Morfin is building a crypto-friendly community bank
Morfin, a company that operate from Luxembourg under an Electronic Money Institution license, in full compliance with European banking laws, wants everyone to be able to use cryptocurrency inside a legal safe-haven.
Morfin’s creators describe the project as a “Blockchain Community Bank,” whose goal is “to create a bridge between institutions/regulators and crypto-users.” Based in Luxembourg with developers in Romania, Morfin was one of the startups selected for the 7th edition of the Fit 4 Start at Luxinnovation.
I discovered Morfin because somebody added me to their Telegram channel. Since I don’t like being added to chats and groups without having so requested, I posted a loud complaint. But a few seconds before hitting the “Leave” key I started chatting with Business Development manager Vlad Centea, and found his pitch interesting.
Morfin is best described as a next-generation bank, open to cryptocurrencies. The Morfin website promises a hassle-free online bank account, with an easy to use mobile wallet app that allows users to do everyday operations, and the possibility to manage some cryptocurrencies and ERC20 tokens.
In a post titled “The story behind Morfin,” the developers propose an analogy with cars. According to the developers, Morfin is not a conventional car, but a next-gen sport car “built from scratch, light, efficient, innovative, built with a purpose and a mission.”
“Usually, after a few years, the technology used in competition cars and sports cars is adopted by mass production cars... Blockchain is still a racing car technology in the world of finance.”
In other words, the developers see Morfin as a prototype of a future online bank, open 24/7, with full banking services and open to cryptocurrencies.
A comparison with Wirex comes immediately to mind. Wirex offers cryptocurrency wallets including Bitcoin and Ethereum, a built-in mini exchange, the possibility to hold funds in crypto and fiat (USD, GBP and EUR), and a debit card that can be loaded with cryptocurrency. Wirex EUR accounts come with their own unique IBAN (International Bank Account Number), which lets customers directly fund their Wirex EUR account by bank transfer.
I am an avid user of Wirex, so I asked Centea how Morfin compare to Wirex. According to Centea, the main differences are:
“1. UX and usability. We want our clients to have a personal finance experience rather than what they now get with an exchange. Take the services you find in Revolut or N26, services like expense tags or split bills. Wirex see the card linked to crypto as the center of their business, we see the bank account as the center of ours.
2. Compliance and trust. This is our primary focus. We push the limits to make sure that our solution can withstand any regulation that might occur.
We took the current banking standards as baseline and we plan to apply them to crypto. In my view it’s still a wild west in terms of crypto compliance. We want to survive any new legislation, and we hope for our solution to become a standard.
Our customers have to feel at ease using Morfin, because they know we don’t cut corners. We didn’t choose a jurisdiction that allows shortcuts on compliance, for starters. Morfin takes all those extra steps to make sure institutions feel comfortable with what we do, with how our clients operate. Nobody else does it, because it’s not easy. Practically, we made Morfin regulation-proof.
3. The long term vision. We focus on a “banking experience” for the crypto community. We see banking through the lens of blockchain philosophy. This means we will not ask for a banking license from a credit institution to provide loans, for example. We do plan instead to introduce p2p everywhere we can apply it. It’s a great concept that eliminates all bottlenecks and unnecessary costs. We will have p2p fx, p2p ATM, crowdfunding through STOs and more. This is the concept of “community banking, which is the core of our philosophy.
4. Equity through a Security Token Offering (STO). We want to reward our early adopters. We will follow a normal startup path in terms of funding. Our early adopters will earn shares for their direct contributions, along with some long-term unique perks.
Security Token Offerings (STOs) are ICOs that are explicitly described as securities offerings, and carried out in full compliance with securities regulations. Offering equity through a STO is a key part of Morfin’s “community bank” vision. Centea continues:
This way, our customers will own a piece of their bank. We don’t work like an ICO and we don’t plan to take the same path. With our investment plan, we give customers the opportunity to own a piece of a regulated institution. Customers have an exit with each funding round, whenever they want. Once the company is stable enough, we plan to list our token. The whole process is meant to reduce the investment risk of community members that opt to invest alongside Angel Investors and VCs.
The ratio between Community money and VC money will be decided according to the number of requests. The value of the company depends on how we acquire new users fast. This will have two consequences. The valuation of the company will be higher, and the next funding round will come sooner. When we pass the break-even point, investors will have dividends too.
We hope our community will help us grow and develop the right product, usable and useful. Also, we plan to announce every new job opening to the community first and then to the larger public. We will always put community first.”
I signed up for the Morfin Beta programs. I received a welcome message, a place in Morfin’s waiting list, and some reputation points, which will enable me to participate in the Morfin STO. The status of the program and the next steps, according to Centea, are:
“Right now, we are building a beta community, restricted to a fixed number of participants.
Users will get the first unpolished version of the product, give us feedback and advice, and maybe work with us to prepare for the public release.
While we work to deliver the Beta, we are also working on the legal framework for the first funding round. Once the framework is in place, the Beta subscribers from the list will be invited to go through standard KYC so that they can participate in the funding round along with Angels and VCs.
Premium users earn free shares with referrals and premium subscription. The equity program is described in broad strokes in the subscription page, and we will come out with more details in the second quarter of this year.
Right now, what we want most is to see how we are received by the community, how much interest our product garners.”
Whether this ambituous project will succeed remains to be seen, but I think the Morfin team have a sensible approach that is visionary and pragmatic at the same time. While parallel, unregulated cryptoeconomies with strong privacy and no KYC are closer to my old libertarian heart, I realize that there’s a need for next-gen, crypto-friendly mainstream banking, and I wish Morfin all the best.
Cover picture rom Pxhere, image from Morfin.