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Will We See Fintech Giants Move into the Crypto Space?

01 November 2023 14:51, UTC

Some fintech firms have seen huge success investing in the world of crypto, but others have been hesitant. Will they move into this disruptive space?

Although cryptocurrencies have faded somewhat from the mainstream news recently, they certainly aren’t going anywhere. Bitcoin is still trading at around US$30,000, leading the way at the head of the overall crypto market, but other currencies are very much still in play. With all this in mind, will major fintech firms start paying attention?

Fintech has long been all about disruption and innovation, yet has often avoided utilizing cryptocurrencies like Bitcoin and Etherium despite the way they revolutionize the concept of money. They even make practical sense for fintech firms, as cryptocurrencies can be moved faster and more cheaply than traditional currencies, allowing them to run operations more efficiently.

It makes sense for fintech and crypto to join forces, and they could be said to share similar goals. While many fintech firms have embraced cryptocurrency, and even seen impressive gains as a result, it seems as if many major companies are lagging behind. Will fintech giants ever enter the crypto space; and if so, when?

Leading fintech firms embracing crypto

One of the many surprises surrounding fintech and crypto is that several major players in the fintech space have already embraced the innovative technology. However, it seems that others are reluctant to follow suit. This is unusual given how effective the move into crypto has been for many of these organizations.

Take PayPal, for example. The fintech titan began working with crypto in 2020, allowing its users to buy and sell currencies including Bitcoin, Ethereum and Litecoin. The company quickly increased purchase limits from US$10,000 to US$20,000, and eventually began allowing users to use crypto as payment to over 29 million merchants.

Users can convert their crypto into fiat currency to pay for goods and services using PayPal. There are plenty of shops and online casinos that accept PayPal deposits, making crypto a functional currency online thanks in part to PayPal. It’s no wonder the company launched its own stablecoin recently, delving further into the world of crypto.

Of course, PayPal isn’t the only company that has embraced cryptocurrency over the past few years. Block Inc — the Jack Dorsey-owned firm behind payment options including Square and CashApp — renamed itself from Square Inc in 2021 to indicate its new focus on blockchain-related technologies.

Other companies appeared to be entering the crypto space in a big way, but have pulled back recently. For example, both Visa and Mastercard have decided to push back product launches related to crypto, possibly waiting until the market stabilizes.

What factors are affecting attitudes towards crypto?

With some major fintech firms embracing crypto and others avoiding it, it is worth asking what factors these companies are considering. For example, one of the main things companies look for in any industry is customer demand. Is there a large market for crypto adoption that fintech giants can tap into?

Demand for crypto skyrocketed from early 2020, which might have caused many fintech firms to immediately embrace it; indeed, many did. However — as with any rapid rise in consumer demand — there were concerns that it might have been a trend or a bubble. Companies were hesitant to invest in crypto until they were sure their money wasn’t going to be wasted.

The value of most cryptocurrencies has fallen since then, but there is reason to be optimistic. The hype cycle has potentially ended, meaning the value of crypto might be stabilizing. That will give fintech businesses confidence in the value of investments into the world of the blockchain, possibly spurring more of them to move into this space.

Embracing crypto could also give companies an edge over their competition, as long as they invest wisely. For example, PayPal allowing crypto to be used to pay for goods and services has solidified it as the main payment method online. Failing to do this could have led to competitors providing this service and eroding PayPal’s market share.

However, one thing that must be considered is return on investment. The growth potential for crypto doesn’t seem very high to many at the moment, as we are coming to the end of a drop in crypto’s value. The failure of crypto exchanges like FTX has also scared many companies away. These factors are important; however, they can be overcome by smart fintech firms willing to take a risk.

Will fintech giants embrace crypto?

Every firm has a different outlook on crypto, and some will never utilize the technology. However, fintech and crypto are made for each other. Although recent events have made many businesses hesitant to invest in the blockchain, this is unlikely to be the case for too long.

As more customers use crypto to pay online, fintech giants will realize the technology isn‘t going anywhere and could become an integral part of their business model. Expect to see more of them embracing cryptocurrencies in the years to come.