CNBC has heard that Bitcoin could be taking another turn toward mass acceptance. According to crypto custody company NYDIG, clients of certain U.S. banks will shortly be able to purchase, retain, and sell bitcoin from their current accounts for the first time. The two companies stated that the venture, a subsidiary of the $10 billion New York-based asset manager Stone Ridge, has partnered with fintech behemoth Fidelity National Information Services to enable US banks to sell bitcoin in the coming months.
According to Patrick Sells, head of bank solutions at NYDIG, the service has now enrolled hundreds of banks. Suncrest, a California-based community bank with seven branches, is in discussions with numerous major banks. However, many of these lenders have opted to partner with smaller entities. Historically, bitcoin users have depended on apps from emerging fintech firms like Robinhood, a commission-free brokerage, PayPal, and Square. They’ve also turned to crypto-focused platforms like Coinbase.
Banks, on the other hand, have avoided bitcoin for retail banking consumers. Only recently have they unveiled plans to enable high-net-worth clients to gamble on the blockchain. According to Yan Zhao, president of NYDIG, banks are now requesting bitcoin. They see their customers transferring dollars to Coinbase, Kraken, and other crypto exchanges.
Peer Pressure
According to Rob Lee, when hundreds of smaller banks join, giants like Bank of America and JPMorgan Chase can face pressure. This pressure could lead them to sell crypto to their retail banking customers.According to CNBC, Morgan Stanley was the first bank to sell bitcoin assets to its clients in March. However, it also means that the new era of brokers to trade crypto in the US is about to start, as the regulations and restrictions were the restraint factors before that. JPMorgan is allegedly looking at its own offering in partnership with NYDIG. Goldman Sachs soon followed with its own announcement. Banks have relegated bitcoin to ultra-high net worth individuals and family offices. In such cases, these individuals have tens of millions of dollars.
“A large number of individual can’t invest money at the same scale as institutional investors can,” Zhao said. “Now that bitcoin can be bought with as little as $1 from your wallet, you have an appealing commodity that can be possessed by anybody of any number.”
The connection to lenders will be handled by Fidelity National Information. They are a provider to banks with nearly 300 million checking accounts. Bitcoin custody and trade execution will be managed by NYDIG. According to Zhao, disclosures would clarify that NYDIG, not the banks, will manage bitcoin. Additionally, the blockchain would not be FDIC-insured.
Fidelity National Information, headquartered in Jacksonville, Florida, provides links to applications such as chatbots and Apple Pay to banks. It’s also a major player in the payments market, having purchased processor Worldpay for $35 billion two years ago, making it the sector’s largest transaction to date.
But Why Are You Doing It?
According to Yan Zhao, the president of NYDIG, banks and financial institutions are responsible for monitoring millions of dollars that are transmitted to cryptocurrency exchanges such as Coinbase, Kraken, and others on a regular basis. It’s a slice of the pie that they’ve been avoiding up until now, but not anymore.
It’s not only that the banks believe their customers want Bitcoin; they’re saying, ‘We have to do this because we see the data,’” Zhao explained, adding, “They’re seeing deposits flowing to the Coinbases and Galaxies and Krakens of the world.
With Bitcoin available through your bank, it can be acquired for as low as $1. Now, anyone can possess this appealing asset. This holds true regardless of their financial situation. “We believe that this is significant for economic empowerment,” she continued. She was referring to the growing desire for Bitcoin services among the general public.
Mr. Robert Lee, the head of digital banking at Fidelity National Information, has stated that hundreds of small- and medium-sized U.S. banks might push bigwigs such as JPMorgan Chase, Goldman Sachs, and others to offer cryptocurrency services to their customers in the future.
Such financial institutions have, to yet, only grudgingly provided Bitcoin trading services to high-net-worth individuals, with no such services available to the average private investor. But is it possible that this may soon change?
Conclusion
Customers are sending money to cryptocurrency exchanges like Coinbase. Consequently, banks are showing interest in bitcoin, as stated by Yan Zhao, head of the New York Digital Investment Group. The banks recognize not just customer demand for bitcoin but also the compelling statistics. Zhao elaborated that by 2024, bitcoin will be available in hundreds of US banks. These banks are observing deposits moving to platforms like Coinbase, Galaxy, and Kraken, among other exchanges.
