Insights from a modern lending platform: crypto or coin?

YouHodler is a Fintech company; its aim is to build a bridge between Blockchain/Distributed-Ledger Technologies and the traditional financial world.

Interview with Ilya Volkov, CEO of YouHodler

Isabelle Ganz, Partner of QUORUS GmbH and Nina Fois, QUORUS GmbH, Research, Marketing & Communications

YouHodler is a cryptocurrency lending platform providing crypto-backed lending solutions with fiat (USD, EUR and in the future CHF) and stable coins, as well as crypto/fiat and crypto/crypto conversions. The project started in 2017 in Cyprus, where YouHodler was created as a spinoff of an existing regulated Cypriot company. The platform went live in the following year and in 2019 the management took the decision to strategically re-orient the company with an international focus: different jurisdictions were evaluated and Switzerland proved itself to be the best place to open a new office, thanks to its Blockchain-friendly environment, the financial market regulation that is technology-neutral, numerous infrastructural advantages and supportive framework conditions.

As a European and Swiss-based company with two offices, one in Limassol (Cyprus) and another one in Lausanne (Switzerland), YouHodler, based on its strategic position, aims to gain customers from different countries. The company, still at the beginning of its journey in Switzerland, finds itself in the process of launching its Swiss operations and recently receivedits Pawn Broker authorization from the Cantone of Vaud as well as the confirmation of the “Affiliation” with the Swiss Self Regulating Organization Polyreg.

Ilya Volkov, CEO of YouHodler, with a Russian and international business background in commercial finance, online trading and Blockchain, is full of positive expectations regarding the benefits of YouHodler’s operations on the Swiss market for both the Swiss community and for his company.

Let’s discover why!

1. How would you describe the aim and the purpose of YouHodler?

YouHodler is a Fintech company; its aim is to build a bridge between Blockchain/Distributed-Ledger Technologies and the traditional financial world. Through YouHodler, we want to develop an efficient connection between crypto and traditional finance in order to create added value for people that want to hold (HODL) their crypto assets and profit from liquidity at the same time. This becomes possible using the crypto as collateral to get instant cash loans or crypto loans in EUR, USD, GBP, CHF, Tether (USDT), or Bitcoin (BTC).

2. For what reasons did you choose Switzerland, especially with regard to other attractive locations in Europe? What were the key elements the Swiss parquet offered and which of these elements played the decisive role in your decision-making?

Switzerland proved itself to be the best choice among other countries because of its business-friendly environment. Especially, the Swiss Financial market regulations are very supportive for FinTech Startups. Besides this specific element, the solid Swiss economy, the financial stability, the legal security and the high quality and safety standards as well as the transparent bureaucratic conditions, were factors that directed us towards Switzerland.

Switzerland’s geographical position, exactly at the center of Europe, also played a very important role in our decision-making, especially with regard to future internationalization. Furthermore, the Swiss Expertise in the Blockchain’s sector, the efficient crypto/Blockchain community and the presence of the Crypto Valley Association (CVA, non-profit association) were further crucial elements that positively influenced our decision to establish YouHodler in Switzerland. Also, not to forget are factors such as the patent legislation and protection. Above all, the support in Switzerland for innovative startups at cantonal and national level is also mentionable and deserves a lot of credit.

In 2019, I decided to join the CVA and in 2020 I became acting Chair of its Western Chapter. In my new public position, I’d like to give something back to the Swiss environment and contribute myself to the further sustainable development of the Blockchain ecosystem in the country and beyond.

The worldwide renowned Swiss Banking System in context with the Blockchain and Crypto environment is not a simple “love story”. Let me explain why. In connection with the Blockchain topic, Swiss Banks are more open in comparison with banks from other countries, but, due to their high esteem of the protection of the reputation of the “Swiss financial center” their approach overall remains conservative. With that said, to me “conservative” with regard to the banking system can also mean less risks and less risks enable the market to stay healthy, a good thing on the one hand but also a hurdle that has to be overcome in order to be able to achieve the “next level in banking” on the other hand.

