US bank SoFi Technologies has launched a cryptocurrency trading service for its clients as clearer rules allow the cryptocurrency market to attract more interest from traditional finance.
SoFi announced Tuesday that its crypto service aims to offer dozens of cryptocurrencies, including Bitcoin (BTC) and Ether (ETH), and will begin a phased rollout on Monday, with more customers gaining access in the coming weeks.
SoFi CEO Anthony Noto told CNBC’s Squawk Box on Tuesday that the bank was the first and only nationally chartered bank to launch consumer crypto transactions, and was prompted to do so after the Office of the Comptroller of the Currency (OCC) eased its stance on how banks engage in crypto in March.
“One of the holes we’ve had over the last two years has been in cryptocurrencies, the ability to buy, sell and hold cryptocurrencies. We weren’t allowed to do that as a bank. It wasn’t allowed,” he said.
SoFi exited the crypto industry in 2023, subject to obtaining a banking license in a more stringent regulatory environment. The bank returned to cryptocurrencies in June, rolling out international payment options and allowing fiat-to-crypto conversion and sending via blockchain.
Blockchain and virtual currency “super cycle technology”
SoFi also plans to introduce SoFi USD, a dollar-for-dollar stablecoin backed by reserves, and integrate cryptocurrencies into its lending and infrastructure services for borrowing and quick payments.
“We believe that blockchain and cryptocurrencies are supercycle technologies similar to AI that will permeate the entire financial system,” Noto said.
He added that stablecoins will fundamentally change payments if they are liquid and have no credit or duration risks.
“I’m actually very concerned about stablecoins issued by non-bank entities. Where are the reserves? Are there existential risks to those reserves? Are there credit risks to those reserves? Are those reserves less likely to go bankrupt?” he said.
“These are three factors you need to consider when using any stablecoin. Just because it’s back dollar for dollar doesn’t mean those dollars will be there when you try to liquidate.”
Members support cryptocurrency shift
SoFi has more than $41 billion in assets, according to financial metrics platform Business Quant. The bank’s third-quarter financial results listed net revenue of $962 million and 12.6 million members.
Related: How TradFi Bank is driving a new stablecoin model
Mr. Noto stated that 60% of the bank members surveyed were interested in investing in cryptocurrencies, and also revealed that he allocated 3% of his portfolio primarily to cryptocurrencies such as Bitcoin.
“We’re exposed to currency because we believe we’re investing in technology, not currency. The analogy I use for people is, imagine if in 1990 you could buy a piece of the World Wide Web through a coin called the World Wide Web Coin.”
“It’s very similar to that. These are networks that are used for payments and other applications, communication networks,” Noto added.
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