2019 is less than a month away. For many in the crypto space, this year may as well be sooner done. But it hasn’t been all that bad if we look at the technical part of the industry. Its several sections such as healthcare, payment gateways, and security token offerings, made major developmental strides within the year. Crypto Banking is one of the winners with a growing momentum seen so far in this last quarter. Taking a few highlights as cases in point, we had Noomi Wallet launch. It is said it is set to ‘elevate crypto banking in Blockchain 3.0 Era’ by building a Virtual Financial Assets solutions for the Blockchain ecosystem. Europe’s first complete Crypto Banking solution is coming with a complete Banking as a Service (BaaS) solution on the EOS Blockchain. As recent as 22nd November, SEBA Crypto AG (Founded by UBS Bank former managers) announced a partnership to build Tempest ‘Level A’ cold storage, for Cryptocurrencies, barely a month after raising $103 in its Megaround funding to build a bank offering Crypto services. These are a few of the positive headlines pointing at shifting financial needs in favor of Cryptobanks.

Free banking concept

Crypto Banking is not an entirely new concept. It borrows significantly from the 19th Century so-called Free Banking Era. At the time, banks in the US could issue their own currencies. Instances of the practice within the same century are also noted in Sweden, Switzerland, and Australia. Scotland’s controversial and much scrutinized system begun earlier in the 18th Century. Its case has been used by Free Banking proponents to advocate for a return of the system. Even though the systems differed from country to country, they fell within the general theories of Free Banking models. They were, much like Crypto Banking, an alternative to central banking influenced by governments.

The seeming ‘return’ to Free Banking, shows that there are fundamental issues that central banking has failed to meet. Cryptocurrencies, although not fully developed nor implemented due to regulatory hitches amongst other inherent flaws, have proved better and more convenient than fiat. The shortcomings of fiat are deeply rooted in the systems that control them. Traditional banks are the medium for currency disbursement, thus, their inadequacies directly affect the financial system. Crypto Banking offers solutions that give Crypto Banks better bargain within the financial sector.

Crypto Banking Vs Traditional Banking

The source of the failings in the traditional banking system is that power and wealth is concentrated in the hands of the few who manage it. Monetary issuance of currency by governments creates a bias towards the success of its economy. As such, they are susceptible to politicization and corruption. In this set up, central banks service local commercial banks. Although central banks are independent on paper, central bank governors are appointed by the countries’ presidents. This technically puts them under control as allies are appointed to foster government agenda. Such structure in an economy is least favorable to the consumer as government interests come first. Crypto banking on the other hand acts on the contrary. Even with governmental regulations, there are no direct external influences that sanction activities within the network. Once infrastructure governing crypto operations are in place, the decentralized system acts on its own. This main difference sets the point of departure from whence Cryptobanks fair favorably.

Formidable technology

Cryptobanks are online services for storing crypto assets and its processing as well as providers of Business to Business to Consumer (B2B2C) solutions. They are basically web wallets that are operated professionally on a large scale. Cryptobanks powered by the disruptive Blockchain technology highly praised for its privacy, transparency, and credibility. Blockchains facilitate an emerging asset class equivalent to mutual funds, government-backed currencies, stocks and bonds on a global platform. These decentralized borderless networks are open to consumers across the world irrespective of status or background. By design, Cryptobanks offer a range of competitive and attractive services over traditional banks.

Efficient money movement

Transactions on the Blockchain are fast, secure and less demanding. While some traditional money transfer services may take a couple of days to be available on the other end, Crypto transactions take advantage of Peer-to-Peer model of transaction that is instantaneous. This enables Cryptobanks process transfers at lower fees as they are not affected by the bureaucracy that creates long procedures in traditional transfers and resultant high fees.

The elimination of third parties through direct transactions on Blockchain networks ensures dispute resolution takes the shortest time possible. The two actors involved can easily reach an agreement as they are in direct communication. In the event of misunderstandings in traditional fund transfer systems, the conflicts drag on for days. Paypal dispute resolution, for instance, takes up to 43 days to conclude. Even worse, should Paypal suspect that funds sent from one user to another show ‘an unusual pattern’ funds are put on hold even when the parties involved have no dispute. These actions from third parties disrupt money movements creating an unfavorable environment for trade.

