Crypto infrastructure has shown a willingness to perform bank-like operations, leading to a trend in the launch of neobanks. However, recent disputes have called into question whether cryptocurrencies are ready for neobanks.
Crypto networks have been proposed many times as a venue for neobanks. The rise of cryptocurrency payments also coincided with the rise of other digital neobanks using traditional technology.
As a cryptopolitan reported Previously, one of the key issues with crypto-based banking is the ability to pay yield based on stablecoin ownership. This contentious issue is still unresolved for US users, as discussions regarding competition with mainstream banks are still taking place.
Other banking experts say stablecoin issuers should not: pay interestwhich could close the way for crypto neobanks.
Cryptocurrency neobanks seek common standards
Cryptocurrency neobanks do not have a single standard for either the services offered or the digital infrastructure. Some apps and organizations, such as Coinbase and Metamask, handle the payment side of banking. Almost all crypto apps and wallets can be used for easy payments.
Crypto payments coincided with the rise of SoFi, Revolut, Wise, and other similar fintech payment services, all offering largely compatible user experiences. Encryption can provide a similar experience, adding a layer of permissionless or private transactions.
For some, the true form of on-chain banking is DeFi banking. With the current DeFi infrastructure, the potential of neobanks goes beyond payments and remittances. It will be possible to borrow and save with interest based entirely on blockchain finance.
The challenge for neobanks will be to ensure accurate risk assessments.
Relying on even the best lending protocols may be too risky by banks’ standards. Although crypto rails exist for interest-bearing financing, the protocol is still under threat from loss of liquidity, attacks, or crypto market impacts.
Is crypto ready for neobanks?
Cryptocurrency has matured beyond its days as a playground for huge profits. As markets have become more conservative, attention has shifted to more reliable yield possibilities. Existing neobanks such as Revolut and Kakao are also expanding into cryptocurrencies and could use their reputation and profile to add new payment toolsets.
Over time, cryptocurrencies have developed native solutions for multiple steps in banking products. Wallets gained niche payment apps, DeFi lending offered yield, and some protocols offered automatic savings.
One of the main barriers to implementation was complexity. To achieve a full neobank, cryptocurrencies must transition to something more similar to mainstream neobank apps.
The biggest deployment successes so far include: crypto card. These new products are well known and are driving adoption, especially in the use of stablecoins. The biggest successes have come from self-custody neobanks that also handle cards.
like a larger entity Crypto.com Although it controls a large portion of the market, additional activity comes from projects like TRIA for direct cryptography. expenditure.
Crypto neobanks also have problems with fake platforms offering investments while stealing funds or demanding exorbitant fees.
Another issue for neobanks is ensuring privacy and remaining regulated. Crypto neobanks on public chains still expose large amounts of data that can be tied to real entities, potentially posing security risks. Another big problem is that “crypto neobanks” has turned into a new narrative where the best and most impactful projects were not selected, leading to the release of thousands of apps and massive competition.
