that says, you know, and then they talk about how these products are marketed towards you know, younger children, everybody spoke about like, you know, Air Jordans. You know, if there's a pair for like 200 and my allowance is 50 bucks a month, do I feel confident that yes, I can go and now suddenly buy a pair of Air Jordans and I can pay 50 months for the next four years? Yeah, I think mathematically it sounds like a plan, but you miss one payment, it's going to sit with you forever.

The fact that you could never afford a 200, you know, pair of Air Jordans in the first place. And now you're going to have trouble finding a job, getting a car loan, getting to your job. All of these things couple and they add up, you know, fairly quickly. So, so a product, you know, that you've built that kind of goes around the regulation doesn't require, you know, the eligibility to be tested.

But you have to make some effort to make sure that this is not getting, you know, your target market is not, you know, 14 year old. Your target market is not. People who are not well versed with, you know, financial literacy or people who generally cannot afford that product because you are now waiting for that 36 percent APR to kick in.

It's a lot like subprime lending is what I, you know, spoke about in that article. But yeah, I do firmly believe that. I think the growth and the product people, you know, we, we get this hype from building something and putting it out there. Does it have a positive impact? Definitely. I'm sure like there are, there are tons of really solid use cases for BNPL, but the bad one, we're not talking about what controls are we going to put to prevent that from happening and not become the core market.

Jas: And I can apply this analogy to like, you know, multiple different products in the fintech space, but I feel like we should just be talking a little bit more about, you know, the ethical boundaries and how do we go back and prevent misuse of these products.

And I think the second example that I would use is Robinhood. Right? So the whole case of during the pandemic, kids signing up, using stolen identities you know, buying stuff. It's like using literally, you know, Robinhood as a casino. there's no reason for you to be able to do that. And then some misreporting that happens, some kid, you know, jumps off of their roof and they, they lose their life.

Yeah. I think, you know, to, to, to build some more consciousness and making sure that these products only get used by people who are supposed to use them. I think that's important. That's on us, not just compliance people. Compliance always pushes back to make sure that, you know, those controls are in place, but even from a product standpoint, I think for folks to start thinking about those constraints, I think it's very important.

Stephen: That's interesting, and what do you think? Because like, in crypto, you were based in the UK for a bit, the FCA is very strong about, I believe it's the FCA, I could be wrong, about advertising crypto, whether it's on banners or in the metro, they're very, they scrutinize crypto, you have to put in certain disclaimers. They have to be large, pretty much taking away from any advertisement that would be effective in today's marketplace. Do you feel that, you know, maybe buy now pay later should have to adopt similar regulations?

Jas: The answer is yes. I don't know when was the last time you and I have read a disclaimer. I mean, I read disclaimers only to see what the fine points are so that we can use them, you know, when we provide services to our clients, but that's more commercially driven. I don't think disclaimers, disclaimers are like, that's like, dogfooding, like that's like food for lawyers. Right. I mean, that, that's a legal checkbook that you're checking.

I think it's a little bit more than a disclaimers. It's a little bit about, you know, educating the community and the societies. I think that's very important. It's not going to hurt for us collectively to run campaigns that you can go back and say, Hey, this product is geared towards solving XYZ problem.

You know, if you're under the age of whatever, like you cannot use this product. It's a lot like, you know. Cigarette smoking. I think we, you know, not to say that, you know, kids are not a target and they don't, you know, go after those products, but I think we've made collectively an effort. If you see 13, 14 year old, you know, smoking by, you know, by a street corner, I think you're going to stop them and talk to them and try to like, you know, dissuade them, but you're not going to do that if it's a 25 year old.

So I think having some consciousness built out in the society, I think that's just going to be that's just going to be important. And the flip side of the story also is that, again, we have like bank accounts for children now. Which I feel is a humongous plus point. I think it's amazing that you can start building financial literacy in children by giving them, not a piggy bank, no one uses a piggy bank anymore, but you're giving them a bank account and the parents have oversight and they can actually see.