According to the World Bank Findex Database 2018 on Financial Inclusion, 1.7 billion adults in 144 economies remain unbanked. The report shows a steady increase in mobile and internet transfer transactions between 2014 and 2017. However, although two-thirds of the said unbanked population own mobile phones, they have no access to financial services. While banking is not available everywhere, Cryptobanks can take this to advantage and offer banking to all those who have access to the Internet. This is possible as the borderless nature of cryptocurrencies are not subject to geographical restrictions.

Smart Contracts

One of the outstanding feature of Blockchain technology introduced by Ethereum is Smart Contracts. They are codes that execute terms of a contract without action from third parties. Smart Contacts outline requirements to be met before they are executed. This makes Crypto banking trustless where actors within the network are protected from malicious actions. Also, as banks highly rely on contracts for their services, Cryptobanks take advantage of Smart Contracts by applying them to these services to reduce processing costs.



Overall, within Crypto Banking systems, consumers are free to choose the Cryptocurrency that best suits their needs. It increases financial opportunities and allows all actors to participate in the economy while sharing in the growth. As every transaction is permanently and digitally stored on the Blockchain, consumers can analyze transaction history and can investigate on a banks’ health before committing to them.

Moves in the Crypto Banking market

As seen, there are legitimate pointers at Crypto Banking taking root as the financial model of the future. Silvergate Capital that owns Silvergate Bank applied to be listed at the New York Stock Exchange with the intent of raising $50 million in its IPO. Known as the ‘Banking Platform for Innovators’ Silvergate opened its doors to Crypto Exchanges and Institutional Investors with a focus on Crypto Assets in 2014. They also opened the Silvergate Exchange Network (SEN) to act as a network for its crypto clients early in 2018. Insinuating that it is going to make Crypto its mainstay, Silvergate was quoted:

‘’We intend to continue focusing on our digital currency initiative as the core of our future strategy and direction.’’

Mike Novograts, a former Goldman Sachs partner, continues to brave the odds in a bid to create ‘the Goldman Sachs of Crypto.’ He intends to draw institutional money to the crypto market through his Merchant Bank, Galaxy Digital. Novograts has been particularly optimistic amid losses from the bear markets. Still, he believes that though it is easy to get skeptical:

“There is something happening...Several high fliers involved in traditional finance are embracing cryptocurrencies. Jeff Sprecher, Chairman and Chief Executive of Intercontinental Exchange (ICE) is launching a cryptocurrency called Bakkt. Additionally, Fidelity Fund management is setting up a company to facilitate crypto trading with Galaxy as its first client.’”

FotonBank.io joins in the Cryptobank race with some of the most promising solutions. Following after its predecessors Nebeus Crypto bank and the European Crypto Bank, through its double Lightnet ecosystem, (Public Light and Private Light Secure) it positions itself as the ‘Financial ecosystem for the future’ basing on its unique features. Currently, there are 4 million daily crypto users for payment services, the number is projected to increase to 31 million by 2019. Crypto market is also expected to hit $1.4 billion by 2024. Foton believes high cross-border fees in international transactions, high remittances in developed nations and the transparency of the distributed ledger will dominate as growth Cryptobanks accelerators.

Foton intends to combine financial and blockchain solutions to create a decentralized user-friendly platform. Payments through its Blockchain will offer worldwide coverage for multicurrency transactions as well as instant contactless payments for QR, AliPay, ApplePay, and GooglePay among others. Importantly, it will offer Crypto backed loans through autonomous unbiased credit systems. Borrowers can build their credit history through a reputation rating system whose updates are made in real time on the Blockchain.

Additionally, users can improve their reputation by contributing to the positive growth of the network. The network will operate an open source platform based on the Turing programing language to allow anyone to build Smart Contracts and APIs that integrate with the network. This open-source approach is adapted to encourage innovation and improvement of the platforms.

Banking is set to be one of the sectors that seriously adopts Blockchain in the near future. It, however, doesn’t come as a surprise. Banking falls within the financial sector for which Satoshi created Bitcoin. While Blockchain seems to fit into everything, it was particularly tailored for finance and it looks great on Cryptobanks.