Freedom Money Ep6

Today we have a very special guest, Manish Gupta from ValueUET. Welcome to the podcast, Manish.

Thank you, Kevin. And how are you feeling? How are you doing today?

Yeah, I'm doing very well. Looking forward to this. We, we've spoken before and have similar businesses and maybe, you know, opportunities to collaborate. So it's a real pleasure to bring you on to the podcast. Just hoping you can start give us a bit of your background and a background of Valuet.

Sure. So I'm Manish Gupta. I'm co-founder and CEO of Valuet. It's a Bitcoin-backed lending platform and first of its kind in India. As my background concerned, I have 20+ of experience in investment banking operations, sales strategy, and recently with my 5-year stint in UK, I was managing client relationship for fintech firms. The Valued, as I mentioned, is a Bitcoin-backed platform, first of its kind in India, in which a borrower or Bitcoin holder can unleash the power of Bitcoin and use this as an asset and get fiat currency against it. So I'm very excited to build this, and it's a tough journey so far, but I'm I can see the sunlight now.

Yeah, the sunlight comes for a bit and then, you know, more clouds come. That's the entrepreneur's journey. So what stage are you at in this journey today?

So we are ready with the product. We are just tightening the screws around the MultiSig platform, which where the Bitcoin is going to sit. And we are currently working on our marketing side of the business. So we are very soon going to meet the potential borrowers or Bitcoin holders who can use this platform.

And the platform is available to people in India only today?

This is— yes, so this is currently we are launching only for people who have Indian account holder. So you can be present anywhere in the world, but you need to have like an Indian ID and account where you can receive currency INR currency, which is Indian flag currency.

And you mentioned that in India there's currently no existing centralized lending solutions, or sorry, multisig, I need to say.

Yes, so multisig is literally different from centralized. It's very much like comes into space of C5, DeFi kind of space. So let me explain a little bit about multisig for the users. So multisig is a platform which is created by Bitcoin Bitcoin developers itself, in which, in which the Bitcoin has multiple key holders. It's very much like a bank vault where instead of one key you have multiple keys. So we are using 2-of-3 multisig, which means the wallet has 3 keys and it requires 2 keys to open it. So in case of our platform, there are 3 players. Borrowers, lenders, and Valuet. And you need at least 2 of them to release the Bitcoin back to any other wallet.

Okay, and so in a, I guess, a standard case, Valuet would be acting as the final arbitrator for who's getting the payout to check.

Absolutely. In a, in a, you know, I say in a, in a good environment, in a healthy park, or in a State path, we might never use our key at all. The lender and borrower will keep exchanging fiat currency against the Bitcoin, and once the borrower returns all the collateral INR, he— the borrower and lender can use their keys to release the Bitcoin. In case—

sorry, no, no, just a question. You said in INR, so the loans are denominated in Indian rupee?

Yeah, this— so we are exploring the possibility of using USDT also as alternate currency, but we are not going to do any other cryptocurrency exchange on our platform. There are many platforms which exist which are doing exchanges, but we want to be our unique platform where we can unleash Bitcoin as an asset in India. Currently, it's still, uh, not so recognized, uh, we call it VDA in India, Virtual Digital Asset, which means that you cannot use it to buy any other asset or product as of now in India. You can only trade, exchange, trade it.

All kinds of, uh, restrictions. So one— and so again, I'm curious, I'm gonna just dig a bit deeper on the market in India. So there's some exchanges and they may offer some lending solutions, but I understand there's— Coinbase is coming, but there's no real international exchanges with huge presence at this time. And then there's some domestic exchanges that may offer lending. Are there any centralized custodial lending solutions?

There are few, but again, one of the biggest platform, WazirX, has just been defaulted last year. So again, the centralized system is failing everywhere. It's the same story which is, which is happened in US, it's moving to India. So most of the centralized exchanges are notorious, and especially the, the founders or the holders of these wallets are not trustworthy. So Vauld is a recent failure again where my founder, co-founder, has lost some money on his Bitcoins in it. So despite knowing the founder personally, he's not able to recover any asset back. So Indian customer, I say per se, or Indian Bitcoin holder is very, very scared right now. And this has been reflected in lower volumes on exchanges also because heavy regulation from government side and some recent fraudulent and scam activities on the other side is preventing Indian users to use Indian platform as such for any crypto-related activity.

