A popular digital bank has launched cryptocurrency deposits. What’s in it for customers?
Global digital bank FV Bank has announced the launch of a new service that allows its customers to make direct deposits in USDC stabelcoin into the organisation’s dollar accounts. Funding an account by transferring tokens does not differ much from traditional financial transactions. Funds received in USDC are instantly and automatically converted into US dollars at the time of deposit. This new solution allows FV Bank users to send invoices to their international customers in USDC, providing faster and cheaper transactions as well as conversion of funds. We tell you more about what’s happening.
FV Bank is a cryptocurrency digital bank regulated by the Office of the Commissioner of Financial Institutions in Puerto Rico. The company originally planned to roll out cryptocurrency custody services in 2021, following the lead of major US banks like Standard Chartered. However, the launch date was eventually postponed. Obviously, the bear market in which the cryptocurrency industry and other categories of activity are currently found has had an impact.
To demonstrate the magnitude of the latter, suffice it to show how cryptocurrency rates have changed over the past week. The most tangible collapse among the largest market capitalisation coins here was shown by Etherium ETH, which lost 20 percent of its price.
Changes in cryptocurrency rates over the past week
On a monthly scale, the situation is noticeably worse. Bitcoin lost 10 percent of its price in this interval.
Change in cryptocurrency rates over the past month
Despite the situation, cryptocurrencies are finding new uses. And that includes members of the world of traditional finance.
Where cryptocurrency is being used
FV Bank CEO Miles Pasquini commented on the announcement of the new service in an interview with Cointelegraph. Here is his relevant rejoinder.
We believe that this feature will significantly improve the user experience and open up commerce opportunities without additional costs.
In other words, bank officials recognise and acknowledge the benefits of digital assets. Obviously, this is a strong argument for those users of the financial institution who, for whatever reason, have not yet had time to interact with coins.
FV Bank and USDC
For now, USDC is the first stabelcoin the bank is working with, but the list of similar tokens in the organisation’s services may expand in the future. Pasquini continues.
We chose USDC because of its licensing, reserve attestations and real-time liquidity.
In addition to the integration of USDC, FV Bank also plans to launch its own custodial service in the fourth quarter of 2022. It will allow the bank’s customers to hold digital assets in a custodial account, where Bitcoin, Etherium and other coins can be transferred “based on integration criteria”. That is, the list of tokens supported by the bank across its suite of services will expand.
Note that the idea of storing cryptocurrencies through a bank is essentially at odds with the ideals of digital assets and crypto. In addition, there are quite a few hardware wallets available today that allow you to securely store and interact with coins. One of their most recent representatives in the form of Ledger Nano S Plus we got acquainted with in a separate article.
Capitalisation of USDC for the past year
FV Bank is not the only financial institution integrating USDC. On Tuesday, equity trading platform Robinhood also announced the listing of Stablecoin. It became available for transfers on Polygon and Ethereum networks on Wednesday, i.e. yesterday.
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As a reminder, USDC is a typical Stablecoin from Circle, which is backed by real assets at a 1:1 ratio to tokens. There are other types of similar projects – for example, algorithmic steblecoins. Their value is secured by algorithms, smart contracts or user actions on a decentralised basis, i.e. without the activity of a specific company. The concept of algorithmic stablcoins gained a lot of popularity last year, but now it is more associated with the collapse of the Terra project ecosystem this spring.
Due to the ill-advised actions of the Terraform Labs team, their TerraClassicUSD steblecoin almost completely devalued, causing the project to collapse with a capitalization of tens of billions of dollars. This led to bankruptcies of some cryptocurrency companies and a massive correction of the entire market.
Eventually, the problem became so serious that algorithmic stablcoins will now be banned altogether by the US government, albeit temporarily.
White House paves the way for uniform regulation of the crypto market
The heads of the House Financial Services Committee continue to debate the terms of a bill recently released by the White House to regulate cryptocurrencies. It would ban TerraClassicUSD-type algorithmic stackcoins for two years. The published bill also gives banks and other financial institutions the ability to issue staplecoins, working with a network of regulators.
It should be noted that the bill is not yet final White House guidance – the document still needs to be voted on next week. But if passed, it would mark the beginning of stricter regulation of the steiblocoin industry in the United States. Perhaps the concept of algorithmic steiblocoins will be forgotten as a dead end.
We believe that such an innovation will benefit the digital asset industry. It not only confirms the strengths of cryptocurrencies, but also speaks in favour of a great future for the new asset class. Accordingly, the company's customers and others will have a new way to connect with coins, if they haven't already done so.
What do you think about this? Share your opinion in our Millionaire Crypto Chat. We’ll discuss other important developments in the blockchain world there, too.
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