If there’s one lesson that 2021 has unearthed for the world, it is that moving forward, there’s no time to shy away from integrating novelty into existing business models. The finance industry in itself has undergone some mind-bending shifts in the past few years, accounting for new terms by the hour for us to wrap our heads around. The recent feather to the cap of this escalating expansion is the adoption of crypto and decentralized finance (DeFi) propositions by FinTechs – who seemingly have a big role in becoming the springboard for crypto’s accelerated adoption and mainstream acceptance.
We’re already witnessing the orbital jump of FinTech scale-ups into the fascinating—and let’s face it, sometimes mind-boggling—world of decentralization as they embrace crypto through the many ways of payments, investments, lending, and even offering crypto-as-a-service platforms. The evolution of this sector can equally be attributed to how swiftly these digital assets can fit into the mainstream today, as well as diving into the series of events that have established today’s widespread usage of this dawning domain. Without further ado, let’s discover the journey that sets the stepping stones for the road traveled and the road ahead for this association.
Cryptobros and FinTechsis, this one’s for you:
Building The Bedrock: From 2009-2020
Two roads diverged in the crypto-fintech journey, and we sure are taking both of them to gain insight. Our Crypto Adoption Timeline already provides a brief on the advent of how these digital currencies came into play – only this time, we’re adding FinTech to the mix.
- The very first stop that fuels our drive for this trip down foundation lane begins with the notion of Bitcoin through a 2008 whitepaper written by Santoshi Nakamoto. However, it was only in early 2009 that the Bitcoin network came to life. With the mining of the first block generating 50 Bitcoins, the issuance of these digital coins has since then been augmenting through its own volatile trajectory.
- Fast forward to 2012, and the vision of a secure environment where digital currency exchanges could take place was born through Coinbase. Being one of the first platforms to allow such a trade, the digital wallet soon garnered the attention of both investors and crypto enthusiasts alike. A series of branding, rebranding, and controversies later, the American company presently treads ahead with a market capitalization of about $61B.
- Speaking of controversies, Stripe’s on-and-off relationship with crypto has been the topic of discussion for a while now. The payments company, which made headlines in 2014 for accepting Bitcoin payments in an industry-first move, drew the line for the fluctuating cryptocurrency three years later pertaining to the unviable growing fees and failure rates it held for payments back then. Now, after three years of sidelining, the fintech is set to reenter the crypto space and has already begun assembling a team of web3 engineers and designers to support crypto’s potential in underserved markets.
- The year 2017 saw the humble beginnings of many events for the crypto-fintech affiliations. The positive response to the many digital currency offerings had others wanting to make their own coins, and the launch of Binance Coin (BNB) in 2017 by Changpeng Zhao through an Initial Coin Offering (ICO) was a result of the same desire. Since then, the BNB market cap has risen to $90B. Noticing the growing appetite towards these novel currencies, fintechs such as Revolut (2017), Robinhood (2018), and Paypal (2020) also introduced crypto-asset investment initiatives, with each of these players continuing down the path with the launch of various new crypto features – including the likes of Robinhood’s upcoming launch of cryptocurrency wallets.
Behold the Breakthrough: The Year of 2021
The last year saw a surge in the cryptocurrency market value, thanks to the awareness around these digital tokens and non-fungible tokens (NFTs) making the masses open to the idea of finding value in them. In a bid to expand their user base due to the presented opportunity, many of the fintechs also found ways to assimilate DeFi into their functioning.
- 2021 opened with the introduction of the first federally chartered digital asset bank in the form of Anchorage Digital Bank. This move came as a game-changer for blurring the lines between traditional finance and cryptocurrencies, considering the US-based digital assets firm could now increase the ability to expose institutional players to the world of crypto.
- Hot on the heels was the debut of a crypto debit card by European crypto-native payments platform Wirex in March. The multi-currency debit card, which allowed users to spend up to 18 cryptos as well as traditional currencies in real-time, also came with a new reward program in which Wirex X-tras like 2% crypto-back on purchases were eligible to the customers.
- The month of July held quite the activity for the crypto space – with payments fintech PayU investing in open-source blockchain ecosystem Celo, so as to offer half a million of its merchants the possibility to accept Celo’s stablecoins (cUSD) for everyday payments. Square, the American financial services and digital payments company, followed suit with the release of its own bitcoin business unit TBD, with the sole intent of making decentralized exchange permissionless and open in terms of its roadmap, development, and usage.
- Amongst other fintech players who onboarded the crypto craze, the names of digital wallet Venmo, multi-asset platform eToro, and embedded fintech company Nium come out on the top. eToro’s recent announcement of its DeFiPortfolio, offering 11 crypto-assets, enables users to easily diversify their crypto index without having to research each individual asset. Nium also made headlines for the launch of its global API-based Crypto-as-a-Service (CaaS) platform in October. With the popularity surrounding digital currencies in becoming a fast investment asset class, the unicorn’s timely product made it possible for users to embed crypto marketplace services, along with brokerage, custody, and ready-to-go compliance monitoring of Know-Your-Customer (KYC) and Anti-Money Laundering (AML).
The past few months have proven to be a defining time for DeFi to grab the attention of both larger institutions and the general public alike. Despite facing hurdles from authorities regarding the regulation of this variable asset, many revolutionary events pioneering the concepts of web3 and NFTs have already set-stage to transform the global financial landscape. 2022 already seems to be a promising year for the industry, as many trad-fi firms are on their way to applying for digital licenses and assembling teams to offer more innovative crypto solutions to both existing and emerging customers. Only time will tell the direction this drift will sway us along.