So I'd like to dig deeper into these centralized failures because you're right, they do keep coming up and it, you know, literally feels like it's a matter of time in many, many cases. It sounds like they maybe were a regulated entity within India if they were one of the bigger exchanges that failed. And so just a question about if they were regulated and what the nature of the, you know, decision-making that led to the failure. And then just if you have any idea on the number of people impacted and the amount of dollars lost.

Yeah, so the Indian market is kind of pseudo-regulated. I will use pseudo because Indian government or Indian policymakers are anti-Bitcoin or anti-crypto. That means that they do not want to encourage any crypto activity per se. So they are not regulating per se, they are kind of strictly saying do not do business in India. So this kind of gave us a leeway to these centralized exchanges to do whatever they want to do because if they defaulted or if they do any scandal or scam, they do not come into any regulation. It's very much like there's a gray area, so they are just exploiting the gray area tremendously. But if someone wants to legitimately do a business in crypto, there's a heavy negative force of regulation which comes across, which we have also facing. So we have to follow the traditional conventional banking norms to run a transparent Bitcoin business. So it's, it's, it does not come— and, and I was reading, uh, other markets in Asia. India is a unique example where, uh, we need to follow traditional banking regulations on a Bitcoin. So, and they, they don't know, they never matches. So I'm— we have already applied for the license banking license, or I will say like a, you know, financial asset holder license, and it's still pending for last 3 months. So I am not sure when we're going to do it. That is one big hurdle which is stopping us from going big bank launch. We cannot advertise till we get this license. The second part of the question, how big the volumes are, I don't have the numbers in place, but it's close like half a million USD, which the last one defaulted. So huge numbers, uh, yeah, many people. But again, this data is not publicly published, like it's not publicly available easily because of the scarcity of— or the hidden business which we are running in India right now. So you will be surprised to know that after America, Indians are the biggest holders of Bitcoin. Unofficially, and there's no concrete data around it.

After, after who? United States?

United States, yeah.

Interesting. So yeah, I mean, it's a big market, a lot of people, and makes sense.

Yeah. So I will take you back to the whole history of why this is happening and why Indians are big Bitcoin holders. So in 2016, I will take you back when Bitcoin is known by a handful of people. In 2016, the government of India banned high currency notes because there are a lot of fake currency in the market. So they suddenly banned like the highest denomination physical currency notes from the banking system, which consists of 80% of Indian physical money. And a lot of people at that time converted those bank notes into Bitcoins. We're talking about when Bitcoin was below 10,000. And from 2016 to 2020, it's 10 years now, and these people are still holding the Bitcoin, scared that if they come out on any exchange or platform like ours, the government will catch hold of them. Because you can trace back the history of Bitcoin with the price. So that is something which I'm facing challenge of— I met few people who are holding Bitcoins for 10 years, but they're saying they take— they're going to sell it in Western markets, not in India ever.

So yeah, it's, uh, you know, I think we've talked about this offline, but I mean, governments can be receptive to new technologies or not, and you know, I guess there's consequences for both, and it seems pretty clear that adopting progress is helping people is probably the path that they'll eventually end up taking, but it's strange times now. So do you, so just question specifically about what you're building now. I know, you know, it was the launch and so I'm curious about next steps and, you know, curious about the launch and where you exactly you are.

Yeah, so as I mentioned, the product is almost ready. I will say 95% ready. Uh, we are just, uh, tagging our backend. The frontend is ready. Uh, we are accepting users now on the platform. We have a half a million credit line ready with us to— for the borrowers to give in. And now is the real challenge is to find these Bitcoin holders and convince them to come into mainstream line and use their assets.. So what we are providing is the first time we are opening Bitcoin in India as an asset class. So it's a big revolution in per se, but we cannot make it a big announcement or we cannot do a lot of PR around it because of tight regulations. So we want to go big bang. It's a new thing. It's a big thing. It can unleash billions of dollars worth of credit line for holders. But we are kind of restricted ourselves, uh, deliberately.

