Coinbase, the cryptocurrency exchange is looking to expand into traditional financial services. The company is going to allow customers to deposit paychecks directly to their online accounts.
Additionally, they are setting up direct deposit services where customers can send a portion or all of their paycheck directly into the Coinbase online account. Max Branzburg, who is Coinbase’s vice president of product wrote, “We’re determined to deliver the most trusted full suite of crypto-first financial services to our 68 million users.”
The direct deposit will allow customers to have easier access to crypto-currency transfers or trading. Customers can still leave their money in dollars if they choose, operating as a holding place similar to a bank.
Coinbase is looking to answer customers’ desires to cut out banks in the process by eliminating bank transfers that are inconvenient to their customers. While a small percentage of United States bank customers hold or trade cryptocurrencies, the number is growing as crypto finds its way into mainstream investment strategies and payment processes.
The launch is projected to take place within weeks, and Coinbase will use an FDIC-insured bank partner for the direct deposits. The company is not the first to allow for direct deposits beyond traditional banks. Paypal and Robinhood both allow for the service, as do online only banks.
As Banking Exchange reported earlier this week, Coinbase had attempted to also offer interest on accounts, which received push back from the SEC. However, some analysts wonder if the SEC can really hold off companies from offering similar services as banks pointing to the fact that customers may choose to leave their accounts in US dollars. Both the SEC and the American Bankers Association have pushed back against cryptocurrency focused companies.
However, a 68 million customer base is larger than some of the top US Banks and the demand for cryptocurrency will likely continue.
Coinbase and companies like them will continue to push to have the right to provide similar services to banking customers, and banks will need to consider expanding its services to compete in the future.