Monaco - Fundamental Analysis
Table of Contents
1. Concept Assessment
- a. What Problem is Monaco Solving?
2. Operational and Product Assessment
- a. Milestones
- b. Monaco’s Cards
- c. WaveCrest ban / Visa Program Manager
3. Market Assessment
- a. Purchase availability
- b. Wallet and Storage Options
- c. Competition
4. The Team
5. Red Flags
Monaco Technology GmbH has a mission of putting cryptocurrency in every wallet around the world. Founded in June 2016, Monaco raised US$26.7 million through one of the most successful Token Sale events to date. The company is headquartered in Switzerland with offices in Hong Kong and Singapore.
Through the Monaco Visa card and mobile app, users will be able to buy, exchange, and spend fiat and cryptocurrencies, such as Bitcoin and Ethereum, at perfect interbank exchange rates.
1. Concept Assessment
1.1. What Problem is Monaco Solving?
As stated in the introductory paragraph, Monaco is planning on is convincing average Joe to see cryptocurrency as real money and thus overcome one of the biggest barriers to widespread cryptocurrency adoption.
Today cryptocurrencies can be exchanged for fiat money, but this is an extra, rather inconvenient step.
This is where Monaco aims to bring a change. The company allows its users to hold multiple fiat and cryptocurrencies in an account that is always free.
Moreover, it provides access to VISA payment cards, which according to the company’s statements can be used to spend currencies at any retailer that accepts these debit cards. The bank will always conduct exchanges at the real rate, so no money will be lost when converting various currencies.
In a similar way to conventional internet banking or PayPal, users will be able to send or receive money over the Monaco app at real exchanges.
It should also be mentioned that out-of-the-box, the Monaco application will support quite a few fiat and cryptocurrencies including US Dollars and Australian Dollars, as well as cryptocurrencies; Bitcoin, Litecoin, Ethereum and Binance's BNB token (Monaco has an established partnership with Binance).
Additionally, the project is backed by people with real fintech experience, people who have knowledge of building debit card offerings and actual financial products, with real-world use. More details about the team are provided in one of the upcoming chapters.
As a plus, Monaco seems to be open to strengthen its management team. In December 2017 it announced new appointments to its senior management team, with Erald Ghoos as Chief Operating Officer, Sean Rach as Chief Marketing Officer, Ken Baylor as Chief Cybersecurity Officer, and Weiyi Zhang as Platform Architect.
2. Operational and Product Assessment
Monaco raised US$26.7 million through one of the most successful Token Sale events to date.
Moreover, the company seems to be active and focused on developing the project and on bringing increased value to its users. The following reached milestones illustrate the company’s commitment:
• Announced Credit and Invest Products on CNBC - January 2018
• Launched listings on 9 additional Cryptocurrency Exchanges (Total 17) - December 2017
• Four Key Hires Announced (COO, CCSO, CMO, Platform Architect) - December 2017
• Partnership with Gemalto to Produce Metal Cards - November 2017
• VISA Program Manager Approval Announced - October 2017
2.2. Monaco’s cards
It should be noted that the cards are yet to be distributed to people worldwide. Currently, over 64,000 people have registered to receive one of the company’s cards.
Based on the firm’s declarations and website, we know the following about the Monaco Cards:
With exception of the Midnight Blue card which is plastic, the rest of the cards that Monaco offers are premium Visa metal cards. All cards support tap-and-go NFC payments.
Moreover, all cards in Monaco's lineup do not have any packaging or delivery costs. To our knowledge, no other competing cryptocurrency debit card offers a free card without requiring some upfront cost to get the card. In the case of TenX, it costs $15 USD (including shipping), to get a TenX Pay plastic debit card.
The plastic Monaco card is completely free, while the metal ones require locking up MCO tokens for a six-month period.