Got it. Well, I think you've touched on a few of the challenges, um, but really that's kind of my next question is, you know, what other challenges are you seeing? Is it, you know, again, regulatory, um, you know, with the tech stack, people, all the challenges that startups run into? Yes.

So I'll start with the tech part because that is very interesting. So multisig itself is little clunky. It's not good looking per se from user experience perspective because user has to move his asset to a multisig wallet. He has to maintain his key. The lender who have never heard about Bitcoin before maybe has to be participate in the cycle and hold a key. So most of this are our lenders are HNIs, family offices, who are traditionally lending money to Indian users. And they are scared to see the whole multisig part. So tech stack is a little challenging to present clean in a cleaner way. We're trying our best. We are put some demo videos on the website. We have provided a lot of material for the multisig, but still we are hand-holding our lenders to, uh, and bringing them into the Bitcoin world. People, yes, uh, every, every startup has this as a big challenge, uh, money and people. So we are trying to bring the best of the talent, especially on tech side. It's a challenging part, but, uh, people who understand the cause are connecting with us. I have— we have a good tech team and Australia and India itself. Now we are working with a few marketing agencies to launch our campaign on the borrower side. We are heavily relying on Reddit and Twitter for a word-of-mouth kind of marketing. The regulatory part is something which I can talk to you about hours and hours. So as I mentioned, Indian government is anti-crypto. So we have to take that as the first step before building any product on Bitcoin or any cryptocurrency in India. So what we are doing right now is following conventional banking license norm to run a non-banking product. So this is how it's going to work. And we have to be more cautious about all our and transparent about all our transactions on the chain. Because again, the regulatory— regulations do not understand Bitcoin, blockchains. So we are— we, I mean, all the people who are working in this space in India, Web3 world, is kind of educating the government also and trying to bring government systems into Bitcoin— not Bitcoin, but I will say the blockchain world first. And probably slowly introduce them to the crypto. So, uh, there's a, there's a positive one, uh, outcome from one of our cases back in December, which, uh, for the first time, uh, Bitcoin was recognized as an asset. Someone has, someone has stolen someone's Bitcoin and he filed a lawsuit, and eventually this was recognized in judiciary court that Yes, Bitcoin is an asset which was stolen. It's not some digital or Monopoly money which, you know, is taken away. So this is a positive step in that direction. So it's a challenge, but I will say that this is a known challenge which we know from day one itself, and we build our platform or our system around it.

With, yeah, I mean, the regulatory challenges seem seem to be an issue everywhere. So I'm Canadian, I live in Costa Rica and have my business in El Salvador because I, you know, they certainly wouldn't let me do this in Canada in terms of, you know, getting licensing or participating in that. Um, so yeah, sometimes, uh, you know, we'll, we'll hope that over time You know, how can I say this? When I look at the regulators and the meetings that are happening with people within the industry in Canada, you know, often it doesn't give me a lot of hope. And the reason is really because, you know, it just seems like ideologically or politically, there's just people who are set in a position where they're kind of anti-crypto. And yes, I'm not sure they know why. It's just, you know, I'm against this thing that may bring freedom and choice to other people.

It, you know, I think you put in the right, exactly right words. Like, it's a fear of unknown. If they do not know what I am doing, I'm talking about government or regulators, they are fearful, they are afraid. So because I'm doing something which they do not understand, they just want to kill it.

So yeah, but again, I mean, for me this is so strange. Like, why is the default position just to kill off innovation? Like, make sure it doesn't happen? Why is that, you know, a priority where everybody's giving their money to this government and their top priority is to stifle innovation in a lot of cases?

