In a major development, payment giant NCR is joining hands with digital asset management firm NYDIG to allow 650 banks across the United States to facilitate Bitcoin purchases to its clients. These banks together serve more than 24 million customers across the country.
This is a big development in pushing Bitcoin use among the masses. Besides, it also brings traditional financial institutions closer to the crypto world. As reported by Forbes, this deal will allow community banks North Carolina-based First Citizens Bank and credit unions including Bay Federal Credit Union to offer crypto trading services to their clients through the mobile applications developed by the payment provider.
The great thing is that banks won’t need to go all through the regulatory challenges involved with holding cryptocurrencies. Rather they can facilitate their clients these services using NYDIG’s crypto custodial solutions. Speaking of this development, NCR president of digital banking, Douglas Brown said:
“We’re firm believers in the benefits of crypto and the strategic application. And that’s true for our banking relationships, as evidenced by NYDIG, and across retailers as well as restaurants and the like.”
This announcement from payment giant NCR comes amid rising demand from banks and credit unions to facilitate crypto purchases. Interestingly, this move also puts traditional financial players in direct competition with crypto exchanges. NYDIG President Yan Zhao told Forbes:
“A lot of these banks have seen that one of the biggest outflows from there depositors is moving money from the bank to exchanges like Coinbase. And so that’s part of why banks are so excited to have this capability for themselves and for their consumers.”
Phased Implementation of This Deal between NYDIG and NCR
In the first phase of this partnership, NYDIG will allow NCR’s banking clients to buy, sell, and trade BTC and other cryptocurrencies directly from their mobile application.
The purchaser, in this case, thinks that they are directly working with the bank. However, in the backend, NYDIG will work as the custodian of the digital assets. In daily purchases of Bitcoin and other cryptos, they are usually sourced from OTC desks and exchanges. Depending on the size of the trade and other factors, the customers acquire them at a slight markup price.
NYDIG will follow another approach and a subscription-like model. It will receive a per-user-per-month fee from the bank. NYDIG’s head of bank solutions, Patrick Sells notes:
“I think you’ll see cheaper transaction fees through the banks than what you have today in the marketplace. But the banks do get to determine what they want that transaction fee to be.”
NCR President Douglas Brown also believes that banks will follow a PayPal-like model. He said: “Banking today is a daily or a couple of times a day activity for people, which is what we typically see. Crypto gets to an hourly or sub-hourly level of deepening engagement”. He further added:
“We have broader ambition to do a multitude of things with crypto that will extend into our multi-vertical markets, retailers and restaurants. And then other capabilities oriented around digital banking.”
NYDIG is a big player in the crypto space and provides custody to more than $4 billion worth of digital assets.