Netherlands-based fintech firm Mesh.Trade has established a presence in South Africa, and is looking to shake-up the local capital markets using blockchain technology.
In an e-mail interview with ITWeb, Mesh co-founder and executive head Connie Bloem says the company entered the local market this month.
Mesh is a multi-sided, decentralised, financial markets platform, where users can tokenise and trade any asset class, across any geography.
While Mesh is fully blockchain agnostic, the initial rollout of the Mesh platform is on the Stellar blockchain, a layer one blockchain that was built to support global financial markets and payment systems.
The fintech company’s move to set up a local base follows South African Reserve Bank deputy governor Kuben Naidoo in July announcing the central bank’s plans to declare crypto-currency a “financial product” and the intention to develop a regulatory framework around it within the next 12 to 18 months.
According to Mesh, regulators the world over are stepping in and signalling their intent to clamp down on the crypto market to ensure it becomes a safer and more secure asset class for investors.
It notes that in the global financial system, technology innovation has certainly proven its ability to increase competition and reduce transaction time and costs. However, early in their lifecycle, new products and platforms are often fraught with risks, so it is important to distinguish between the hype and true value in the early phases of an innovation cycle, Mesh adds.
“Mesh’s decentralised financial markets platform promises to disrupt the traditional finance landscape as we know it by bridging the divide between the status quo and our digital future,” says Bloem.
“Mesh was built to create markets which are more inclusive, more transparent and more accessible, and ultimately revolutionising how capital is raised and investments are made.”
According to Bloem, SA has a mature and functioning financial market with active and forward-looking regulators.
“But the markets are not open to everyone, and there are many barriers to entry created by institutional and regulatory gatekeepers. These limit participation in the market, which constrains true market potential.”
She notes that many companies are delisting from public markets due to the inefficiencies and onerous historical market practices, opting for a less liquid but more flexible private market.
“It is because of this positional inertia that change is not going to come from within but rather from a responsible revolution such as Mesh.”
Asked about the competition in the market, she says there are a few fintech firms that are active within the South African market offering to democratise the market by providing greater access for individual investors to more affordable financial markets.
She notes these companies are only solving a part of the problem and usually follow a brokerage business model.
“This means that Mesh’s biggest competitor is the existing status quo, the institutional gatekeepers that embrace current market inefficiencies as they are profiting off its traditional mechanisms and have no incentive to move beyond the status quo.
“We want to enable issuers to raise capital from investors through Mesh directly and investors to invest cross-asset in traditional assets such as stocks and bonds, in DeFi [decentralised finance] assets and other unique digital asset offerings.”
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