Additionally, none of the cards have monthly or annual fees like a traditional bank account would. The Monaco Card team opted for tiered perks and restrictions on each card instead. All the details and limits are mentioned below.
a. The Midnight Blue card is the lowest of the card lineup and it is made of plastic. It comes with a $2000 monthly interbank exchange rate limit and a monthly $200 free ATM withdrawal limit. It is an introductory card meant to appeal to newcomers into cryptocurrency since it comes with no associated risks. The Midnight Blue offers cardholders enough to use it for a few basic purchases and make a decision as to whether or not a cryptocurrency debit card is right for them.
b. The Ruby Steel is the first card in the premium metal range. It comes with a $4000 interbank exchange rate limit (per month, 0.5% thereafter), $400 ATM withdrawal limit (per month, 2% thereafter) and 1% cashback on all purchases. It also requires a lockup of 50 MCO tokens.
c. The Precious Metal is the middle tier card and it requires a lockup of 500 MCO tokens. It comes with 1.5% cashback on all purchases, LoungeKey Airport Lounge Access, $10,000 interbank exchange rate limit (per month, 0.5% thereafter) and $800 ATM withdrawal limit (per month, 2% thereafter).
d. The Obsidian Black card is the top premium metal card in Monaco’s offer. It requires a lockup of 50,000 MCO tokens and it comes in a limited supply of 999 cards. It offers 2% cashback on all purchases, Loungekey access, unlimited interbank exchange rate limit and a $1000 ATM withdrawal limit (per month, 2% thereafter).
2.3. WaveCrest ban / Visa Program Manager
WaveCrest, a third-party issuer for Visa cards, had its Visa agreement canceled because it violated several terms of the contract. This affected a few players from the cryptocurrency world, who were offering cryptocurrency cards, including TenX and Centra, two of Monaco’s rivals, which relied on WaveCrest to issue cards throughout Europe.
It is important to note that this did NOT affect Monaco in any way. Unlike other cryptocurrency projects who collaborated with a third-party for Visa cards, Monaco chose the full compliance route.
As a result, Monaco is a Visa Program Manager (under the company name Foris Limited), uses Wirecard as its issuer and BIN sponsor, and Gemalto as its card manufacturer who is responsible for all facets pertaining to cards and personalization.
Being a Visa Program Manager brings further advantages to Monaco: it can set its own fees and it is not dependent on a third party to do the right thing and remain compliant with companies like Visa.
3. Market Assessment
Monaco is registered in Switzerland and has offices in Singapore and Hong Kong, where legislation is more open to cryptocurrencies.
3.1. Purchase Availability
The company is constantly expanding its presence and listing the MCO Token on additional cryptocurrency exchanges. In December 2017 alone, Monaco was listed on seven new cryptocurrency exchanges.
Currently, the MCO token is listed on Bittrex, Binance, EtherDelta, Liqui, Livecoin, YoBit, BigONE, Exchange X (EXX.com), Huobi.pro, OKEx, Coinnest, Coinrail, and QRYPTOS.
All these exchanges reach millions of cryptocurrency users, which in turn increases the liquidity and access of the MCO token.
3.2. Wallet and Storage Options
There are many wallets which can store any coin on the Ethereum blockchain, including Monaco. Some of them are MyEtherWallet, Parity, Trezor, Ledger Wallet, Jaxx, MetaMask, Eidoo.
Monaco is not the first of its kind when it comes to cryptocurrency cards. For instance, TenX is one of Monaco’s competitors from the cryptocurrency arena and it launched a crypto debit card before Monaco. Moreover, there are other competitors such as electronic/cryptocurrency wallet companies (Bitwala, BitPay, and CryptoPay).
However, as mentioned in the paragraphs above, Monaco has the Visa Program Manager accreditation.
All its cards (though not released yet) have zero packaging, transport, monthly and annual fees.
4. The Team
Monaco has built a specialized team with experience in fintech and the debit cards space.
The CEO of the company, Kris Marszalek is a serial entrepreneur and a well-known figure in Southeast Asia. Prior to Monaco, he founded three companies in the tech space (e-commerce, mobile LBS app, consumer electronics), he raised two companies from zero to ~$100 million and had two exits.
Monaco’s CTO, Gary Or has 9 years of full stack engineering experience. According to his LinkedIn profile he enjoys designing user flow of products. He is also interested in Machine Learning and AI.
