In the summer of 2020, SoftBank Group rattled Wall Street with heavy bets on U.S. tech stocks as the pandemic gripped markets. Behind those trades, which earned SoftBank the “Nasdaq whale” moniker: Akshay NahetaAn executive marked by bold bets on disruption.
Now, after orchestrating multi-billion dollar deals, including an attempt to merge Nvidia and ARM. Naheta is ripe for perhaps his most ambitious bet yet: reinventing the world's payments infrastructure.
His Zug, a Swiss-based startup, Distributed Technologies Research (DTR) is working to bridge the gap between traditional banking and blockchain technology, partnering with companies trying to modernize global payments infrastructure.
The startup says it can eliminate payment inefficiencies ranging from transaction costs and exchange rates to foreign exchange fees and payment delays. “Current payment networks suffer from inefficiencies – transaction costs, interchange fees, FX conversion costs, settlement delays and other clear fees,” Naheta said in an interview with TechCrunch.
DTR's core technology, AmalgamOS, connects banks to blockchain networks. via APIs; This allows businesses to integrate payment capabilities while maintaining compliance with local regulations. The system can handle everything from merchant payments to treasury management, supporting traditional currencies and major stablecoins in 48 countries.
The startup is based on what Naheta describes as an “international orchestration network” that automatically routes transactions through traditional banking or blockchain channels, offering the best combination of speed and cost. “We are connected to 12,000 banks in Europe,” he said in an interview. A business that integrates DTR's APIs can allow its customers to initiate direct transfers through banking apps.
DTR's push into payments infrastructure appears opportune. Visa and Mastercard – both Charge a 2-3% swipe fee.It's typically the second-highest cost for merchants after wages — as they face continued scrutiny over their duopoly, and the proposed U.S. Credit Card Competition Act could require banks to offer merchants alternatives to dominant networks.
DTR's early customers say its infrastructure fills a significant gap. Philip Lord of Oobit, a crypto wallet startup, said the system allowed his company to transfer money to a bank account in 30 seconds on Christmas Day. He said the system allowed his company to move to a bank account in 30 seconds on Christmas Day.
Naheta's interest in payments infrastructure comes from an unlikely source: SoftBank. Acquisition of Fortress Investment Group In 2017, The deal added about $20 million worth of bitcoin to SoftBank's balance sheet.
While studying the underlying blockchain technology; Naheta said he saw an opportunity to use his background in wireless communications in payment networks. While at SoftBank; Naheta began assembling what he hoped would become DTR's founding team. He reached out to an undergraduate thesis writer; Pramod ViswanathHe now leads Princeton's blockchain center and is an expert on wireless communications. Sreeram KannanWho starts next? own layer.
The team sees blockchain as a peer to peer-to-peer communication network that can leverage decades of research in wireless systems to revolutionize payments. Naheta almost quit SoftBank in the summer of 2018 to focus on DTR and crypto venture Bakkt, but was persuaded to stay by senior executives including Rajeev Misra and Masayoshi Son.
Naheta's previous forays into the payments sector included an investment in SoftBank's Wirecard, which later collapsed. SoftBank is still making a profit on its investment in Wirecard. “I had a lot of mistakes,” he admitted. “I looked at it from the perspective, here's a company that has regulatory licenses around the world, and clearly has payment technology.”
Such experiences seem to influence DTR's emphasis on compliance and organizational credibility. This measurement method extends the company's growth strategy. “Even if we add 60 people in the second quarter, we will be free cash flow positive,” he said.
Startups are facing competition in many fields. Wise has built a successful business matching money flows between countries, while Ripple offers blockchain-based settlement despite its legal issues, and says traditional banks are upgrading their systems through initiatives like SWIFT. Finally, At least Stripe's Bridge was recently acquired for $1 billion. Helping the world's most valuable fintech startup penetrate deeper into payments.
However, Naheta is open to serving businesses that straddle these worlds — especially digital nomads; Serving companies operating across creative business platforms and emerging markets.
“Banks are not equipped to do KYC/AML at that small level where they pay $200 to $10,000 a month,” he argues. The semi-disjointed nature of national payment systems creates special challenges for businesses operating globally, as each jurisdiction maintains its own rails and regulations.
The high margins and network effects of the payments industry make it notoriously difficult to disrupt. Even after recent declines, PayPal commands a market cap of $70 billion, while Visa and Mastercard are valued at more than $1 trillion.
“I really think the retail customer is missing out on the payment,” he said. “This is not the banks' fault. They are embedded in legacy systems and it is very difficult to change Titanic.”
Lord of Oobit said in an interview that the area is still wide open. Until a year ago, He pointed out that the only option for businesses looking to move between crypto and traditional banking systems is to “go to an OTC shop and pay 1 to 3% to transfer it.”
“For years, we've had a lot of startups, we've had a lot of coins coming up and whenever we wanted to do an on-ramp or an on-ramp, there was no other formal legal idea system around,” he said. DTR's solution is “block faster” than other options.