The “smart money” is waking up to digital assets such as cryptocurrencies.
A 2020 study by Fidelity Investments revealed 80% of institutional investors see digital assets as appealing, and 36% are already invested in them.
However, banks have been slow to accept digital assets as deposits or to offer them as investments.
That’s partly because the financial industry is lacking an all-in-one institution that can serve as a custodian for digital and traditional assets.
But one innovative company is focused on filling the void.
Banking for Cryptocurrencies
Two weeks ago, Kraken Financial became the first digital asset company in the U.S. to receive a bank charter.
The company will allow its U.S. clients to bank with digital assets and national currencies.
Kraken’s bank charter validates the global shift from traditional banking and wealth management to financial technology (Fintech).
Banking functions such as bill payments and direct deposits can now be facilitated with cryptocurrencies. These digital assets can be held in a deposit account, exchanged for other cryptocurrencies or converted to fiat currency.
Holding fiat and cryptocurrency at the same bank means there is no need to transfer between a bank account and a digital asset wallet.
This would eliminate the period of time between transfer and receiving funds. And by skipping the wait time, capital can be deployed more efficiently.
3 New Digital Asset Products
With greater versatility, deposits in cryptocurrencies are more attractive.
This provides an opportunity to receive a much higher interest than what would be received in a traditional checking account.
Kraken’s charter also permits the bank to offer digital asset products, including:
- Digital asset debit cards — this enables customers to pay with cryptocurrency directly from a checking account.
- Cryptocurrency staking — which provides an opportunity to earn income from digital assets. Staking has risen rapidly in popularity this year. The value of the cryptocurrency staking market now stands at $35 billion, nearly 10% of the total cryptocurrency market value.
- Trust accounts — that provide an investment vehicle to hold cryptocurrencies as part of a lifelong wealth management plan. Utilizing a trust, clients can include cryptocurrencies in their estate planning.
As businesses expand cryptocurrency product offerings, digital asset management will grow exponentially.
Digital Asset Management Is Still in the Early Stages
Forecasts suggest the industry will grow 450% by 2025, from $1.7 billion to $9.3 billion.
In reality, this number will be much higher as digital asset management takes share from the $487 billion wealth management industry:
(Source: Research and Markets)
As you can see, Fintech is rapidly changing the landscape for financial services. But its disruption is still in the early stages.
Investors still have a chance to make huge gains as Fintech takes share from banks in the years to come.
Analyst, Automatic Fortunes