The company’s Managing Director, Bobby Bao, has extensive experience in investment banking, corporate development, and investor relations. He worked as Head of Corp. Development at Ensogo, an investment banker at China Renaissance, Deloitte, Merill Lynch. Moreover, while at China Renaissance he worked on deals including merger of Didi and Kuaidi (now Didi Chuxing) as well as Strategic Corporate Development Projects for JD.com
Another former Ensogo executive, Rafael Melo, Monaco’s CFO has 15 years of experience in finance, with a special focus on risk, compliance, and Mobile Payments ecosystem in Asia. He worked in high-tech organizations and entrepreneurial and start-up enterprises, mainly as a financial manager/advisor.
He led the fundraising efforts as CFO at ASX-listed Ensogo, securing strategic investment from VIPSHOP (NYSE:VIPS) and raising over A$50m from blue-chip institutions like Fidelity, Goldman Sachs, and BlackRock.
Brent Diehl (Senior Vice President, International Expansion) is another executive whose previous experience includes over 20 years in payments and international business development; MD of Alliance Payment Solutions, head of Visa's AP-CEMEA prepaid consultancy division, Western Union (international expansion efforts for prepaid cards).
Erald Ghoos (COO) was also recently brought to the company. He previously was the COO at Payreto and has held leadership roles at various financial institutions.
Sean Rach (CMO), is also an important figure. He has experienced working with AMEX (the cards aspect) and other financial institutions.
Moreover, security expert Dr. Ken Baylor (CCO), was hired. He founded the Vendor Security Alliance and has previously held senior security and compliance positions at Uber, Pivotal, Wells Fargo, Symantec, and McAfee.
Another key hire is Dr. Weiyi Zhang (Platform Architect), previously VP Quant Trading of AP Capital Management. At AP Capital Management he led the development of an algorithmic trading platform and managed the Asian market arbitrage portfolio. He also worked as VP of Electronic Market Making at JP Morgan and Quant Trading Strategist of Equity Derivative Trading at Deutsche Bank.
It should also be pointed that the company’s representatives are communicating quite often with the cryptocurrency enthusiasts and the firm’s fans. Moreover, the company recently announced that it will be a lead sponsor of the inaugural Money20/20 Asia - a leading global Payments and FinTech event - that will take place in Singapore at the Marina Bay Sands Expo & Convention Centre from March 13-15, 2018.
Additionally, according to Monaco’s representatives, the company is looking forward to gathering and connect industry leaders and companies during a drinks reception for all speakers and sponsors it will host on Monday, March 12 at The Fullerton Bay Hotel rooftop. Monaco will also sponsor the Sweet Spot Café located in the registration area on Level 3 and all the event's networking breaks on Level 4.
5. Red Flags
• Certain controversy is surrounding the company. In May 2017, Monaco tweeted that it would offer a Visa Inc.-branded payment card. Later that month, Monaco put out a press release describing the benefits of its Visa-branded card. In an Aug. 31 press release, Monaco announced a new mobile application along with plans to debut five different payment cards. But there was no mention of Visa. The value of Monaco’s currency dropped 29 percent that day. However, accounting for all its ups and downs, Monaco’s money has tripled in value since May 17.
• In 2010, Marszalek founded the daily deals website Bee Crazy, which was similar to Groupon. He sold it to iBuy Group Ltd. in December 2013 for $21 million. After the deal, he became the chief operating officer of iBuy, which later purchased Ensogo Ltd., a unit of LivingSocial Inc., for $18.5 million. iBuy ultimately changed its name to Ensogo and named Marszalek CEO in August 2014. On the 21st of June 2016, Ensogo announced that it would shut down all South East Asia operations (HK included). Its CEO, Kris Marszalek resigned as well at the time. That is when Bee Crazy was sold to preserve cash for new investment opportunities. Bee Crazy came under fire from the Hong Kong Consumer Council for the sudden closing, which left clients who bought and sold coupons on the website with no way of contacting the company.
• There was negative press coverage in the press at the time. The unexpected shutdown affected operations in several areas where Ensogo was present, including Singapore, Thailand and Hong Kong.
• The shutdowns can be attributed to Ensogo’s poor performance, although several new business models had been changed in over the years, to make it a profitable venture, under Marszalek’s management. Competition probably affected Ensogo, since it had a good head start - Alibaba bought a controlling stake in their main competitor, Lazada, for $1B. Lazada was also facing financial problems before Alibaba rescued it.
• Because of the scandal, there are some cryptocurrency enthusiasts who bash Monaco and don’t trust the company’s management, including the CEO.