The high level of education, research and innovation, as well as the startup ecosystem of the Swiss universities are highly developed, but from what I could see, some communities in Switzerland, especially within academia, although being at a top level, are still quite regional and less proactive internationally. Nevertheless, they are open to new connections and to global projects. According to my own experience, they just need an external incentive and someone with fresh ideas that can facilitate contacts to get the international idea or project off the ground and running. The basis, knowledge, knowhow, and stamina are there, but the vital spark that lights the fire for a new adventure sometimes is missing.

(Pixabay)

3. What role did the canton and its business associations play during the foundation and establishment phase of YouHodler? Which other institutions have been particularly important?

The establishment of YouHodler SA has started with the support from the Embassy of Switzerland in the Russian Federation and the Swiss Business Hub Russia (SBH) through Switzerland Global Enterprise (S-GE) (https://www.eda.admin.ch/swiss-business-hub-russia, contact: mos.sbhrussia@eda.admin.ch).

With the support of the SBH and S-GE we were able to present our project to the 26 Swiss Cantons. We received very positive feedback from many of them and our choice fell on the Canton of Vaud, more precisely on Lausanne. This canton was “better” than others in terms of information and willingness to support. For Startups in the Blockchain industry it is true, that the Canton of Zug and the Canton of Zurich are Frontrunner destinations, but currently both cantons are overloaded with startups coming from the Blockchain sector, whereas the Canton of Vaud started later, has also a very favorable environment and sufficient capacities and interest to onboard new startups. For YouHodler, this is of mere importance, because it means we can get more inputs and expertise from the canton itself and be among the first companies on the cantonal floor in the said market, not among the last.

The DEV (Canton of Vaud, Development Economic – https://www.innovaud.ch/) also played a very important role and gave us all the support we needed. Further backing we received from the CVA as well as consulting firms, such as lawyers and accountants, the initial phase that includes challenging financial market regulation issues would have been impossible without these partners.

4. What concrete opportunities has Switzerland offered you as a business location? What advantages does Switzerland offer for scaling up a successful startup?

All the elements and characteristics of Switzerland, previously mentioned, help a startup to get a solid foothold in Switzerland and to successfully scale its business. Furthermore, the country is multi-cultural and multi-language and therefore has an interesting mix of different mentalities. This Swiss specificity is a very good basis for international growth and expansion. The country has everything that is needed to develop a new innovative business. For someone with fresh thoughts and new innovative ideas, it is very easy to build something efficient starting from the already existing Swiss basis.

YouHodler plans to scale its business within and outside Switzerland, but currently finds itself still in an early stage.

5. What do foreign companies or startups need to bring to the Swiss market? What advice would you give to a startup when looking for investors in Switzerland?

The company and/or the project needs a solid reason and somehow justification to go to Switzerland. It is also very important for the company to have a clear idea of what value the project will bring to this market on a national and cantonal level. By considering the Swiss market, you have to keep in mind: “Value before money”. It is only when you are able to show your company’s value to the market that you will be able to attract investors.

I spent a year in the Silicon Valley, where I saw a lot of startups and companies with bright ideas trying to find funds. Applying for investments and having just an idea might work in Silicon Valley, but it would definitely not work , in Switzerland. To be successful and able to win Business Angels or Venture Capital Firms in Switzerland, the whole project has to be much more concrete, well presented and sustainable. High level of innovation and substance have to go hand in hand.

To start our business in Switzerland we presented our business plan to SG-E. This initial documentation was used to present YouHodler to Switzerland’s 26 cantons. Again, it is very important to be able to present a structured business project, its efficiency and its potential value for the market. In the case of YouHodler it was “relatively easy” to present the projects’ value, because first revenue streams already existed. Our business plan gave a good overview over the project but was not extremely detailed. However being able to present an already working platform as well as revenue streams, did immensely facilitate the entire process.

In this regard, I would like to add that in the set-up phase, personal funds stemming from the existing business as well as funds of the other UBOs’ and myself were invested into the business. For the moment, we do not plan any financing rounds, because the current business model creates sufficient revenue streams to maintain the ongoing operations of the company. Should YouHodler need external financing in the future, it will be feasible to raise money from Venture Capital Firms or through a bank.. Prerequisite is, of course, that the FINMA approval is granted. The YouHodler team is looking forward to its further challenging journey on the Swiss market.


Ilya Volkov, CEO of YouHodler
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