When working with a B2B provider, sometimes the “business” aspect can make the relationship feel impersonal. You receive a service and don’t give it much thought beyond that. At Stronghold, we aim to change this narrative by humanizing the B2B relationship and sharing team insights on company roadmaps, goals and how they will affect you as a consumer. Our co-founder and CTO Sean Bennett joined our thriving Discord community for an “Ask Me Anything” (AMA) session, responding to questions about Stronghold, security, DeFi, governance, and more. Read on for highlights from the community-powered event.
Meet Sean and Stronghold
While in medical school, Sean became interested in digital currencies and blockchain after recognizing his mother's arduous process to send money to her family in the Philippines. In 2013, he started building on Ripple, and in 2014, he dropped out of med school to to build the Stellar network’s first stablecoin.
Sean co-founded Stronghold, a payments infrastructure company that secured IBM as its inaugural customer. The company aims to provide financial service accessibility for all by building payment tools that enable swift settlement and interoperability between both traditional and modern technologies.
When Sean co-founded Stronghold with Tammy Camp in 2017, their original project name was “Citadel.” With a logo and branding already in place, they searched for a similar name and landed on Stronghold. A self-proclaimed cat and dog person, Sean supports Stronghold’s technological development and long-term planning.
What Sets Stronghold Apart
There are countless payment providers in the current financial system. Stronghold’s “niche” provides services for industries facing high compliance burdens. He shared, “There’s a rule of thumb Stronghold follows. If there’s a buying restriction like age, there will be stricter regulations.” These businesses, including gambling and alcohol companies, often face stigma regarding their sector and struggle to find financial tools that meet their needs. As part of Stronghold’s mission to make payments accessible for all, we help with banking and financial services like cash advances.
Because Stronghold focuses on these industries, we know it’s essential to take a conservative approach to our business operations and “focus on a sustainable business model.” Stronghold is a business first, with other offerings like crypto making up just a part of our services. The core of our work is technology and the value it brings. “No matter what happens with markets or fads, our core will be a sustainable business,” Sean noted. This means Stronghold sometimes moves slower than other crypto companies, but this careful approach keeps the company running through “crypto winters” and other market downturns. We hope other companies do the same to keep the ecosystem robust and ready for growth.
Security, Compliance and Regulation
Protecting user data and supporting safe transactions have been a priority over Stronghold’s last 18 months. We received our SOC 2 Type II certification in Q3 2022, which proves our security to partners looking to integrate with our products. We’ve completed a Nacha audit for the domestic ACH system, and because we have large banking partners, our due diligence process, including KYC and background checks, is very in-depth. We’re proud to have policies and technical procedures that meet the highest standards for industry security and protect your business transactions.
As the debate on crypto regulation continues in governments worldwide, Stronghold continues to follow best practices. Sean noted, “We’ve been building with the regulatory environment in mind since day one. We’ve always had a compliance department and head of legal.” Stronghold keeps an eye on the regulatory space for potential difficulties, but Sean also recognizes that regulations can “make things easier because our partners, particularly larger corporations and banks, see increased certainty and guardrails.” Stronghold plans to stay in the U.S. and continue to support more merchants domestically, although we do have subsidiaries in New Zealand (Sean’s home country).
The Future of Stronghold
Stronghold recently launched the beta version of our promotions program, which will deliver new payment tools directly to merchants. They’ll be able to roll out deals and rewards to build customer loyalty. For Stronghold, this brings us closer than ever to consumers. We aim to use these channels to eventually introduce SHx rewards and payments to end users and welcome more individuals into the SHx community, including our growing rewards system. “One hundred percent of onboarded merchants have joined the SHx rewards program,” Sean explained.
Stronghold will also be expanding its Merchant Financing Program. Stronghold has an “allow list” of approved contributors for its DeFi pools to comply with regulations. Supported by guaranteed contributors, these pools provide capital for merchants in need, particularly ones unable to access traditional financing options due to their industries. While Sean shared that he was initially “skeptical” of DeFi, he now sees it as a way to deliver value to “traditional” businesses. Stronghold uses Merchant Financing to wrap DeFi technology in a way that “doesn’t scare business customers.” Sean also noted, “We’ve had a lot of demand to grow the DeFi program so we can scale merchant financing as a whole.” He described another new aspect of the program: administrative fees. This will prompt merchants to pay a certain amount in SHx directly back to pool contributors, growing the community.
We’re also introducing data improvements related to ISO 20022, a standardization procedure that will maintain our interoperability in the fintech, traditional finance and crypto spaces. We’re not considered a decentralized ledger technology (DLT) on our own as we don’t have an internal ledger, but we partner with several DLTs, which makes ISO 20022 essential for our operations. Stronghold will also be preparing for FedNow when it tentatively launches in July. We’re always keeping an eye on the industry to see its integration with other technologies.
The Future of SHx and Decentralized Technology
One of Stronghold’s next big launches will be our StrongholdNET/SHx overview. It’s a roadmap outlining future steps for the business and the token, and we’re prioritizing governance, including retail participation, in these discussions. While our team is still finalizing the details, Sean proudly confirmed, “We’ll be holding our first governance vote in Q4 of this year.”
Stronghold is working on new listings and capabilities for SHx. Maintaining liquidity is crucial as we launch on different exchanges, as we don’t want to spread trading activity “too thinly.” Stronghold is ready to tap into its incredible community to support reaching new areas. Stronghold isn’t its own protocol, so it will likely remain on Stellar and Ethereum and won’t have nodes or ledgers in the future. We use “what’s already out there” to support things like staking.
One thing’s for sure: Sean is excited about the future of Stronghold and the fintech sector as a whole. To be part of future discussions and get to know your B2B payments provider beyond the business relationship, join our Discord server here.
Read the full transcript of the AMA with Sean Bennett!