Satoshi Citadel Industries (SCI), a Philippine-based digital startup, has announced that it has acquired Keza, an app that enables users to make investments through Bitcoin. The acquisition, details of which are undisclosed by either party, will enable the two companies to join in synergy with their focus on emerging markets. It also affords SCI a new avenue for expansion, given that it already has brands in several Bitcoin-related verticals.
SCI’s rise as a Bitcoin umbrella company
Bitcoin is on the rise as a viable means to make digital payments and remit money online. Given these potentials, it is only reasonable for startups to bank on the game-changing possibilities in Bitcoin to expand to other industries, such as investing in financial instruments. In 2015, Silicon Valley-based Keza set out to do just this, by launching an app that enables users outside the US to invest in stocks and other instruments at US and international stock markets. The app reportedly launched to rave reviews and was on its way to gain traction among its target emerging markets.
Unfortunately, the startup had to close its US operations in April this year. While no official reason has been offered, observers speculated that Keza may have had compliance issues with the Securities and Exchange Commission, which regulates businesses dealing in the financial industry. This left the status of the company in limbo, especially with the limited options it could now offer its customers, even after the company received a seed funding of US$ 357,000 in funding from the Digital Currency Group and Jason Calacanis.
Meanwhile, launched in 2014, SCI has received seed funding from Kakao’s venture capital arm KVI, and has branched out as a holdings company that runs several Bitcoin-related brands. Its flagship Rebit.ph is a money remittance service focusing on fast and inexpensive transfers to the Philippines. BuyBitcoin is an online marketplace for exchanging Bitcoins with other currency. Prepaid Bitcoin is a service that lets users buy Bitcoins in exchange for local currency. Bitmarket.ph is an e-commerce enabler for businesses that want to accept Bitcoin payments. BitBit, meanwhile, is a mobile payment app that runs on Bitcoin.
Philippines: A haven for remittance businesses
The Philippines is regarded as a growth market for digital financial services, especially with the rapid growth of smartphone penetration, as well as a healthy remittance sector. IDC counts 20 percent year-on-year growth in smartphone penetration. Meanwhile, international remittance in the first quarter of 2016 alone was US$ 6.46 billion–a 4.4 percent year-on-year growth, which is expected to be sustained throughout the year. About 10 percent of the country’s gross domestic product comes from the remittances sent in by about 10 million Filipino expatriates working and living abroad.
Remittance is not cheap, however, with the World Bank estimating an average remittance fee of 5.76 percent. In addition, a study by productivity firm TimeDoctor cites remittance delays of three to five days as among the big concerns that recipients face, not to mention the hidden forex costs. In contrast, sending funds through Bitcoin is near-instantaneous and usually comes with minimal fees.
Keza currently runs only on iOS, although SCI has promised to expand coverage to other platforms in the near future, as well as potentially expand its capabilities beyond its current offerings, and possibly expand to other Asia Pacific markets, as well.
The takeaway
While there have been concerns about the viability of Bitcoin as a currency in itself, startups like SCI–and even Keza–have proved the value of investing in services that revolve around Bitcoin, as well as building applications on top of the cryptocurrency and the Blockchain. SCI’s acquisition of Keza will open up bigger opportunities for customers in emerging markets who wish to gain access to financial markets, but who have limited access otherwise.