FINANCE Bitcoin is coming to hundreds of U.S. banks this year, says crypto custody firm NYDIG

Discussion in 'Crypto Assets' started by johnarb, May 5, 2021.

  1. johnarb

    johnarb

    Personally, I've been transferring $$$ from Coinbase, Gemini, Kraken to my traditional banks in the past week (and from a few months ago) from sale of bitcoins, but I could just as well leave the $$$ on those platforms and use them as Fintech banks.

    Even PayPal and Square are options

    https://www.cnbc.com/2021/05/05/bit...reds-of-us-banks-says-crypto-firm-nydig-.html

    Bitcoin is coming to hundreds of U.S. banks this year, says crypto custody firm NYDIG
    PUBLISHED WED, MAY 5 20217:24 AM EDTUPDATED AN HOUR AGO

    Hugh Son@HUGH_SON
    • For the first time, customers of some U.S. banks will soon be able to buy, hold and sell bitcoin through their existing accounts, according to crypto custody firm NYDIG.
    • Banks are asking for bitcoin because they can see their customers sending dollars to Coinbase and other crypto exchanges, according to Yan Zhao, president of NYDIG.
    • After rolling out the initial bitcoin product, NYDIG plans on other services, including debit card rewards paid in bitcoin and a new type of bank account that is FDIC insured, but pays interest in bitcoin, he said.
    Bitcoin is coming to hundreds of U.S. banks this year: NYDIG

    Bitcoin may be taking another step toward mainstream adoption, CNBC has learned.

    For the first time, customers of some U.S. banks will soon be able to buy, hold and sell bitcoin through their existing accounts, according to crypto custody firm NYDIG.

    The company, a subsidiary of $10 billion New York-based asset manager Stone Ridge, has partnered with fintech giant Fidelity National Information Services to enable U.S. banks to offer bitcoin in coming months, according to the two firms.

    Hundreds of banks are already enrolled in the program, according to Patrick Sells, head of bank solutions at NYDIG. While the firm is in discussions with some of the biggest U.S. banks, many of the lenders that have agreed to participate are smaller institutions like Suncrest, a California-based community bank with seven branches.

    “What we’re doing is making it simple for everyday Americans and corporations to be able to buy bitcoin through their existing bank relationships,” Sells said. “If I’m using my mobile application to do all of my banking, now I have the ability to buy, sell and hold bitcoin.”

    Until now, bitcoin adopters have relied on apps from a new generation of fintech players like free trading brokerage Robinhood, payments giants PayPal and Square, or crypto-centric firms like Coinbase. Banks, on the other hand, have steered clear of bitcoin for retail customers, only recently announcing plans to allow rich wealth management clients to be able to wager on the cryptocurrency.

    But banks are now asking for bitcoin because they can see their customers sending dollars to Coinbase, Kraken and other crypto exchanges, according to Yan Zhao, president of NYDIG.


    “This is not just the banks thinking that their clients want bitcoin, they’re saying `We need to do this, because we see the data,’” Zhao said. “They’re seeing deposits going to the Coinbases and Galaxies and Krakens of the world.”

    [paste:font size="5"]JPMorgan Chase and Bank of America could face pressure to offer crypto to their retail banking customers, according to Rob Lee, head of digital banking at Fidelity National Information.

    In March, Morgan Stanley was first among banks to offer bitcoin funds to its clients, CNBC reported last month. Goldman Sachs quickly followed with an announcement of its own, and JPMorgan is reportedly looking at its own product in conjunction with NYDIG.

    But in those cases, banks have relegated bitcoin to ultra-high net worth individuals and family offices with tens of millions of dollars.

    “Most people can’t invest in things that institutional investors get to invest in,” Zhao said. “With bitcoin available through your bank to be purchased with as little as $1, now you have an attractive asset that’s available to be owned by anyone in any amount. We think that’s huge for economic empowerment.”

    [​IMG]
    Yan Zhao of crypto custody firm NYDIG
    Source: NYDIG
    While Fidelity National Information, which is a vendor to banks with nearly 300 million checking accounts, will handle the link to lenders, NYDIG will take care of bitcoin custody and trade execution. Disclosures will make it clear that it is NYDIG, and not the banks, that handles the bitcoin, and the cryptocurrency won’t be FDIC-insured, according to Zhao.

    Fidelity National Information, based in Jacksonville, Florida, caters to banks, providing access to services like chatbots or Apple Pay. It’s also a heavyweight in the payments industry, and two years ago bought processor Worldpay for $35 billion in the sector’s biggest acquisition to date.

    Banks will determine how much to charge their customers for bitcoin trades and will retain most of that fee revenue, according to Sells. After rolling out the initial bitcoin product, NYDIG plans on other services, including debit card rewards paid in bitcoin, and a new type of bank account that is FDIC insured, but pays interest in bitcoin, he said.

