Why ‘old war horses’ need to ‘wake up’ to crypto
Cryptocurrency such as stabelcoin is gaining traction in superyacht transactions.
Yacht companies need to “wake up and address” a growing tide of clients keen to use crypto for sales and charter transactions, according to Giles Whitby-Smith, CEO of Bitcashier.
Digital currency has become more mainstream in recent years and many high-net-worth individuals are either sitting on big crypto gains or will have a crypto component to their portfolio.
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And the trickle could turn into a torrent, particularly as stablecoin, which is pegged to fiat currencies or other assets, has become the preferred crypto in which to transact rather than the more volatile first-generation coins such as Bitcoin and Ethereum.
“We’re finding incidences of people using crypto increasing dramatically,” Whitby-Smith tells us. “We’ve done three times the amount of volume this year in superyacht transactions in terms of sales and charter than we did last year.”
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According to Whitby-Smith, a former investment banker, the original concept of Bitcoin was as a form of payment that would be the same value anywhere in the world, which wouldn’t be subject to any currency fluctuations because it is decentralised. “That got lost along the way so I was interested to see how we could get back to something like that,” he says.
After careers in the City, real-estate and the founding of merchant ship tracking service Pole Star, Whitby-Smith set up Bitcashier, a crypto payment and processing platform, with software developers Marc Dominic and Wojciech Langiewicz in 2019.
Perfect medium
While Bitcoin has become “less popular” as a form of transaction and is seen more of a long-term or day-trade investment, stablecoin such as USDT fluctuates in line with domestic currency, making it more suited to transactions for real-world assets.
“There’s a whole generation of people out there who don’t want to deal with traditional finance,” says Whitby-Smith. “They do want to deal with stuff they’re used to, being on their phone and digital currencies.”
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Critics point to crypto as having no intrinsic value and therefore prone to wholesale collapse, but Whitby-Smith adds: “Bar there being a complete meltdown of the entire financial system globally, I can’t see it failing now.”
One of the main appeals of using crypto is the speed of transactions and the 24/7/365 global nature of the digital world. “I do see that for certain industries, high-end luxury goods, high-end properties, with global citizens who don’t want to be tied to banking hours, then crypto is the perfect medium,” he says.
Less stress
According to Whitby-Smith the fastest sale of a superyacht his platform has dealt with “from beginning to end”, is five days when a “young crypto guy” wanted a boat for a party in Puerto Rico and did a $3.5m deal through Denison over the weekend.
Whitby-Smith also cites a charter in July worth €785,000 which the client wanted to pay for in crypto. The inquiry came on a Thursday afternoon with the charter set to commence somewhere in the Mediterranean on the Monday morning. After onboarding the client and “rapidly doing compliance” the funds were in the charterer’s account at 7pm on the Friday.
Ian Petts, an experienced finance director in yachts and jets, says crypto can eliminate the stress of dealing with traditional banking hours.
“Especially if you’re trying to do a deal on a Friday afternoon and the Monegasque banker then goes out for lunch and it gets to two o’clock, three o’clock, and they haven’t come back in to sign the transfer,” he says.
“It can get very stressful. Whereas [with crypto] you can do it at midnight. You can do it during the weekend. All the KYCs are pre-cleared, so you get the green light.”
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As digital currencies become more popular, the spread of people holding it is not just confined to young, tech savvy individuals.
“We have a client who is in his late sixties,” says Henry Smith, sales broker and partner at Cecil Wright. “He put 5% of his portfolio into crypto in 2015 and now that represents over 50% of his fund. So it could be anyone. There’s no poster boy for it.”
However, Cecil-Wright’s Smith suggests that the number of people using crypto to buy real-world assets is still minimal, if growing.
“A lot of the guys who got into it as part of an investment strategy aren’t selling it or aren’t using it to transact with,” he adds.
‘Old war horses’
That certainly appears true on the sell side of a yacht transaction. Both Smith and Whitby-Smith say they have yet to do a deal where the seller receives crypto in payment. Even if the buyer uses digital coins to pay, it is converted through the platform to the agreed fiat price. The seller does not even need to know it was bought with crypto.
From a lawyer’s perspective, the extra workload for a crypto transaction is not particularly onerous. Citing one deal he was involved in with a shipyard, Jay Tooker, co-head of HFW’s yacht team said: “There was kind of about 10, maybe 15 lines of extra text in the contract. Really not that much and not that complicated.”
Talk of crypto always brings up the subject of security and compliance, but being a decentralised currency on a digital ledger, the source of the coins is easily traceable, according to Whitby-Smith, whose platform has to adhere to strict regulations.
“We can go back six, eight, 10 hops to find out where that crypto has come from because every piece of crypto has an identification number attached to it so you can see if it’s been involved in a terrorist wallet or whatever,” he says.
In terms of the future, Whitby-Smith and his team see stablecoins as a “growth market” which could translate into more yacht deals.
“We still have old war horses in the industry who say, ‘I never have, never will’ but it’s only a matter a time until they get a client who says, ‘I’d like to use crypto to purchase or charter a yacht,’” he says.
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