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In the United States, financial institutions are regulated on both a federal and state level. Capital requirements, regulation to protect customers, as well as FDIC and NCUA insurance are just a few reasons why financial institutions like banks and credit unions are a secure and trusted place to store and invest your money. Not only is your money insured when it’s stored in a bank or credit union, it is also monitored and supervised by both professionals working at the institution and subject to on-site regulatory checks by their chartering authority. Financial institutions are subject to penalties if they mismanage deposits and can face serious litigation and fines if they fail or refuse to comply with regulatory laws. Banks and credit unions have the trust that depositors need in order to make the system function.
Just days ago, popular cryptocurrency exchange FTX suspended withdrawals. Last week, new reports showing that sister company Alameda Research had billions of dollars in the company’s proprietary token on their balance sheet triggered a mass sell-off on the exchange, plummeting the token’s value and FTX with it. Competitor Binance CEO Changpeng “CZ” Zhao first suggested they would acquire and bail-out the suddenly-struggling exchange but he quickly reversed course, citing new reports of money mismanagement and government investigations into FTX. The morning of posting the blogpost you're reading, FTX filed for bankruptcy. New developments are still coming out on this story, but regardless, many of their customer’s funds are still tied up in the platform and potentially permanently lost.
This, unfortunately, is not a new issue. Earlier this year, cryptocurrency lending platform Celsius went illiquid and several other exchanges experienced downturn and closures in the following months. With this new FTX development, other exchanges will likely go through a comparable exodus of funds and business. Simply put, many people who hold digital assets are turning away from large, invisible, and inaccessible exchanges. Now more than ever it seems clear that for the best, and perhaps only, way most people and corporations should be transacting with crypto safely and securely is through their regulated and monitored bank or credit union. “What’s going on with FTX is a clear indicator of why qualified custodians must be used to store digital assets. Banks and credit unions must respect the trust that clients and members have for them by offering a solution that protects the user's balances alongside the bank's corporate balances,” says Kian Sarreshteh, co-founder & CEO of CryptoFi.
Built with banks and credit unions in mind, CryptoFi knows that stability, brand, and being a center of trust are essential to financial institutions. CryptoFi engages with banks and credit unions by offering a turnkey cryptocurrency management platform that provides a suite of new capabilities that drive an increase in user retention, acquisition, and non-interest income while reducing capital flight. These capabilities include seamlessly integrated cryptocurrency trading and holding with qualified, US-based custodians directly in the institution’s banking app, frictionless crypto-asset balance transfer from major exchanges to establish the financial institution as the top-of-wallet option for cryptocurrency, a Bitcoin rewards program, a crypto education to keep users informed and engaged, and a suite of back-office management tools to analyze, customize, and enhance the offering. CryptoFi is also unique in that it is decoupled from the qualified custodians it is partnered with, meaning that it serves as a neutral party to monitor user’s wallets - adding an extra layer to ensure that a user’s assets are always being held securely.
CryptoFi also offers solutions for corporate cryptocurrency payments. Financial institutions may want to facilitate purchases, interbank exchange, and/or cross-border payments with any other bank or corporate client using any cryptocurrency or stablecoin. CryptoFi’s layered approach can integrate with your corporate banking and payments technology to allow institutions to convert stablecoins to other stablecoins, free floating digital assets, or fiat currency, avoiding the need to lock themselves into any one payments provider. They can also choose to hold received or converted digital assets with CryptoFi’s qualified custodians. This too comes with management tools so that institutions can further monitor and optimize their offering.
Now more than ever it is clear that both people and corporations interested in cryptocurrency need a secure & trustworthy place to trade with it and keep it safe. Financial institutions, already seen as a center of trust among their users, have the opportunity to make themselves that place with CryptoFi. Learn more at www.cryptofi.tech and sign up for a demo today.
