As cryptocurrencies continue to gain traction, many of the gatekeepers of the world’s financial markets are starting to sit up and take notice. Fintech service companies and mainstream banks are quickly realizing the potential of both cryptocurrencies and the distributed ledger technology on which the digital currencies are built, as major assets for their organizations.
There is no denying that cryptocurrencies have had to endure a bit of a checkered past, since some of the earliest adopters of the technology were shady figures in the underworld; some even used Bitcoin to carry out drug and arms deals in the seedy depths of the dark web. However, with more people buying into digital currencies, there is a drastic shift in the banking and finance sectors towards acceptance of cryptocurrencies and blockchain technology.
Blockchain-Powered Banking
In what is seen as a major move towards the acceptance of cryptocurrencies by major financial institutions and fintech players, Bitwala, a German blockchain startup, announced that it had worked out a strategic partnership with solarisBank of Berlin to launch what is described as the first “blockchain bank account” in Germany.
So far, Bitwala has managed to raise more than 4 million euros in new funding in September 2018 in a bid to support the new initiative, signing up 35,000 new users for the impending launch, in the process. The Bitwala / solarisBank partnership is designed to ensure that the euro funds in the blockchain accounts are protected to a maximum of 100,000 euros, in accordance with Germany’s deposit protection scheme, which will be supervised by Bundesbank and BaFin.
Bitwala spokesperson Roman Kessler says that the new account will offer SEPA transactions, a debit card and the simplified management of customers’ recurring payments. In addition, the account will have an in-built Bitcoin wallet that would provide the convenient cryptocurrency trading and will offer quick liquidity.
Overcoming Regulatory Obstacles through Strategic Partnerships
It is easy to see why Bitwala would consider solarisBank as a worthy ally for the new initiative, as it has the backing of noteworthy names in the financial services industry, including card provider Visa and Spanish banking group BBVA. According to TechCrunch, solarisBank, which was founded in 2016, recently closed a Series B funding round that raised 56.6 million euro.
Kessler says that Bitwala was drawn to solarisBank since it has a “fantastic technical platform that allows” companies to have the ability to seamlessly “go in and plug use cases” into its API, while providing regulatory access, thanks to its German banking license.
By partnering with solarisBank, a company that has a full banking license issued by the German Federal Financial Supervisory Authority, Bitwala’s new bank account offers customers the same legal status and safeguards for their funds as any regular German current account. The alliance also helps Bitwala to avoid many of the regulatory problems the company has had to deal with in the past. For instance, in January 2018, Bitwala was among a number of cryptocurrency companies adversely affected when its debit card issuer was closed by Visa Europe.
Is A Cryptocurrency Bank on The Horizon?
Although the market for cryptocurrency is undergoing something of a depression at the moment, many industry experts believe that the many partnerships being announced, such as that between Bitwala and solarisBank, show that digital currencies are here for the long haul. However, one thing that is sorely lacking is the presence of a true cryptocurrency bank that would let customers easily exchange cryptocurrencies for fiat legal tender, such as dollars and euros.
However, if the people at Seba Crypto AG are to get their way, we may be on the verge of witnessing the birth of one of the world’s first fully-regulated cryptocurrency banks. Founded and operated by two former managers at UBS, CEO Guido Buehler and Chairman Andreas Amschwand, Seba Crypto recently raised around $104 million to kick off the project, according to a Bloomberg report.
Quoting sources from the company, Reuters reports that the proceeds from the funding are to be used to build a bank which would offer cryptocurrency banking and exchange services to both individual investors and companies that operate within the digital token space. In addition, Seba is looking to obtain a banking and securities dealership license from the Swiss market regulator FINMA, allowing the company to provide crypto trading and investment services.
Buehler believes that by creating a cryptocurrency bank, Seba Crypto will be well positioned to offer seamless services to investors that want to add digital assets to their portfolio mix and are looking for how to trade cryptocurrency, either directly or through investments in businesses based on blockchain technology.
