While many within the financial community still view cryptocurrency as something to be detested, more and more people are changing their tune about its benefits once they fully understand it.

For Sid Powell, co-founder and chief executive officer of Maple Finance, a career as a traditional banker saw him regard cryptocurrency with skepticism until he became a client of the bank.

“I used to be in banking in Australia, helping lending companies borrow so they could use the funds to grow their business,” Powell said to me during a recent interview. “When you’re inside the tent at a bank, you’re super hostile toward crypto. I remember hearing about Bitcoin back in 2014 from other grads at the bank and thought it was a scam. I embraced the Warren Buffet idea that it was ‘rat poison.’ But it was only when I went client side and had to be a client of the bank that I saw all the pain points and the difficulties of using the systems—transfering funds, accessing finance and capital markets—and how gated and inaccessible it was for innovative companies that are trying to grow.”

In response, Powell co-founded Maple Finance as a way to bring lending to the blockchain. The company is a decentralized finance platform and institutional lender specializing in lending to companies in the digital asset space. It settles all loans on-chain by taking large cryptocurrencies like Bitcoin, Solana and Ethereum as collateral, and then sending out the loans on-chain using stablecoins.

“What that does is make our business much more transparent for everyone,” Powell said.  “It also allows us to leverage this new technology rather than being tied to what are now very old legacy systems in the banking sector.”

Maple has only been around for four years, and despite utilizing “newer” blockchain technology, the company has already processed close to $5.5 billion in loans since inception, not only proving there’s demand in decentralized finance (DeFi), but there’s also room for growth.

Read more: On-Chain Crypto Lender Maple is Hoping Boosted Transparency Can Set it Apart as ‘Black Box’ Projects Fail

Powell’s shift in his perception of what blockchain is came while he was the treasurer of a relatively fast growing financial technology (fintech) lending company, during which he realized the company’s operations could be much smoother if it could utilize blockchain technology to directly transfer funds to people or access an international capital market.

“It wasn’t one penny that dropped, it was the ‘death by a thousand cuts’ of being an institutional banking client in 2018,” Powell said. “It was like Blockbuster and Netflix. Netflix effectively had no marginal cost for any new customer because it was just using software and they could reach someone anywhere in the world. When you’re running a lending business using blockchain, we can reach a client anywhere in the world—whether in Japan, Hong Kong, the United States or Europe. There’s no real difference for us and it doesn’t cost us more to serve somebody in a far off market.”

Powell’s epiphany was that his team could ride the wave of blockchain tech to try and become a large institutional lender—riding the wave of new technology he said comes around every 30 to 40 years. “If you look at the 20th century with retail, Walmart was able to grow as large as it did because of highways and the transportation revolution. Families in the suburbs had cars and could park in parking lots in the 90s for big retail. Amazon was able to capitalize off the Internet wave, which kicked off e-commerce. I view Maple as capitalizing off this new wave of everyone doing their transacting online using the blockchain.”

Powell said he would be unable to build Maple as a competitive company today using traditional financial systems.

“I would never be able to compete with the likes of an Aries, Apollo or a KKR,” he said., referring to some of the largest private equity firms in the world. “Whereas, with blockchain, we have an advantage because we’re riding a new technological wave that’s going to grow and expand the addressable market.”

Knowing when to ride the wave at a particular juncture is important, especially as companies like Maple aim to capitalize on being early blockchain adopters. But growth for lending companies like Maple might be limited by the countries that may not yet embrace the wave.

Tether’s $13 billion in profit

“On-chain lending platforms face challenges around credit assessment, fragmented liquidity across blockchain ecosystems, and regulatory ambiguity that undermines predictability,” David Kroger, senior vice president of financial services firm StoneX, said to me over email. “With rules still evolving, regulatory clarity remains elusive. Skeptics argue these points will remain persistent roadblocks, but advocates believe that innovations in cross-chain liquidity tools, improved digital identity systems, and ongoing engagement with policymakers can mitigate each of these challenges.”

For platforms like Maple Finance, the hope is that institutional adoption of blockchain might be poised to swell given the new crypto-friendly administration that recently took over in the United States.

“The legal and regulatory treatment doesn’t happen in a vacuum,” Powell said. “One of the catalysts that has made traditional institutions more interested in the space is Tether. Last year, Tether posted a profit of over $13 billion, which makes them probably the most profitable company per employee in the history of the world in real dollar terms. Stuff like that piques institutions’ interests. If you have Tether—a company of less than 80 people—and they make more money than most global commercial banks that have 10,000 employees, that’s going to get those commercial banks interested in stablecoins.”

As more use cases demonstrate to traditional financial institutions the promise of blockchain, the more they may take notice and want their own piece of the pie.

“For Maple Finance—and platforms like it—to gain traction, it’s important to integrate institutional-grade underwriting that offers transparent, data-driven risk models while embracing DeFi’s openness,” Kroger said. “While purists may fear a dilution of DeFi’s ethos, proponents contend that bridging real-world value onto the blockchain unlocks stable yields and mainstream adoption.”

It’s adoption that Powell believes will be driven in part by companies’ boards and shareholders who advocate for them to start doing more in the space. “And they'll be rewarded if they do,” he said.

Wall Street is taking notice. JP Morgan has long had a presence in blockchain with its JPM COin stablecoin and its transformation of traditional financial markets like overnight lending using blockchain. Now, other banks are taking note, Powell said.

“You can already start to see it with Morgan Stanley and Bank of America sort of indicating they’re getting close to being able to offer their customers access to crypto, and that’s market driven. It’s what they think their customers want, and if they don’t offer it, customers will go elsewhere.”

Which would potentially amount to lost revenue for those traditional financial institutions.

“As cross-chain solutions and identity protocols mature, on-chain transactions will become more user-friendly and less volatile, lowering the barrier for major financial players,” Kroger said.
“The long-term vision sees on-chain lending platforms seamlessly integrating into institutional portfolios—tokenizing everything from invoices to real estate—while maintaining a decentralized backbone.”

But for those portfolios to be inclusive of blockchain assets, traditional institutions need to believe they’re at a disadvantage to their competition by resisting blockchain adoption, with many currently believing that avoiding blockchain actually benefits their business.

“Nobody wants to be Blockbuster in the Blockbuster/Netflix scenario,” Powell said. “You have to show them that it’s in their interests to do it.”

lead image: Sidney Powell