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By Jamie McKane Published: 1月 26, 2022
Codugh CEO Shashank Singhal

Shashank Singhal has quickly grown his first major BSV project, Codugh, into a flourishing BSV start-up after winning the second BSV Hackathon in 2019. In the process, he has learned many hard lessons about the regulatory hurdles faced by blockchain start-ups and how these can be overcome to deliver an accessible and viable product.

Codugh is an API marketplace that leverages the power of BSV to allow developers to earn money from calls made to their APIs in a way that is uniquely enabled by the BSV blockchain. Making money from API development and usage is a difficult problem for developers, and Singhal saw an opportunity for the BSV blockchain to make revenue stream more reliable and efficient with a blockchain-based API marketplace.

From this idea, Codugh was born. The Codugh marketplace enables developers to earn money from their APIs by allowing them to charge users a small micropayment for every call made to the APIs listed on their platform, which takes a small percentage of each payment for itself. This micropayment-based business model is something that is only made possible by the BSV blockchain. Because BSV has no arbitrary block size limit and scales unbounded with extremely low transaction fees, these micropayments can be completed efficiently and profitably, and API developers can earn revenue from their creations that scales linearly with their adoption.

Developers and customers do not need to know anything about blockchain or BSV either, as Codugh recently announced a new CUSD STAS token for their platform, which is pegged to the value of 1/100th of a U.S. cent. This means that developers may sign up, post an API to the platform, and earn fiat-denominated income from their projects without ever needing to interact with the underlying infrastructure of the payment system – the BSV blockchain.

As a blockchain-based start-up with fiat on- and off-ramps, however, Codugh is faced with the daunting task of navigating global blockchain regulation, much of which is still difficult to interpret and ensure compliance with. The team behind Codugh are developers, not lawyers, and they have had to adapt quickly to stay abreast of this regulation.

Bitcoin Association spoke to Codugh Founder and CEO Shashank Singhal about how they have overcome the regulatory hurdles intrinsic to operating a blockchain-based company and the lessons they learned along the way. 


Obtain the relevant licences

Many of the regulatory challenges that arise from Codugh’s operations relate to its new CUSD token, which functions as a digital token built on the native tokenisation capabilities of the BSV blockchain. Because Codugh is accepting and dispensing fiat currency and converting it to these tokens on its platform, the team needed to acquire certain licences and put various customer protection measures in place for compliance.

‘We have licenses as a digital exchange and as a remittance service provider. We do KYC and KYT processes to make sure that everything happening in our platform is sound and there’s no money laundering or terrorism financing going on through our platform,’ Singhal says.

‘Obviously, we currently maintain all transactions of the token within our own platform to fend off the regulatory complications of people sending out tokens outside of the platform and doing all sorts of other things with them.’

For a group of developers building a BSV-based start-up, obtaining the relevant licences and checking their compliance status against changeable regulatory requirements has been a difficult but ultimately rewarding path.

‘It’s been a challenge. Certainly, it’s been interesting. It’s been arduous at times, but it’s been good,’ says Singhal.

‘We love learning new things; we love dealing with stuff, but obviously, when it comes to dealing with legal it gets a bit tiresome, but we work with lawyers as well to make sure that we understand everything correctly and to make sure that we’re handling all the processes correctly.’


Consult with lawyers and be thorough

The team has had to revisit their initial approaches to many solutions they created to ensure compliance, and they learned quickly that consulting outside legal expertise is a crucial step in building a blockchain start-up – especially one that offers a token in exchange for fiat currency.

‘The worst thing is thinking you understand something and then going on to build something that you then realise doesn’t quite fit with a regulatory framework, or you missed something because it all is extremely complicated, as we know.’

Singhal advises businesses building on BSV to thoroughly double-check the compliance of all their products and to consult legal experts on what must be done to meet regulatory requirements.

‘Make sure you consult lawyers. Make sure you be careful that you are thorough. I know it takes time and I know it’s annoying, but it’s got to be done and it’s worth the struggle in the end.’

This consultation and compliance-checking process is ongoing, and will likely become even more relevant as Codugh grows its business and the capabilities of its platform. Singhal has great ambitions for the company, from pay-per-kilobyte data storage to the sale of mining hash power.

‘We’ve already built payment processing infrastructure for the APIs. We can just spin that out, and it’s actually much simpler than you’d expect to then apply that to technology after technology. When it comes to paying per-hour, per-kilobyte as we plan to for data storage, we can already have the payment processing in place. And with just a small amount of tweaking, we can deal with all the payments and all the functionalities heading through the compute services as well,’ Singhal says.

‘We’ve heard some requests in the community as well from people who want to use hash power temporarily but don’t want to have to buy massive machines to generate their own hash power. So this way they’ll be able to rent it short-term and on-demand, pay per function and miners have an additional revenue stream when they’re not necessarily using all their mining power or can make even more money per machine by renting it out than they would have through just the mining function.’

‘Integrating the Codugh gateway is a really cool way to sell different items – you can make money off any connected item you have by renting it out and again getting paid in real-time microtransactions. In 24 to 36 months’ time… I think we’d be the foremost company in terms of micropayments in the entire world. Maybe [we can] delete every subscription model in the world and replace it with pay-per-use, pay instantly, because it’s much cleaner, it’s much smoother and it’s just much better.’

Each of these ambitious applications will undoubtedly come with its own regulatory hurdles, and Codugh has learnt from its past challenges to continue to court legal advice and thoroughly check its offerings against any relevant regulations.