- Traditional finance recognizes that cryptocurrencies are more than just investable assets.
- In the EU, fintech has become a major competitor for crypto natives.
Stripe is heating up cryptocurrencies.
The payments giant’s $1.1 billion acquisition of stablecoin platform Bridge heralds the next stage in the evolution of cryptocurrencies, pitting native brands against fintechs, banks and asset managers.
That's according to Gillian Lynch, head of Ireland and EU at Cameron and Tyler Winklevoss' crypto exchange Gemini, who claims the evolution is already evident in the European Union.
“If you look at our competitors here in the EU, fintech is a huge competitor, but this is probably a slightly different situation than in the US,” Lynch said. Crypto-native companies like Coinbase and Kraken have a much larger presence in the US.
He said fintech was just the beginning and that big banks would be next as the EU introduced regulations to help big global companies enter the market.
european rules
The EU's crypto market regulation came into effect in July, with rules for stablecoins being the first to apply. The part of the regulation targeting service providers such as exchanges will come into force at the end of December.
Complying with MiCA's licensing rules will be a “huge undertaking” for Gemini, but it could be a boon for cash-rich companies, Lynch said.
MiCA allows companies that start operations in one jurisdiction to serve the entire jurisdiction. Therefore, those who can afford to abide by onerous rules can enter the world's second-largest cryptocurrency market, accounting for one-fifth of the world's trading volume.
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Lynch and other EU crypto exchange businessmen predict accelerated consolidation as a result. Large companies will enter the market, while smaller companies that can't afford to respond will go bankrupt or be acquired.
Fintech land grab
It is no coincidence that MiCA is targeting stablecoins in its first phase, and its first breakthrough transaction, Stripe's, is to integrate with stablecoin functionality.
Lynch said this appears to be an early sign that cryptocurrencies are gaining mainstream acceptance, integrating into the financial system, and moving beyond their initial use as stores of value.
“We focus on the investment side [of cryptocurrencies]But we're going to start to see more focus on cryptocurrencies as a means of payment, and that's where stablecoins come in,” she said.
The entry of large, well-funded companies into the market is a competitive threat to crypto natives, but it also presents an opportunity to partner with them.
growth trajectory
Gemini has gotten America through some tough times. The company paid a $3.7 million fine in February and returned about $1.1 billion to customers in its defunct Earn loan program.
Lynch said the exchange wants to expand the institutional side of its business.
Gemini will consider partnering with companies on various activities. Asset managers will need a place to store their crypto holdings and make them available to investors, while some banks may need an over-the-counter trading partner.
Gemini is also interested in targeting personal wealth, a service that banks provide to the wealthy, Lynch said.
This makes sense for a company headquartered in the tax haven of Ireland, home to the world's third-largest investment fund.
The stage seems set for this iteration of the cryptocurrency evolution, as banks want to provide their customers with access to cryptocurrencies and MiCA provides clear guidance for digital assets within the EU. Masu.
“It's going to be interesting to watch it play out over the next 12 to 24 months,” Lynch said.
Joanna Wright is a regulatory reporter. DL News. Any tips? email address: joanna@dlnews.com.
