In the summer of 2020, as pandemic-driven volatility gripped markets, SoftBank Group shocked Wall Street with a series of massive options bets on U.S. technology stocks. Behind these operations – which earned SoftBank the nickname “Nasdaq whale” – was Akshay Naheta, an executive whose career has been marked by courageous bets on disruption.
Now, after orchestrating multibillion-dollar deals, including an attempt to merge Nvidia and ARM, Naheta is making perhaps his most ambitious bet yet: that the world’s payments infrastructure is ripe for reinvention.
His Zug, Switzerland-based startup, Distributed Technologies Research (DTR), is attempting to bridge the gap between traditional banking technology and blockchain technology, joining an army of companies seeking to modernize global payments infrastructure .
The startup claims that its technology can eliminate various payment inefficiencies, from transfer costs and interchange fees to foreign exchange conversion fees and settlement delays. “Current payment networks suffer from inefficiencies: transfer fees, interchange fees, FX conversion fees, settlement delays, and other opaque fees,” Naheta told TechCrunch in an interview.
DTR’s core technology, AmalgamOS, essentially connects banks with blockchain networks. Through APIs, it allows businesses to integrate payment features while maintaining compliance with local regulations. The system can handle everything from merchant payments to treasury management, supporting both traditional currencies and major stablecoins in 48 countries.
The startup has built what Naheta describes as an “international orchestration network” that automatically routes transactions through traditional banking rails or blockchain, depending on which path offers the optimal combination of speed and cost. “We are connected to 12,000 banks in Europe,” he said in an interview. A company that integrates DTR’s APIs can allow its customers to initiate transfers directly through banking apps.
DTR’s entry into the payments infrastructure comes at a seemingly opportune time. Visa and Mastercard, which both charge swipe fees of 2% to 3%, typically the second-highest cost to merchants after payroll, are facing increasing scrutiny over their duopoly and the proposed Credit Card Competition Act of the United States could require banks to offer merchants alternatives to dominant networks.
DTR’s early customers say its infrastructure fills a significant gap. Phillip Lord of Oobit, a cryptocurrency wallet startup, said the system allowed his company to transfer money from its cryptocurrency wallet to a UK bank account on Christmas Day in less than 30 seconds, a transfer that would have taken days through traditional channels.
Naheta’s interest in payment infrastructure comes from an unlikely source: SoftBank’s acquisition of Fortress Investment Group in 2017. The deal put about $20 million in Bitcoin on SoftBank’s balance sheet.
While studying the underlying blockchain technology, Naheta says he saw an opportunity to apply his background in wireless communications to payment networks. While still at SoftBank, Naheta had begun assembling what he hoped would be DTR’s founding team. He reached out to his undergraduate thesis advisor, Pramod Viswanath, a wireless communications expert who now leads Princeton’s blockchain center, and Sreeram Kannan, who would later start EigenLayer.
The team saw blockchain as a peer-to-peer communications network, which could apply decades of wireless systems research to revolutionize payments. Naheta said he nearly resigned from SoftBank in summer 2018 to focus on DTR and crypto venture Bakkt, but was persuaded to stay by senior executives, including Rajeev Misra and Masayoshi Son.
Naheta’s previous forays into the payments industry also included SoftBank’s investment in Wirecard, which later collapsed. SoftBank still made profits from its investment in Wirecard. “I made a lot of missteps,” he acknowledged. “I looked at it from the perspective of a company that has all these regulated licenses around the world and clearly has the payments technology.”
Such experiences appear to have influenced the DTR’s emphasis on compliance and institutional credibility. This measured approach extends to the company’s growth strategy. “Even if I increase my headcount to 60 people by the second quarter, we will be free cash flow positive,” he said.
The startup faces competition on multiple fronts. Wise has built a successful business matching currency flows between countries, Ripple offers blockchain-based payments despite its legal issues, while traditional banks also say they are upgrading their systems through initiatives like SWIFT. Last, but not least, Stripe’s recent $1 billion acquisition of Bridge will help the world’s most valuable fintech startup make deeper inroads into payments.
Yet Naheta sees an opening in serving businesses caught between these worlds, particularly digital nomads, creator economy platforms and companies operating in emerging markets.
“Banks are not equipped to handle KYC/AML at such a small level, where you are paying 200 to 10,000 people a month,” he said. The fragmented nature of national payment systems creates particular challenges for businesses operating globally, as each jurisdiction maintains its own guidelines and regulations.
The payments industry’s high margins and network effects make it notoriously difficult to disrupt. PayPal holds a market capitalization of $70 billion even after recent declines, while Visa and Mastercard together are worth over $1 billion.
“I really think the retail customer is getting screwed about payments,” he says. “And it’s not the banks’ fault. They are connected to legacy systems and it is very difficult to transform a Titanic.”
Lord of Oobit said in an interview that the space remains very open. He pointed out that until just a year ago, the only option for businesses that needed to move between cryptocurrencies and traditional banking systems was to “go to an OTC store and pay probably 1 to 3% to get the transfer”.
“It’s crazy that for so many years so many startups were born, so many coins appeared, and every time I wanted to do an on-ramp or off-ramp action, there wasn’t another formalized legal idea system around,” he said. DTR’s solution is “one block faster” than the alternatives.
