A total of 650 banks in the United States will soon be able to sell bitcoin to an estimated 24 million customers. Community banks, including North Carolina-based First Citizens Bank, and credit unions, including Bay Federal Credit Union in California, will be able to offer cryptocurrency trading to their clients as part of a partnership between NCR, the world's largest payments company, and NYDIG, a digital asset management organisation.
Financial institutions that choose to make the service available will rely on Nydig's custody services to avoid having to deal with the cumbersome regulatory procedures associated with actually keeping the cryptocurrency for their customers.
The initiative is the latest by Atlanta-based NCR to capitalise on demand from banks and credit unions fed up with cryptopurchases being made from their accounts and sent to third-party exchanges. Traditional banking institutions are joining an increasing wave of companies in direct rivalry with cryptocurrency exchanges by giving these customers with a way to buy bitcoin—and eventually spend it—within their existing accounts.
NCR head of digital banking Douglas Brown adds, "We're ardent believers in the benefits of crypto and the strategic application." “And that's true for our banking connections, as Nydig has demonstrated, as well as across retailers, restaurants, and other businesses.”
NCR, originally known as National Cash Register, employs 34,000 people in 160 countries and offers a wide range of services, including digital banking, ATMs, and restaurant point-of-sale kiosks. The company's stock dropped 62 percent to $13.43 between January and March 2020. Then, following in the footsteps of PayPal and many other financial technology service businesses after the Covid-19 outbreak, NCR's stock has risen 238 percent since March 2020, when quarantine began, to $45.44. Non-cryptocurrency transactions brought in $6.2 billion to NCR last year.
NCR is the largest provider of point-of-sale software to supermarket and other retail outlets in the world, with a 45 percent market share, in addition to its work in the finance industry, according to research firm RBR. In total, NCR serves 180,000 restaurants, retail chains and more, including Fifth Group Restaurants in Georgia and If everything goes according to plan, all 9 hotels In the near future in Ohio will be able to accept bitcoin payments.
In May, the 135-year-old group collaborated with New York-based cryptopayment business Flexa to allow customers of Sheetz, a convenience store chain founded in Altoona, Pennsylvania, to pay for petrol and other goods using bitcoin, ether, litecoin, dogecoin, and other cryptocurrencies. Now, Brown claims that "dozens" of NCR's banking and credit union clients have complained to him about their customers utilising their savings to purchase bitcoin and other cryptocurrencies.
Rather than losing such assets to third-party cryptocurrency exchanges—or sending threatening letters to its clients saying they don't approve of the purchases—they decided to keep the value by providing the services themselves. “A lot of these institutions have recognised that shifting money from the bank to exchanges like Coinbase is one of the major outflows from their depositors,” adds Stone Ridge cofounder Yan Zhao, who will join Nydig as president in December 2020. “And that's one of the reasons why banks are so ecstatic to have this capability for themselves and their customers.”
In the first phase of the relationship, NCR's banking clients will be able to purchase, sell, and trade bitcoin and other cryptocurrencies directly from their mobile app. While the purchaser will feel as if they are working directly with the bank to make these purchases, the actual assets will be held by Nydig on the back end. When a customer wishes to purchase bitcoin, it is obtained from various regulated OTC desks and exchanges and sold at a slight markup based on the size of the trade and other factors. The bank, in turn, pays Nydig a monthly fee based on the number of users.
"I believe you'll see cheaper transaction fees through the banks than you see presently in the marketplace," says Patrick Sells, Nydig's head of bank solutions. “Banks, on the other hand, have the authority to set transaction fees.”
You'll be able to charge for investment advice in addition to being able to charge for it, Brown believes that the banks will likely follow PayPal's lead. The payments giant noticed a 100 percent increase in the pace at which its customers visited the app in the months after it began allowing them to buy and spend bitcoin, enhancing the possibility to sell them other products. “Banking today is a daily or twice-daily activity for people, which is what we normally see,” Brown says. “On a per-hour or per-sub-hour basis, crypto deepens interaction.”
While the Office of the Comptroller of the Currency granted banks the right to hold private keys that provide users access to bitcoin on behalf of their clients last year, NCR bank customers are unlikely to have to worry about that. Nydig intends to store the precise quantity of assets purchased by its clients in cold-wallet custody off-line. “Every dollar of customer bitcoin is bitcoin held in custody, in trust for the customers,” Zhao explains.