Yeah. So it's very political in nature also because a few bad incidents about Bitcoin, as I mentioned about when this note, you know, the currency was banned in 2016, the people moved to Bitcoin. That kind of set a wrong precedent from day one itself. And over the years, because of some cross-border terrorism activity in India and Pakistan, the few cases of Bitcoin transfers have been figured out between terrorist organizations. So again, this has been a bad name to the crypto and Bitcoin, which, uh, I know it's very difficult to understand because before that the currency was being, you know, exchanged in these transactions. And they are like very larger scams and frauds happen in banking world. Then for sure.

Yeah, yeah, yeah.

So recently, recently, I mean like, like 2 days back also, there's a big fraud equivalent to say $100 million have been surfaced in one of the bank in which this money was just vanished and there's no trace of it. And this money is hold by a government account in in one of the public banks, and when they want to withdraw it, it does not exist at all, and there's no traces of it. So this $100 million scam has not been highlighted as much as, you know, a $1,000 Bitcoin lost by someone.

Well, yeah, I mean, this is the thing, like, we forget about JP Morgan paying almost $400 million in fines for Jeffrey Epstein. There was a Canadian bank, Citibank, and they were, you know, they basically had a business that was money laundering for Mexican drug cartels, and they paid, I don't know, $4 billion in fines related to that. And so, you know, having worked in banks, I know the calculus that you're doing, and to pay a $4 billion fine, you're making more than $4 billion on the transactions, right? So it's, uh, you know, it's great that those people get the point that at, you know, Bitcoin and say that this is a vehicle for crime. It's, it's, uh, you know, it is what it is. And I think people, people eventually will start seeing it for what it is, uh, already. I guess, you know, my next question, Maneesh, is really about, uh, any advice you have for builders. But before I go there, um, Is this your first startup, or do you have other experience in starting things up?

This is my second venture. So, uh, back in UK in 2024, I started like an edtech. So I'm an engineer from IIT Delhi, and this is like a— this is like an MIP equivalent of India, and I am teaching students on and off for last 20 years. I love— I want to be educated, close to education, teaching. I always wanted to be a professor when I was in, but you know, never a chance. So, so I started an edtech because in India there's a huge, uh, young youth market, uh, and currently what is being served by the formal education is not enough. They are— so there's a survey done by Nelson, and they figure out that 50% or 60— more than 50% of Indian youth is unemployable. That means after graduation or post-graduation, they are still not ready for the industry. So I started this venture a few years back, but I— again, it was a solo venture, uh, I was new, there are many hurdles, so I have to stop midway in that. But yes, my second stint with ValueAdd is much more fruitful. We have a good team in place, the mission is very clear, and this time it's for much bigger audience and much bigger cost.

And so, I mean, was there one lesson you can take from the first startup?

I realized that one thing which a lot of founders are doing wrong is they think they know everything and they can do everything themselves. I think this— the whole idea of, uh, you know, the co-founder tag is very wrongly presented, uh, in across globe, across different markets. Co-founder is the person who drives the idea, maybe not his own idea, but he just drives the business, but he needs right set of people. So I for myself, for my— like, it's a tech-heavy business, so I need good developers in place. I need a good marketing PR team in place, and I need, uh, uh, like, good people who have done this before in place. So I've done a lot of research this time. I've met a lot of people, uh, test my idea, put across my ideas in different platforms. Uh, I traveled across the country to meet people of different age group and demographics, just to test my idea before start building. Because, uh, the last time I was building first and not thinking that my idea is the best, so, and I will do everything myself. So yes, uh, co-founder is a big responsibility, but always remember that, uh, you are not alone in this journey. So keep the right people on the side. Asking for help is not a bad thing. Asking for advice is not a bad thing. Learning from everyone around you is not a bad thing.

So yeah, no, it's great to hear you say that. I, I always think my Achilles heel is not asking for help, but it's exactly, you know, for me in terms of running this business, it's really exactly what you're saying. I have people who are much better at the technology the programming side and front-end and app development than I could ever possibly be. And similarly for the marketing and content and kind of the other pieces. And so it is really liberating when you can hand things off to people and they can come back with, you know, results that are better than you could produce. And it is you know, kind of really rewarding to, you know, have people who kind of share the vision and are able to, you know, play their role on the team. And, you know, so my role just becomes kind of, you know, managing and planning and cracking the whip every now and then, right?

