Crypto banking is a newer concept that describes how people can interact with cryptocurrency. Between investing in cryptocurrency and traditional banking methods, there is a point of convergence where banking services are made available to exchange and interact with both fiat currency and cryptocurrencies. Enter: Crypto banking.
What is Crypto Banking?
Crypto banking simply refers to the managing of digital currency at any financial service or banking provider. It’s becoming widely popular because anyone with an internet connection can buy, sell and trade cryptocurrencies. Examples of crypto banks include Wirex, Ally Bank, Barclays, JPMorgan, and Goldman Sachs (to name a few), as all allow the management of digital currencies and support cryptocurrencies.
Crypto banks operate very similarly to the way traditional financial companies hold stocks and cash for investors and customers. However, instead of traditional fiat currency, crypto banks hold digital assets as well.
For example, Vast Bank offers personal and business banking products such as checking and savings accounts in addition to CDs, loans, and credit cards. Although it has been a small local bank for 35 years, it recently broke into crypto banking and has received national attention for becoming the first nationally chartered U.S. bank that lets customers buy, sell and hold crypto assets from their bank account.
Crypto Interest Accounts
You can get started by setting up a crypto interest account, which is essentially a crypto version of a savings account. Interest rates can be around 10%, which is much higher than on a traditional savings account. Examples of crypto-saving accounts include those offered by BlockFi, Gemini, Linus, Nexo, and Outlet Finance.
Crypto Checking Accounts
Crypto checking accounts are also an option. Most crypto checking accounts have no monthly fees, so you can hold on to more of your money. Examples of crypto checking accounts include those offered by institutions such as Quontic Bank and Vast Bank.
Quontic’s Bitcoin Rewards Checking account rewards customers with Bitcoin for making eligible purchases. The idea is that when you use your Quontic debit card to make a qualifying purchase in-store or online, 1.5% of the total amount of the transaction will be converted to Bitcoin.
Other Ways To Get Started
If you want to get started with crypto banking but you don’t yet own any cryptocurrency, you can easily sign up for an account at a bank that supports cryptocurrencies or one of several decentralized finance apps, also known as Defi apps, and then purchase Bitcoin and other currencies from their crypto marketplace. Decentralized finance apps are applications where financial products are available on decentralized blockchain networks, so there is no need for a middleman such as a brokerage or a bank.
Future of Cryptobanking
As traditional banks catch on to consumers’ desires for more crypto capabilities in banking, we can expect to see some radical changes to the financial sector in the coming years. Here are two predictions on the future of crypto banking.
A collaboration between banks and fintech is necessary if banks expect to remain relevant and competitive in the future of digital currencies. Already, major banks like Chase are discussing the possibility of classifying Bitcoin as a legitimate asset class. Banks could benefit from increased traffic and profitability as more investors begin taking advantage of the crypto space.
There are many uses in banking for blockchain technology, so it’s only a matter of time before banks start to take advantage of the public ledger in certain areas. For example, trade finance often involves collaboration on transactions. Blockchain implementation can reduce fraud and increase transparency across several types of transactions