Swyftx, Superhero merger to create group trading across 320 digital currencies

A deal between digital asset exchange Swyftx and share trading and superannuation platform Superhero will be a first in Australia.

John Winters and Alex Harper for Superhero Swyftx merger

A $1.5bn merger between Brisbane-based digital asset exchange Swyftx and share trading and superannuation platform Superhero will become the first Australian business to bridge the gap between digital and traditional finance.

The proposed deal between the two start-ups is set to create a group with 800,000-plus customers, supporting trading and investment across more than 320 digital currencies, as well as equities and super.

Superhero, co-founded by chief executive John Winters and chief technology officer Wayne Baskin in 2018, is believed to have considered offers from multiple suitors.

ASX-listed wealth management business Netwealth is understood to have been among them.

While Swyftx is likely to emerge as the senior partner in the Superhero deal, both boards will continue to operate until the composition of the group board is determined.

Swyftx co-founder Alex Harper said Superhero’s regulated business would play an important role as crypto itself embarks on its own transition to regulation.

“The merger represents a significant step for both businesses in terms of their evolution from disruptive tech players into a single, major financial institution that can grow across domestic and international markets,” Mr Harper said.

Swyftx co-founders Alex Harper and Angus Goldman in Brisbane. Picture: Tertius Pickard

The deal, which was struck on agreed, internal valuations, has coincided with a further round of extreme volatility in the global crypto market, as legacy businesses like Commonwealth Bank find the combination of traditional and decentralised finance a tough regulatory nut to crack.

Since last November, when Bitcoin hit a record high of $US69,000, about $US1.5 trillion ($2.1 trillion) – or more than half – has been wiped from the market.

Bitcoin, which accounts for about 40 per cent of the market, is now trading at about $US30,700, down 55 per cent from its peak.

The main driver of the collapse was crypto starting to behave like a risk asset, so it was targeted like other risk assets when inflation surged and interest rates began to rise rapidly from near-zero levels.

Investors were further spooked by signs of weakness in stablecoins, which are a safer form of crypto.

TerraUS, the world’s fourth-largest stablecoin, collapsed as it lost its peg to the US dollar.

Despite the rout, the $US1.5 trillion global crypto market capitalisation is still double what it was in January 2021.

Superhero co-founder and chief executive John Winters. Picture: Supplied

All four founders of Swyftx and Superhero have retained their unshakeable faith in the asset class, knowing that one-quarter of adult Australians have already traded in crypto.

Both companies will continue to operate their separate platforms while plans are made to extend their service offerings to all investors.

Mr Harper and Angus Goldman, who co-founded Swyftx in 2018, have bootstrapped the company as it grew from 50,000 to 600,000 customers.

“We’ve operated quite profitably, and we have the option to raise funds to accelerate growth as a combined group,” Mr Harper said.

“Some businesses focus way too much on scale and achieving scale.

“For us it’s customer first and revenue first – we’re not burning cash; we’re building a long-term sustainable business.”

Mr Winters said crypto had reached an interesting point in its development, as funds from institutions and investment banks flow into the asset class at the same time as retail sentiment softens because of the volatility.

“The difference is that the institutional funds are very large-scale,” he said.

“You often see that as a major turning point in markets.”

An example was the house view at Goldman Sachs, where global head of digital assets Matthew McDermott said last month that digital assets would bring about a “paradigm shift” in global markets.

Another Goldman Sachs alumni, former Australian Securities & Investments Commission chairman James Shipton, joined the Superhero board in May.

Mr Shipton could play a key role as crypto is brought within the global regulatory perimeter.

Swyftx, in the meantime, is also eyeing offshore expansion.

After establishing a beachhead in New Zealand, the company has established offices in London and Vancouver.

Mr Harper said this was part of the group’s plan to evolve from disruptive tech players into a single, major financial institution which could grow in domestic and international markets.

He said the recent, negative reviews of crypto were typical of a downswing in an emerging asset class.

More balanced perspectives would emerge once the crypto market matured.