Blockchain and Crypto

What Coinbase’s new Barclays relationship says about the crypto space

  • Coinbase's new e-money license and Barclays Bank account is evidence of the looming convergence of crypto markets and exchanges are moving in closer with regulated financial markets
  • "This is the first nod to moving towards a transition to data as an asset class and viable liquidity framework."
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What Coinbase’s new Barclays relationship says about the crypto space

Coinbase got access to the U.K.’s Faster Payments Scheme through Barclays Bank Wednesday after receiving an “e-money” license from the U.K.’s financial regulator.

Access to domestic banking means the user experience is about to get a lot easier for Coinbase customers. Historically it’s been a challenging one in which Coinbase  — and cryptocurrency exchanges generally — has had to send customer funds to its Estonian bank it previously relied on and do a currency conversion, all of which can take a couple of days for a customer in an increasingly on-demand economy. Withdrawing money is an entirely separate struggle.

“The partnership with Barclays adds nuance to that legitimacy, granting a seamless currency exchange previously exclusive to fiat currencies,” said Ghela Bosckovich, Head of fintech and regtech at Rainmaking Innovation. “This is the first nod to moving towards a transition to data as an asset class and viable liquidity framework. It proves that we are moving towards a true information economy.”

And with the skyrocketing interest in cryptocurrencies over the last year, the convoluted onboarding experience and first transaction has brought difficulties to the bitcoin wallet and exchange. Earlier this year it hired a former Twitter exec to help handle the customer service volume as it was “failing” to offer users an acceptable user experience.

Barclays could potentially benefit from FX risk management services, liquidity services as well as the overall draw for customers who want to access crypto markets, according to Ajit Tripathi, a partner at ConsenSys. Barclays declined to comment.

The development is evidence of the looming convergence of crypto markets and exchanges are moving in closer with regulated financial markets, Tripathi said.

“We’re seeing this across a wide range of markets — capital markets, digital asset markets, payments systems, asset management services and products. There’s a convergence going on between regulated financial infrastructure and crypto, and this is an important move in that direction.”

Banks have moved away from the anti-bitcoin sentiment over the last year as they realize its potential for future payment rails, capital markets rails and other financial services platforms that could stand to be improved by new technology. At the same time, their customer demand for access to crypto markets has grown significantly, particularly among high net worth individuals interested in investing in bitcoin and crypto assets.

But there are risks for banks.

“Banks have to be careful. Historically fines in the anti money laundering space have been significant, ranging from tens of millions to a billion dollars,” Tripathi said. “I don’t think banks are actively closing access to crypto rails but they have an obligation to comply with rules and regulations and protect customers.”

Coinbase has serious about making its platform regulated and compliant. Last year it also received a BitLicense in New York.

“The partnership with Barclays adds nuance to that legitimacy, granting a seamless currency exchange previously exclusive to fiat currencies,” said Ghela Bosckovich, Head of fintech and regtech at Rainmaking Innovation. This is the first nod to moving towards a transition to data as an asset class and viable liquidity framework. It proves that we are moving towards a true information economy.”

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