Step is a great example of a fintech in the U. S. that's you know, that's doing leaps and bounds in that space. But at the same time, there are very specific regulations that once you have My details and my child's details. You cannot go and target my child and try to cross sell them products and show them different things they should be buying based on their spending profile.

That's just illegal. You cannot be doing that. But what you often see fintechs doing is you see like You know, them like using influencers it's like product placement happening and these kids are watching the game shows and suddenly they want that product. So you're kind of going around again, the regulation and the requirements, but I just feel like that's probably not cool.

If your product is good, the parents and the kids are going to adopt and they're going to use it. And if you get, you know, these children, they start using your product, you've got like customers for a lifetime. But I think staying within the ethical boundary is super important.

Stephen: Yeah, they can't target your child. They'll just get all the influences that your target, your child follows and target them with all the products and services that they use. But we talked, we touched on regulation and you know, you work with fintechs and crypto companies, so I think regulation is probably going to be top of mind. That's probably why they're coming to you in the first place.

What are the loopholes? What are ways that we can work within the regulation? I think the biggest challenge for a lot of crypto exchanges is you never want to be first. Right. You never, if there's emerging regulation, you don't want to be the first one to change. Like it seemed like finance was holding out as long as they can before they had to kind of follow the rules.

And we saw the market share that they were able to get. We also saw the reputational damage and the financial, financial damage they took. But a lot of people are looking around like, Hey, that kind of works out in their favor. They have 50 percent of the market share. They probably have 70 percent of the trading volume.

What advice do you give your customers that are like, Hey, can't we just do similar things or why is this company over here in my jurisdiction doing that? But we can't, how do you kind of let customers know what's the best path when they're seeing Binance and like, Hey, I'll take that 4 billion risk.

Jas: Yeah. We see that changing now a lot. So about five ish years ago, the idea and the mindset was what you have, you know, the typical tech mindset, shoot first, think later, right? While they're still figuring it out, they're gonna, you know, they're gonna have the early movers advantage, have a customer base that big, that they, the regulations, they'll have to come.

what was that movie? It was a Kevin Costner movie. I'm forgetting the code, but I think it says, If you build it, they will come. Or if you build it, they will come. Feel the dreams. Yes. Feel the dreams. Yeah, that's the one. so theoretically it sounds great, right?

But they, they, they came for a very wrong reason. So this is not the fun reason that they came for. So I think with the bigger exchanges, they definitely have a lot of legal firepower. They are, some of them that we work with are doing a phenomenal job of spending a lot of their time in D. C. They're engaging on the public private you know, partnership level.

They've got, like, great policy teams. They are talking to the government. They're talking to you know, the banking committees. They're trying to educate, like, senators on both sides. They're trying to educate lawmakers on exactly what their products do. And they're trying to influence change. By means of engagement, but they have they they have a lot of money to be able to afford to do that.

three-ish years ago, our early stage, you know, when Web3 was on fire, DeFi was on fire. We had a lot of our early stage customers who were willing to take the risk. They were like, you know, we'll see what happens. Because the banks were dying to have them on board as customers. And they were very curious to get started.

So they tried to get state licenses. Somebody tried to register you know, as a broker dealer. Somebody tried to get some exception here. And there was a lot of legality by assumption because we've applied. And some law firm came back and said, yeah, maybe somebody's doing it. Maybe you can try this and try that.

There was no clarity and there's not been clarity even till now. But what has changed is. Two things that happened. One is with the crypto downturn, the investments dried up. So a lot of those early stage companies died their natural deaths. And they don't exist anymore. The others pivoted to becoming more infrastructure businesses.

They are more, they're well funded and they also have a pretty good appetite and a sense of, you know, whether the market's going to swing. But what's happened there is their banking partners have stepped back. So their banking partners are giving them an insanely hard time. And when you're on the banking side, when you're doing your due diligence, the first question that you typically are trying to understand is.

