$9 billion European digital bank N26 launches crypto trading service in bear market

N26 Crypto allows users to buy and sell 100 tokens including bitcoin and ether.

N26

European digital bank N26 announced on Thursday the launch of a crypto-trading service, starting with Austria as the first market for the product.

The service, called N26 Crypto, is expected to be available to Austrian N26 customers in the coming weeks and will initially include 100 tokens, including bitcoins and ether. N26 plans to roll out the feature to users in other markets over the next six months and eventually expand its token offering to include a total of 194 coins.

Gilles BianRosa, Chief Product Officer of N26, told CNBC that the bank’s crypto brokerage function allows users to “dip their toes in water in a way that’s not frothy.”

To complete a trade, users select a coin and enter the amount they want to buy or sell. Once they have completed their order, the money is deducted from their main account balance and displayed next to the token they have chosen. Customers can also “drag and drop” money from their main account to their crypto wallet or vice versa, N26 said.

Berlin-based N26 is a bit behind in the crypto rush. Fintech rivals PayPal and Revolut have long offered their users the ability to buy and sell digital assets and payment methods Visa and MasterCard also sell cryptographic and so-called “Web3” services to their customers. On Wednesday, Brazilian digital bank Nubank launched its own token, called Nucoin.

“Our users are extremely interested in crypto,” BianRosa said in an interview. “That interest remains very high, even in a bear market.”

N26’s crypto foray could have been better timed. Bitcoin and other tokens have fallen into the red this year after investors fled the market amid fears of higher interest rates and liquidity constraints. While high street banks have shunned the crypto due to concerns over its high volatility and involvement in fraud, N26 – which holds an EU banking license – is dipping its toes into the space, believing it to be more than just a fad. “

“We want to take a fairly long-term view on this,” BianRosa said. “It’s not like we’re trying to time the launch on how the market is doing.”

N26 charges a 2.5% fee on buy and sell orders for all cryptocurrencies – except bitcoin, which it offers at a reduced transaction fee of 1.5%. For subscribers to their paid Metal accounts, which cost 16.90 euros ($16.54) per month, the transaction fee is 1% on bitcoin and 2% for all other tokens.

The feature is powered by Bitpanda, the Austrian crypto and stock trading app that shares N26’s backing, Peter Thiel as an investor – Bitpanda collecting a commission on every trade processed through N26. N26 said it plans to support trading in other types of assets over time.

The move could embarrass regulators, who have become much stricter in their approach to crypto after the market wiped out $2 trillion this year. The European Union in particular has been trying to crack down on the “Wild West” of crypto, with incoming regulations to strengthen investor protection around digital assets. N26 has previously been subject to restrictions on its growth by BaFin, the German financial watchdog, due to alleged flaws in its fraud prevention systems.

“We have a very strong relationship with all the regulators, so obviously we’re letting them know about our plans, they’re aware, and we’ve covered all the regulatory needs that we have for that market,” BianRosa said.

BaFin was not immediately available to comment on N26’s crypto ambitions, which the company has previously stated publicly. The Austrian Securities and Markets Authority, which oversees the market where N26 is first launching its crypto service, did not immediately return a request for comment.

Notably, N26’s crypto service does not include support for depo wallets, which means customers cannot move their assets off the platform. Platforms like Robinhood and Revolut have recently introduced features that give users more control over their crypto assets.

BianRosa said this creates a “closed-loop investment loop” where user assets are sealed in a controlled environment. It’s a feature that some of crypto’s biggest proponents might say is at odds with the technology’s decentralized roots. But N26 claims this provides better protection for its users. Customers must complete identity verification checks before performing crypto transactions.

“It’s not like you can convert these bitcoins and buy something on the dark web with these assets in your wallet,” said the N26 product manager.

N26 is one of Europe’s largest fintechs with a valuation of $9 billion in its latest funding round last year. However, like other fintechs, the company loses money. N26 has hit a net loss of €172.4 million ($168.8 million) in 2021, up 14% from the previous year.

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