N26 Crypto will allow users to buy and sell 100 tokens including bitcoin and ether.
European digital bank N26 announced Thursday that it is launching a crypto trading service, starting with Austria as the first market for the product.
The service, called N26 Crypto, will be available to N26’s Austrian customers in the coming weeks and will initially include 100 tokens including bitcoin 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, N26’s chief product officer, told CNBC that the bank’s crypto-broking feature allows users to “dip their toes in the water in a way that’s not frothy.”
To make a trade, users select a coin and specify how much they want to buy or sell. Once they complete their order, cash is deducted from their main account balance and appears next to the sign of their choice. Customers can also “drag and drop” funds from their main account to their crypto portfolio, or vice versa, N26 said.
Berlin-based N26 is a bit of a latecomer to the crypto rush. Fintech competitors PayPal and Revolut have long offered their users the ability to buy and sell digital assets, and payment leviathans Visa and Mastercard also sell their customers crypto and so-called “Web3” services. 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 super high, even in a bear market.”
N26’s crypto attack could have been better timed. Bitcoin and other tokens are deep in the red this year after investors fled the market due to fears of higher interest rates and liquidity constraints. While high street banks have shied away from crypto due to concerns about its sharp volatility and involvement in fraud, N26 – which has an EU banking license – is dipping its toes into the space out of the belief that it is more than “just a fad”. “
“We want to take a pretty 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 its 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 backer Peter Thiel as an investor – with Bitpanda pocketing a commission on every trade processed by N26. N26 said it plans to support trading in other asset types over time.
The move could cause discomfort for regulators, who have become much stricter in their approach to crypto after the $2 trillion market wipeout this year. In particular, the European Union has sought to crack down on the “Wild West” of crypto, with incoming rules expected to improve investor protection around digital assets. N26 previously faced restrictions on its growth by BaFin, the German financial watchdog, due to alleged failures in its fraud prevention systems.
“We have a very strong working relationship with all the regulators, so of course we inform them of our plans, they are aware and we have covered all the regulatory needs that we have for this market,” BianRosa said.
A BaFin spokesperson said the company does not comment on individual banks, but that banks generally “must comply with any statutory obligations for the prevention of money laundering and all other banking supervision requirements, including when doing business with crypto-assets. ” The Austrian Financial Market Authority, which oversees the market in which N26 is first launching its crypto service, said any questions about the move should be directed to BaFin.
Notably, N26’s crypto service does not include support for custodial wallets, meaning 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 it creates a “closed-loop investment loop” where users’ 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 it offers greater protection for its users. Customers must perform identity verification checks before they are eligible to conduct crypto transactions.
“It’s not like you can convert those bitcoins and buy something from the dark web with those assets from your wallet,” said N26’s head of product.
N26 is one of Europe’s largest fintechs, and achieved a valuation of $9 billion in its most recent funding round last year. However, like other fintechs, the firm is losing money. N26 incurred net losses of 172.4 million euros ($168.8 million) in 2021, an increase of 14% over the previous year.