N26 Crypto will allow users to buy and sell 100 tokens including bitcoin and ether.
European digital bank N26 announced Thursday it is launching a crypto trading service, starting with Austria as the first market for the product.
The service, called N26 Crypto, is set to 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 the bank’s crypto brokerage feature allows users to “dip their toes in the water in a non-bubbly way.”
To make a trade, users select a coin and specify the amount they wish to buy or sell. Once they complete their order, the cash is deducted from their main account balance and appears along with the token of their choice. Customers can also “drag and drop” funds from their main account into their crypto portfolio, or vice versa, N26 said.
Berlin-based N26 was a bit late to the crypto rush. Fintech rivals PayPal and Revolut have long offered their users the ability to buy and sell digital assets, and leviathan payments Visa and MasterCard also sell their clients crypto and a service called “Web3”. On Wednesday, Brazilian digital bank Nubank launched its own token, called Nucoin.
“Our users are very interested in crypto,” BianRosa said in an interview. “The interest remains very high, even in a bear market.”
N26’s crypto exploration may be more timely. Bitcoin and other tokens have been in the red this year after investors fled the market on fears of higher interest rates and liquidity constraints. While high street banks have shied away from crypto due to concerns about sudden volatility and involvement in fraud, N26 — which holds an EU banking license — is venturing into the space believing it to be more than “just a fad.”
“We want to take a 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 2.5% on buy and sell orders for all cryptocurrencies — apart from bitcoin, which it offers at a reduced transaction fee of 1.5%. For customers of its paid Metal account, which costs 16.90 euros ($16.54) a month, transaction fees are 1% on bitcoin and 2% for all other tokens.
The feature is powered by Bitpanda, an Austrian crypto and stock trading app that shares N26 backer Peter Thiel as an investor — with Bitpanda earning a commission on every trade processed through N26. N26 said it plans to support trading in other asset types over time.
The move may cause discomfort for regulators, who have become stricter in their approach to crypto after the $2 trillion market was wiped out this year. The European Union in particular has been working to crack down on the crypto “Wild West”, with incoming regulations expected to increase investor protection around digital assets. N26 previously had restrictions placed on its growth by BaFin, Germany’s financial watchdog, due to alleged failures in its fraud prevention systems.
“We have a very strong working relationship with all the regulators, so obviously we informed them of our plans, they are aware and we have covered all the regulatory requirements that we have for this market,” BianRosa said.
A BaFin spokesperson said the company does not comment on individual banks but, in general, “banks must comply with any statutory obligations for the prevention of money laundering and all other banking supervision requirements also when doing business with crypto assets.” The Austrian Financial Market Authority, which oversees the market where N26 first launched 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 says this creates a “closed-loop investment loop” where consumer assets are sealed in a regulated environment. It’s a feature that crypto’s biggest proponents might say is antithetical to the technology’s decentralized roots. But N26 thinks this offers greater protection for its users. Customers must meet identity verification checks before being eligible to trade crypto.
“It’s not like you can exchange 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, scoring a $9 billion valuation in its latest funding round last year. Like other fintechs, however, the firm lost money. N26 posted a net loss of 172.4 million euros ($168.8 million) in 2021, a 14% increase from the previous year.