Or ask is that what is your funds flow and how do you think you're not regulated? That's what the banks are most interested in. And so, so they have to stay within the regulated prep perimeter right now. And I think that's, what's kind of keeping this whole industry a little bit stable. We're not seeing a lot of younger crypto companies.

Wanting to take a ton of risk, at least in the United States, what they're really trying to do is they're, they're operating pretty heavily from the United States, but a lot of their presence is in Latin America and the African markets, and they're trying to, like, move money in those jurisdictions without them, you know, touching the U.S. system pretty aggressively. So I think that's, that's what's happening. But eventually I feel that has to change. There's been. A lot of clarity when it comes to the regulatory landscape in in EU with with Mika being released with Hong Kong laying out the red carpet for the industry.

I think that's a pretty intense expectation from The US regulators, you know, for them to come out with clarity. But again, on the flip side, the challenge is some of the heaviest heavy handed state regulators, if you talk to them and, you know, they've had like some closed door conversations that we've asked them like, Hey, you know, a lot of our customers are not happy.

They want to get out of the US. And they want to take their business elsewhere. What do you have to say for them? And their response has been like, yeah, if they want to go like, you know, tomorrow, tell them to leave today, we don't give a shit. That's not the

Stephen: They're like, they're like packing their bags. We got a discount. We got a discount at the local luggage place. Let us know if you need anything.

Jas: You're definitely not expecting that response. But, you know, the counter to that response also is that they're saying the number of applications For local state licenses is quadrupled. So they're like, we have no dearth of business.

There are new businesses coming up that want to be regulated, but the regulators want to see these businesses regulated like a bank, like a Citibank and a J. B. Morgan. And a lot of these smaller companies or even these bigger exchanges, they don't have the appetite to build a bank like program. So I think there's a happy medium to be found, which is how do you build effective, lean.

Compliance programs, which are more tech driven that allow you to, you know, control the cost and still be effective. I think that's the Holy Grail. If companies can find that, that's what success looks like.

Stephen: That's awesome.

Stephen: With the last couple of minutes that we have, what does the future look like for your organization?

I know we touched on potentially SaaS product. But what are your thoughts? We see a lot of Web3 decentralization, I'm sure a lot of those companies come to you as well, where the regulations aren't quite there, and, you know, but they don't want to go too far, and then three years later the SEC or the regulators are kind of, you know, coming with the fines and penalties.

So what do you, what are projects that you're interested in when it comes to Web3? Whether it's DeFi, Metaverse, what are some things that excite you?

Jas: So first, yeah, the future for us what we are, we've rolled the dice on the fact that our assumption is that the fintech and the crypto industry is going to be more dominant than the regular banking industry in the next about 10 to 15 years.

A lot of times that I've made this statement, I've gotten feedback that this is a bit of an overstatement, and you know, our, the teams on our side, we genuinely believe. That you know, banks are still going to exist, but the predominant, you know, mover of funds and money is actually going to be Fintechs.

So for us to go in and understand the products and the markets and build our brand as a high touch consulting business, addressing the needs of Fintechs today, is what we see as a multi generational business. This is hard work. You know, the funding levels are not the same as banks. We can make more money by serving banks.

We don't do that primarily because no one else is solving the problem that we're solving right now. And also it feels like it's a long game. It's not what we're trying to do in the next two years, three years. In terms of like products that, or things that really interest me, I'm a huge fan of decentralized identity.

DeFi is great. I think my challenge with DeFi generally like on the lending side is. Again, it's a little bit of a third party risk. You have to know parties on both sides. You don't need to know where the money is coming from. Is it clean money? Is the money going to So I think Somehow, we need to solve those problems and they're always going to get like stuck in some regulatory rut or the other, but you'll have very use case specific solutions.

But decentralized identity, the government should not be in the business of creating a decentralized, identity pool. They do enough with the documents and everything else, but this is something that should be left for the private sector. We have seen a ton of companies come up to develop tokenized identities, which basically means your identity stays with you, my identity stays with me, we can have different levels of security checks.

