American bank SoFi Technologies launched crypto trading services for its clients, as clearer rules allowed the crypto market to attract more interest from traditional finance.
SoFi he said on Tuesday that its crypto service will aim to offer dozens of cryptocurrencies, including Bitcoin (BTC) and Ether (ETH), and began a phased rollout on Monday, with more users gaining access in the coming weeks.
SoFi CEO Anthony Noto told CNBC’s Squawk Box said Tuesday that his bank is the first and only nationally authorized bank to launch consumer crypto trading and was prompted to do so after the Office of the Comptroller of the Currency (OCC) eased its stance on how banks can deal with crypto in March.
“One of the loopholes we had in the last two years was cryptocurrency, the ability to buy, sell and hold crypto. We weren’t allowed to do that as a bank. That wasn’t allowed,” he said.
SoFi withdrew from the crypto industry in 2023 as a condition of obtaining a banking charter in a stricter regulatory environment. The bank returned to crypto in June, when it launched international payment options, allowing fiat-to-crypto conversions and transfers via blockchain.
Blockchain and crypto “super cycle technology”
SoFi also plans to introduce SoFi USD, a stablecoin backed by dollar-for-dollar reserves, and integrate crypto into its credit and infrastructure services for lending and faster payments.
“We believe that blockchain and cryptocurrencies are a super cycle technology just like artificial intelligence, and will be pervasive in all financial systems,” Noto said.
He added that stablecoins would fundamentally change payments, provided they have liquidity and do not carry credit or duration risk.
“I’m actually quite concerned about stablecoins from non-bank operators. Where are the reserves? Is there duration risk to those reserves? Is there credit risk to those reserves? Is bankruptcy of those reserves far off?” he said.
“Those are the three elements you have to think about with whatever stablecoin you’re using. Just because it returns dollar for dollar doesn’t mean those dollars will be there when you try to liquidate.”
Members support the crypto shift
SoFi has more than $41 billion in assets, according to to the financial metrics platform Business Quant. Bank results for the third quarter list its net income is $962 million and it shows a member base of 12.6 million people.
Related: How TradFi Banks Advance New Stablecoin Models
Noto said that 60% of bank members surveyed are interested in crypto investments and also revealed that he has allocated 3% of his portfolio to crypto, mostly Bitcoin.
“We’re exposed to it because I believe we’re investing in technology, not currency. The analogy I use with people is imagine that in 1990 you could buy a piece of the World Wide Web through some coin called a World Wide Web coin.”
“It’s very similar to that. It’s networks, communication networks that are used for payments and other applications,” Noto added.
Magazine: If the crypto bull run is ending… it’s time to buy the Ferrari: Crypto Kid
About the Author