Yeah, yeah. Co-founder is the energy which, you know, runs the engine. So we are like— I think co-founder is like in a train, is like engine. So engine can— if engine is good enough, the bogey will follow accordingly. So this is my role. And one good thing which I have realized in last one year during building this, I met really wonderful people from the world. Yourself is a one good example. So much to learn from people like you. I met Francisco from Autotexpay in Spain. And he's building some different product which he gives me an idea that if we can integrate our product eventually. So I'm working on that part also. So the ideas keep generating when you meet good people. So like the way you, like the way I'll say Kaggle is operating the same business model in a different way is something which was enlightening for me. So thank you for, you know, introducing me this idea. So that is again something which every builder has to be wary of. Meet good people, learn from them, and if you can implement something good, why not?

Yeah, no, that's for us in terms of this podcast and really connecting to people at conferences and everywhere else. Like I used to say that Bitcoin gave me hope, but really it's the Bitcoin community that gives me hope.

Absolutely.

People, people have just been incredibly supportive every step of the way. And, you know, connecting me to the right people if, if I hadn't been. And, you know, it's through these types of things where we're able to get connected and, you know, potentially collaborate and build something that, that can help people. You know, it might not be today or tomorrow, but, you know, by being connected, you know, we will get there. And so yeah, it's been a pleasure connecting and a pleasure going through your history here. Is there a good place for people to get more information about you and Valueadd?

Yes, so our front-end website is up, so you can go to valueadd.in. It's up, all the information is present there. I am present on LinkedIn. I will share the link with you so you can share with your audience. After the podcast.

Perfect.

And yeah, and I will share my— I love to meet people, and if anyone has any questions regarding how we operate, how we can collaborate, we are very much open to that. We are accepting new ideas every day, accepting new people every day, and meeting new people every day. So it's more like a college project, you know, kind of vibe, but seriously helping people opening a new digital asset in India.

Yeah, I mean, I'll touch base on this just quickly because to me this is really important. It's not just a matter of leveraging and, you know, speculating on Bitcoin. It's actually providing a financial service that people need and might not otherwise have access to credit. In, you know, certainly in emerging markets. I think, you know, a lot of my audience or North American or developed world audiences, you know, kind of assumes that everybody has access to banking services, but that just is not the case.

Yeah, you're absolutely right, because in India we are very heavily regulated market. So for a normal person to get a credit from established banking system is very difficult. You need to be— have to be really smartly profiled, or like, uh, you know, your, your CIBIL scores or your benchmark scoring has to be really good to get access to these credits, which is only accessible to 5 to 10% of Indian population. So that's 90% rely on off-market lending solutions. So we are trying to bring at least the Bitcoin community into this include this into the financial freedom, unleash their equity, and do a lot more with their Bitcoin, which they cannot sell in India. So if you— so just to— for your audience, uh, in India, if you sell a Bitcoin, there's a straightaway 30% tax on your gains, uh, irrespective of whatever income class we came in. So which is a very heavy taxation. Plus, if you sell beyond half a Bitcoin, uh, the IRS will, you know, be after you for other financial disclosures. So people are scared to sell larger chunks of Bitcoins. Even just— it's not there. It is just running off-market, P2P kind of market., you know, in the basement. So we are still there, uh, you'll be surprised to know.

Yeah, you know, I, I guess the one thing to be optimistic for is, I mean, all of these things just tell me over and over again that we're, we're so, so early in this, uh, you know, that we're still dealing with this kind of nonsense of, you know, government, state being the same, you know, money and state being the same thing. And, you know, I look forward to working with you and making all kinds of services available to more people.

Likewise, it's a good collaboration. We are building the same product in a different way, and this gives us, like, both of us an opportunity to synergize together, you know, mix our product line together, maybe open new markets together. So I'm looking forward.

Sounds good. Well, we'll connect soon and, uh, All the best, Manish.

Thank you, and all the best to you, and thank you for this podcast.

Take care.