The Global Rise Of The Digital Asset Infrastructure Providers
March 4, 2021
Documenting the worldwide rise of the behind-the-scenes digital asset infrastructure providers powering the banking revolution
With an estimated 42 million people holding Bitcoin in the world, and a further 5.25 billion people with a traditional bank account, there is significant potential for digital asset infrastructure providers to rapidly scale as the adoption of digital assets grows. Indeed, the same infrastructure providers are currently experiencing phenomenal growth.
One of the largest global digital asset exchanges and Visa debit card issuers, Coinbase, has 14m users worldwide. However, this pales in comparison to the 1.09bn Visa debit card users worldwide. Furthermore, this figure shows the potential of digital assets like Bitcoin (BTC), Ethereum (ETH), USD Coin (USDC) and others to grow as infrastructure and integrations improve and they become more mainstream.
There are currently just 20-30 crypto debit card programs globally and only a handful of white label providers in this space offering the digital asset infrastructure to provide these services to customers. This is set to change rapidly over the next five years as demand for crypto debit cards increases and specialist B2B FinTech service providers move to provide the much-needed infrastructure to this segment of the financial market. Many digital asset-friendly banking-as-a-service platforms—including SynapseFi, Baanx, Contis, and Uulala—are merely years old and are already growing rapidly.
Debit cards hold the potential to bridge fiat and crypto worlds
The ability to spend cryptocurrency like BTC on a card at any point-of-sale (POS) and making them as easy to spend as any fiat currency is a powerful driver for catapulting digital assets into the mainstream. That said, with the reality that few merchants currently accept cryptocurrencies, digital-friendly debit cards will doubtless act as the “bridge” between traditional fiat currency and cryptocurrencies.
By issuing debit cards, providers like Baanx, Contis, and Coinbase offer their users the opportunity to spend their cryptocurrency funds in real-time at any POS where MasterCard and Visa are accepted. At present the number of global installed POS terminals stands at 161m, representing a significant opportunity of scale as adoption increases, This is without mentioning the majority of Visa-accepting ATMs worldwide as well. This seamless “bridge” is currently in high demand among cryptocurrency users as well as by digital exchanges and a growing number of digital players worldwide. Currently, there are only a handful of B2B digital asset infrastructure providers who can effectively operate in this heavily regulated space.
A family of digital asset offerings
Using blockchain and digitalized assets adds security and lowers the cost of transactions. For instance, texting fiat and digital assets via SMS—a feature available to Baanx B2B customers—enables users to send money at highly competitive interbank rates. This is especially attractive when it is compared with the two to three per cent spreads normally seen with FX and remittance at traditional players, such as WesternUnion.
Savings, lending, and remittance are going digital and lowering transaction costs in the process. For instance, savings and lending provided by companies including Voyager, Salt, and Celsius offer savings rates significantly better than bricks and mortar banks and sometimes as high as five times the highstreet rate.
White label digital asset infrastructure providers light the way
As digital assets go mainstream, many digital players and traditional financial institutions are turning toward blockchain-based B2B digital asset specialists to meet the growing demand. Digital asset infrastructure providers such as Baanx and SynapseFi are leading a revolution with their white label solutions. They offer fully managed services with rapid time to market and significantly lower operating costs when weighed against the total cost of ownership (TCO). This is an important factor that often features strongly in the build or buy decision.
White label solutions such as these provide all the necessary functionality and secure architecture to run a platform that effectively bridges fiat with digital assets thanks to full-stack, modular, and API-driven options. What’s more, they can integrate via API into a client’s existing app by providing all the back end digital asset infrastructure. Baanx even provides a 100 per cent serviced option that includes custom-branded mobile apps.
With the explosion of digital exchanges, more providers are offering powerful prepaid debit cards to their users for greater flexibility when it comes to spending their funds. The advantage of a white label solution—such as one that Contis or Baanx provides—is that it removes the need for business customers to build a complex, customized platform completely from scratch. It also removes potential barriers to entry such as KYC, AML, and regulatory compliance. Finally, a white label solution enables a client to roll out their new payments platform to their users within weeks complete with an experienced tech support team.