As the crypto market makes its way through the recession, more money coming in and more users could help it weather the storm.
But right now, it's sometimes challenging for the layman to get into crypto. Understanding gas rates and wallets isn't intuitive, and the perceived miasma of complication currently surrounding the space doesn't help either. To help foster user adoption and the resulting capital inflow, web3 needs smoother ingress and egress paths to make it easier to buy and interact with blockchains.
Trusted providers with existing core audiences are betting that they can help to fill that void.
In recent weeks, several relevant financial institutions have launched new crypto products and services in a bid to make the space more accessible. In late April, Mastercard, PayPal, and Robinhood spoke independently about the steps they are taking to make it to Consensus 2023 and how they are progressing their moves into the crypto ecosystem.
“Despite the market, we are still on the cusp of mainstream adoption,” said José Fernández da Ponte, senior vice president and general manager of blockchain, cryptocurrency and digital currencies at PayPal. “We got into this technology because we think it contributes to the idea of a faster, more inclusive financial services environment,” Ponte said.
The crypto ecosystem is in a “transition period,” according to Raj Dhamodharan, Executive Vice President of blockchain and digital currencies at Mastercard. The industry is figuring out the technology and what else can be extracted from it, and “a lot of energy is going to be discovered in the next use cases,” he said.
People new to cryptography are more willing to use a platform they already know and trust to purchase web3 products and services. Domestic financial names opening their doors to the ecosystem could be the catalyst that pushes cryptocurrencies from niche to something more.
On April 28, Mastercard released "Crypto Credential," a set of standards and infrastructure that aims to help certify interactions between consumers and businesses using blockchain networks.
“We are excited about the underlying technology and the promise that the technology offers,” said Dhamodharan. “We believe that public blockchains can be a utility for storing and moving value over time…and you need to show that you can do it in a compliant way.”
Mastercard is working with crypto wallet providers Bit2Me, Lirium, Mercado Bitcoin, and Uphold to enable transfers between the US, Latin America, and the Caribbean. The card issuer is also partnering with blockchain organizations like Aptos Labs, Ava Labs (creator of Avalanche), Polygon, and The Solana Foundation to bring the set of standards to developers in each ecosystem.
Robinhood also introduced its latest cryptocurrency creation, Robinhood Connect, which will allow its clients to provide capital for their web3 wallets without ever leaving a decentralized app or being in their Robinhood cryptocurrency accounts. It is also adding more in-app features such as advanced charting and order types for trading, a dedicated crypto tab on the app homepage, and price alerts.
Robinhood has more than 11,4 million monthly active users with $62 billion in assets under custody, as of December 31, according to its website. Johann Kerbrat, general manager of cryptocurrency at Robinhood, declined to share what percentage of his MAU were also cryptocurrency users.
“We still see cryptocurrencies as an operating system for tomorrow's finances,” Kerbrat said. "There's a lot more value, and I think giving more access to customers was very important to us."
People also want to do "more complicated things" with crypto, Kerbrat said, adding that Robinhood users have said it's hard to get into web3 because of the complicated barriers. So trying to improve the crypto customer experience was a "no-brainer," she said.
PayPal also showcased a new feature that allows customers to transfer cryptocurrency between its sister properties, Venmo and PayPal, as well as other wallets and exchanges in the digital asset ecosystem. The feature is an effort to bring "more choice and flexibility" to users, the company said. Cryptocurrency transfers will be rolled out to Venmo customers soon.
“If you look at the way we've been building things, it's been deliberate,” Ponte said. "Consumers want the ability to move and have choice."
Over the past 12 months, more than 74% of Venmo cryptocurrency customers have continued to hold their cryptocurrency in their Venmo accounts, and as of early 2023, approximately 50% of customers with existing cryptocurrency balances added to their holdings. on Venmo, according to internal PayPal data. Thus, most of Venmo's cryptocurrency clients still had their capital, regardless of market volatility, and about half have since added it, which may indicate a sentiment that there is an opportunity for further growth. .
But the way cryptocurrencies will evolve in the long term is to bring all the regulated financial players and large institutions into the ecosystem and help them build applications that can scale, Dhamodharan said. “Similar approach to how the internet has evolved over time: You have VPNs and private businesses, but the internet is still a decentralized public utility. The same should happen in the public chains”.
“From the TradFi space, I think companies are doing some fascinating work in crypto like Fidelity, Franklin Templeton, and BlackRock; we are seeing more and more of financial services,” said Ponte. Even in the midst of a crypto winter, he doesn't expect any institution to fold. "People who commit stay committed."
Robinhood has a "strong belief that web3 is here to stay and wants to be there to help the customer get there," Kerbrat said. “We are committed to the web3 space”.
