GREEN BAY - A Green Bay-based company is giving new hope to community banks looking to hold their own in a fast-growing competitive world of cryptocurrency and secure blockchain transactions.
The offering is a software that integrates this new technology into the already available online framework banks provide.
The language is still difficult for many to understand and so is the functionality. Additionally, there are restrictions for American banks which engage in certain activities involving cryptocurrency.
But still, people keep talking about it, and the total value of cryptocurrencies topped $2 trillion in the first few months of 2022.
In the midst of all this, Sequoir, a Green Bay-based fintech company, envisions the future of banking with digital assets — like your birth certificate or your land title— accessible at any moment, and with the opportunity to use cryptocurrencies to trade or make payments.
This company believes in a future with integrated blockchain technology: a distributed digital ledger of encrypted transactions maintained across a worldwide public network.
"It's just a matter of how it will be used," said Justin Seidl, founder and CEO of Sequoir.
Crypto revolution creates business opportunities
Seidl, a software developer, was born and raised in Luxemburg, 20 minutes from Green Bay. He graduated from the University of Wisconsin-Green Bay, lived in Chicago for five years and worked as head of product for the recruiting firm Hunt Club.
In 2018, he moved to Green Bay with his wife and, around the same time, started Sequoir. Seidl said the name comes from a smash up of "Sequoia" and "acquire," and the offices are located at the Historic Bellin Building, in downtown Green Bay.
He foresaw the crypto revolution and thought eventually banks and credit unions were going to jump in, expand their product base and integrate the technology.
Recently, his company received $1.7 million from investors, including Tundra Angels, an offering of the Greater Green Bay Chamber. Investors include two local community banks, the Bank of Kaukauna and the Bristol Morgan Bank, which serve Dodge, Fond du Lac and Winnebago counties.
Mathew Kee, manager of Tundra Angels, said it’s the group's first Green Bay investment, and the first that's crypto-related.
Saving on third-party trading apps fees
Of the things attracting investors was this integration Sequoir provides, which will help banks recapture a lot of assets from third-party trading apps like Coinbase, by “allowing customers access crypto markets via the bank itself.”
The company also entered a program with Jack Henry, a technology firm with headquarters in Monett, Missouri, which offers payment processing services for the financial industry. They serve over 8,500 clients nationwide, which include more than 1,500 banks and credit unions.
"What this means, is we will have the capability to integrate directly into these online platforms that they provide to banks," said Seidl.
But at first this wasn’t his idea.
He focused on building a software that allowed United States residents buy and sell digital assets, like cryptocurrencies or NFTs (non-fungible tokens) and made compliance and regulation a priority.
Sequoir has a regulatory base in place and is part of the Financial Crimes Enforcement Network, a department of the U.S. Treasury which collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing and other financial crimes.
Seidl says this strategy turned out to be a conservative approach and brought the company very little growth.
In 2021, he decided to pivot to a service model, using Sequoir's built-in software to instead offer the blockchain technology to financial institutions.
The big win for clients, should they decide to enter these markets via their personal bank, is they won’t have to pay those transfer fees they pay on third-party crypto trading companies.
Seidl explained that clients who use these enterprises pay a 1.5% fee for the use of Automated Clearing House Network, a fund-transfer system used by organizations for payroll, direct deposit, tax payments and refunds, and other services; and also a 3.5% fee for the use of credit cards.
Customers would only have to pay for the difference between the buying and selling price of a cryptocurrency, or what is called the “spread” in trading.
John Brogan, chairman of the Bank of Kaukauna, sees cryptocurrencies like assets, as another product banks can offer. But he also understands this technology will add more benefits to community banks and their clients.
Regulation falling into place
Financial institutions provide a safeguard for important documents like birth certificates, wills or land titles. Brogan thinks someday these documents will be digital assets that can be accessed at any moment, and it makes sense people will use banks to store them. He also envisions crypto trades and payments being done using the bank's apps.
He believes banks will become the economy validators of "who really is making the transaction," because these institutions are often in one of the most trusted positions.
However, The Office of the Comptroller of the Currency, administrator of the U.S. banking system, said in November that all banks must notify their regulators about their intentions to provide transactions with Bitcoin or other coins. They also must demonstrate they have appropriate risk management tools before taking on these activities and others, like providing custody services for customers' crypto holdings.
Regulation is not quite there yet, said Brogan, but it will happen at some point.
In the meantime he believes Sequoir can offer the infrastructure, and "is a great solution for smaller community banks." That's because they don’t have the same resources as larger firms to invest in software developers and build this type of technology.
“What we have to do is look at clever vendors and providers like Sequoir, who provide the technology solution that would bridge the gap,” said Brogan.
Nevertheless, Seidl explained that this technology doesn't have to be specifically used for payments or to store value or substitute conventional forms of payment.
It's like how debit and credit cards were once looked at with a wary eye but are now extremely common.
He simplifies it: "This is just a brand-new vehicle in today's digital age to transact value.''
Ariel Perez is a business reporter for the Green Bay Press-Gazette. You can reach him at APerez1@gannett.com or view his Twitter profile at @Ariel_Perez85
This article originally appeared on Green Bay Press-Gazette: Green Bay's Sequoir links community banks with cryptocurrency services