And I can use a token of a certain level and go through airport security and open an account with an HSBC or with a Coinbase and a, whatever like company we have to be in versus I could go and use a token of a lower level to get into a bar and get a drink. Like they don't need to see like, you know, my passport and everything else in the back.

And, and I should be able to like snap the tie. If I have given HSBC access to my higher level token and tomorrow I don't want my account with HSBC. I don't want them to use my token for anything else. That identity stays with me. I think that to me is a fascinating idea and people have been going with this for a while, but you definitely need this needs to come from a more independent ish company.

It cannot be a company powered by Meta, powered by a Stripe or a Square or a Google. It just has to be a little bit of a third party, which is a little bit more Independent is not the right word, but they just have to be an entity of their own and then to make that as an acceptable standard. I think that's a hard part.

How do we go back and say, we're going to start accepting these tokens? And again, how do you make sure that this doesn't end up becoming a monopoly of its own? I think

Stephen: that's a similar problem that the travel rule has, right? How do you standardize this across the board where everyone can kind of use it, where it's just not one solution?

It has to be the interoperability of several solutions. I think Circle had Verite. I'm not sure if they scrapped that product or if they're still continuing on, but it seems like they've backed away from the project, from what I've known. I haven't done research lately.

Jas: They're still going with it but again, I think my challenge is if one company builds it, their competitors are like, yeah, we're not going to use it.

So accept, acceptability of that token becomes very important. And that's why the sanity producing it either has to be some sort of a consortium that all of us agree to or it has to be somebody a little bit more independent. If that's not going to happen, what then becomes an instant foray is so I, I, I was on BSAC, you know, it's a advisory group for FinCEN.

FinCEN is very interested in producing this token. They are very intrigued by the idea. They were very interested in putting out a white paper just to lay out like what the framework is going to be. It took us a lot of time to help them understand that. Maybe it's best suited for the, you know, the private sector to produce a token.

It's best suited for you to put out some guidance on what these tokens look like, who can use them, how do you store them, how do you move them around and who owns them. But if there is no consensus in the private sector on who's going to build it and what the acceptability is going to be, I can easily see this to become like a instant government project, which again could take years, but this is a good opportunity for them.

Stephen: Yeah, I think Travel Rule might solve a lot of it, because the information is going back and forth anyway. We've heard people talk about using the Travel Rule vendors for things like taxation, right? Because they're getting that information anyway. So maybe this is another thing they could kind of add to that list. Definitely with interoperability. Jas, it's amazing.

Stephen: Where can people find you? Where do you like posting? Is it Medium? I know you have a great, you know, running blog on your, on your LinkedIn with all your articles, but where can people find you?

Jas: So LinkedIn is best. My emails are open, jas@strategybricks.com. I'm pretty good with responding to emails, but LinkedIn, I, yeah, I think I live my life on LinkedIn. So, happy happy to engage and happy to answer any questions the audience might have, but this was great. Love being here.

Stephen: Awesome. And the StrategyBRIX, looking for anyone, like I know, you know, this is a great opportunity if you're looking for, you know, people on the product side, compliance side, you know, what does your career page look like these days?

Jas: So, a lot of really smart consultants we are looking for people who have interest in the fintech industry and they. Love consulting, which is very important for us. So we see a lot of candidates and there are a lot of candidates in the market right now, but you're generally looking for people who, for whom consulting is not plan B, if you generally want to be in this space, understand and see a lot of these fintechs from the inside, and then become smarter over a period of time our promise is that once you get in and you definitely want to learn and educate yourself, our job is to make sure that you love the job so much that you always stay.

But for this to be your plan A is very important. So any, anybody who can demonstrate that. So ex consultants do a really good job because they know what consulting is like and it's easy for them to walk in and demonstrate that. But anybody else wanting to be a consultant if they can put that out there, why this is their, you know, their plan A. I think that's something that we all deserve.

Stephen: Love it, Jas. Love it. Thank you so much for joining us on Around The Coin.

Jas: This is great. Thanks for having me, Stephen.

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