    More people would own bitcoin if they could do so through their existing banks, according to a survey commissioned by NYDIG. That allows them a single view of their financial assets and avoids the need to sign up with another institution and fund the account with a money transfer that typically takes three to five business days.
     
    Sprout, zenlot and Trader Curt like this.
  2. ZBZB

    ZBZB

    johnarb likes this.
  3. Trader Curt

    Trader Curt

    This is good news, but it also means they will have control over customers crypto. Seems like they are doing anything not to lose their power.
     
    Baron, NoahA and johnarb like this.
  4. zenlot

    zenlot

    AbbotAle likes this.
  5. ZBZB

    ZBZB

    I think you can withdraw and deposit crypto at tastyworks and tradestation.
     
    johnarb likes this.
  6. johnarb

    johnarb

    This is true, as mentioned in the article, the banks don't want to lose the $$$ deposits to the crypto platforms such as Coinbase and others and lose the assets under their books

    They'd rather everyone keep the $$$ in their accounts and if they must buy bitcoin/crypto assets, they want to have it under their control so they can value it under their assets & liabilities

    It's all part of the adoption, we cannot stop it, but there are benefits, if you think about it, your auntie can now buy the bitcoin through her bank without having to bug you to help her open a Coinbase account :D

    More $$$ coming into the space, $100K/btc will be a low target when these things are activated

    Just like Doge getting all the $$$ investments from eToro and Robinhood...
     
    Last edited: May 5, 2021
  7. NoahA

    NoahA

    I think its pretty scary to be honest. Its kind of liking saying government employees will soon go into the prostitution business. :D

    I think there is quite a bit of risk for the banks. I have long wondered how an exchange can operate and take in all the buys and sells when it takes about 20 minutes for a transaction to clear on the blockchain. (clearly I don't know enough about this) So obviously this order has to be internalized, and the exchanges themselves have to then make sure they have enough BTC to cover all the customers buying, or sell enough to cover all the customers dumping. I assume they don't want to be sitting on thousands of BTC if the market is shifting because they now have to take a loss.

    But what happens in a major dump? Suppose news hits that coinbase is hacked? Suppose news hits that the 30% or so of all the coins in the Satoshi account start moving? The amount of selling will be catastrophic. Do banks really want to get involved with this? The whole idea behind crypto is the blockchain and if most transactions are done outside of the blockchain, does this not negate the whole point?

    On a totally different tangent, once the banks have this all set up, it will be a perfect way to transition to the FedCoin. We might very well wake up one day to news that trading in BTC or ETH has been revoked, but now you have the FedCoin replace that same option in your banking account.
     
  8. johnarb

    johnarb

    I cannot help you anymore, It seems due to your missed opportunity, you are only looking at all the possibilities bitcoin can fail

    You haven't mention an asteroid hitting earth, yet, but one day you will wish for it

    Anyway, off-chain transactions settled on internal private databases at Coinbase or BofA or BoNY are different than on-chain. One is instant, the other takes time through block mining about ~10 min intervals for bitcoin

    Visa and PayPal and others of the likes are Layer 2 settlements and batch processing settlements, similar to above I mentioned
     
    zenlot and AbbotAle like this.
  9. NoahA

    NoahA

    But that is because when it does fail, it will fail hard. If I use my credit card and its stolen, no problem. If I forget my password for my account, no problem, but money isn't lost. But with BTC, the tail risks, although rare, are much more devastating.

    Of course I missed the opportunity, no doubt about that. Heck, even buying ETH 6 months ago for $300 is a missed 10x trade.

    But just as important as it is to discuss the pros of crypto, we also have to be aware of the cons. Look at everyone trading oil when they thought they were smart by getting in on the futures contract for 1 penny only to see it drop to negative $37.

    I saw a great video with a smart guy, Dave Collum, and he did think that the "diamond hand" corporations holding crypto perhaps aren't that married to it. Sure, its great for TSLA that got in maybe around 30k or so, but if we revisit that level, and these holders aren't so strong after all, it will be interesting to see what happens. In fact, I believe that much of the buying is both the result of huge FED free money as well as rotation from precious metals into crypto. If or when this reverses course, can the price of crypto be sustained?

    When you look at current FED policy, its pretty clear they are hungry for power with the illusion that they will make things better for the majority. Crypto takes the power away and I would not fight the FED on this.
     
    Sprout likes this.
  10. johnarb

    johnarb

    Bitcoin is classified as commodity. It's a digital investment asset. It's a speculative asset that is priced based on supply and demand.

    Think of Amazon stock or Gold ETF, price goes up, price goes down, based on buyers and sellers

    Fedcoin is just digital $. It does not compete with Bitcoin and vice versa, just like Fedcoin does not compete with Gold ETF or Amazon stock
     
    #10     May 5, 2021