Nexo launches special debit card for cryptocurrencies
Tool & app

Nexo launches special debit card for cryptocurrencies

By Emanuele Pagliari - 3 Aug 2019

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The Nexo startup has announced an interesting debit card for cryptocurrencies, characterised by a particular feature that will surely appeal to the crypto community. This card allows users to have a credit line backed by the cryptocurrencies deposited.

This translates into the possibility of spending the value of the cryptocurrencies deposited on the Nexo debit card without actually spending them, as stated by the collaborator Antoni Trenchev.

Unlike other credit cards that allow spending cryptocurrencies, such as 2Gether, Wirex and the recent Coinbase Card, which convert part of the crypto funds into FIAT currency for each transaction made, Nexo maintains the cryptocurrencies and provides users with a loan in FIAT currency equal to the amount spent.

To date, the startup has lent over $700 million to over 200,000 customers. With the new card, these loans can be used to make purchases from merchants who accept MasterCard cards thanks to co-branding.

Nexo: a debit card aimed at “not spending” cryptocurrencies

The card’s operating mechanism is quite simple: when a user wants to make a purchase, a system based on a series of oracles will or will not confirm the presence of sufficient collateral funds in the form of cryptocurrencies to cover the expense. If the check is successful, the Nexo debit card immediately receives a loan in FIAT currency equal to the amount of the expense made at the time of payment.

Trenchev declared that currently the card issuer is authorised to operate within the Euro area, but through a partnership with some intermediaries, the Nexo startup intends to expand into the United States and Asia by the end of the year.

The cards are available independently of the customer’s credit history, as the collateral guarantee system in place significantly reduces any risks. However, interest rates are set between 8 and 24% depending on the size of the loan and local regulations.

Users can repay their loans directly using cryptocurrencies or using fiat currency.

Moreover, using the Nexo token the interest rate will be reduced to 8%. Since the collateral system is tied to cryptocurrencies, if the value of bitcoin were to increase, the payment thresholds would also increase with it, since the purchasing power offered by BTC would grow.

Citing the example given by Trenchev, entrepreneur Brock Pierce bought a house in Amsterdam for as much as $1.2 million through a credit line with Nexo and did not make any additional repayments, as the value of bitcoin increased compared to when he applied for the loan.

Conversely, if the bitcoin value were to fall, users would have to deposit more cryptocurrencies in order to pay part of the loan and thus reduce exposure or sell part of the cryptocurrencies used as collateral to restore the loan-value ratio.

The company complies with the Know Your Customer (KYC) policy, follows international sanctions and uses Chainalysis tools to verify whether the cryptocurrencies used come from illegal funds or not

Emanuele Pagliari
Emanuele Pagliari

Telecommunications engineer with a strong passion for technology. His adventure in the world of blogging started on GizChina.it in 2014 and then continued on LFFL.org and GizBlog.it. Emanuele is in the world of cryptocurrency as a miner since 2013 and today he follows the technical aspects related to blockchain, cryptography and dApp, also for applications in the Internet of Things.

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