July 31, 2023
By Anjali Kochhar
Headquartered in London, Cashaa is a new-age neobank. It was launched in 2016 with a singular vision — to aid the adoption of blockchain-based financial products. They started as a peer-to-peer cash transfer system using Bitcoin infrastructure. Soon they realized that crypto businesses are underserved by the banks and treated as second -class business. To support the uninterrupted growth of the crypto industry, they decided to build a banking platform dedicated to crypto industry. Today the company is working at the frontier of business banking, and helped hundreds of crypto-native businesses to deliver robust products to their users. In an exclusive conversation with NFTMetta’s correspondent Anjali Kochhar, Cashaa founder Kumar Gaurav sheds light on the rise of crypto banking.
Anjali Kochhar: What is the current state of global crypto banking and how has it evolved over the past few years?
Kumar Guarav: The global crypto banking sector has undergone a remarkable evolution in recent years. More traditional financial institutions have started to offer crypto-related services, allowing customers to buy, sell, and hold cryptocurrencies. This integration of crypto into the traditional banking system has provided increased legitimacy and accessibility to digital assets. Furthermore, regulatory frameworks around the world have been evolving to accommodate the growing crypto industry. Some countries have implemented regulations to ensure consumer protection and prevent illicit activities, while others have embraced cryptocurrencies and blockchain technology to foster innovation. In addition, decentralized finance (DeFi) has emerged as a prominent trend within the crypto banking sector. DeFi platforms offer various financial services, such as lending, borrowing, and yield farming, without relying on traditional intermediaries.
Anjali Kochhar: How are global financial institutions adapting to the rise of crypto banking and integrating it into their services?
Kumar Gaurav: Global financial institutions are actively adapting to the rise of crypto banking by integrating it into their services. They now offer a range of crypto-related services to cater to customer demands. These services include enabling clients to buy, sell, and hold cryptocurrencies within their existing accounts. Financial institutions have also established their own crypto exchanges or partnered with established ones to facilitate seamless cryptocurrency transactions. To ensure the secure storage of digital assets, they collaborate with specialized crypto custodians, leveraging their expertise in safeguarding cryptocurrencies. Additionally, financial institutions are exploring the potential of blockchain technology to streamline their operations and enhance efficiency. Some have even started offering blockchain-based solutions for cross-border payments and remittances. By embracing crypto banking and harnessing the power of blockchain, global financial institutions aim to stay relevant in the evolving financial landscape and meet the changing needs of their customers.
Anjali Kochhar: What are the challenges and risks associated with global crypto banking, both for users and financial institutions?
Kumar Gaurav: Global crypto banking presents both opportunities and considerations for users and financial institutions. For users, the decentralized nature of cryptocurrencies offers the potential for greater financial autonomy and opportunities for investment. While security is a concern, users can mitigate risks by adopting best practices, such as utilizing secure wallets and staying informed about potential threats. Financial institutions have the opportunity to embrace innovation and cater to evolving customer needs. By integrating crypto banking services, they can attract new customers and expand their offerings. While regulatory compliance can be a challenge, it also provides a framework for legitimacy and consumer protection. With proper risk management strategies and a proactive approach to security, financial institutions can build trust and confidence in the crypto banking sector. By staying abreast of market trends and technological advancements, they can position themselves at the forefront of this emerging industry, fostering growth and contributing to the mainstream adoption of cryptocurrencies.
Anjali Kochhar: How does global crypto banking impact financial inclusion and accessibility for individuals in underbanked or developing regions?
Kumar Gaurav: Global crypto banking has the potential to significantly impact financial inclusion and accessibility for individuals in underbanked or developing regions. By leveraging cryptocurrencies, individuals in these regions can gain access to financial services that were previously unavailable or limited. Crypto banking allows for peer-to-peer transactions, reducing the reliance on traditional banking infrastructure. This empowers individuals to send, receive, and store funds securely, without the need for intermediaries. Moreover, with the proliferation of mobile phones and internet connectivity, crypto banking can be accessed through mobile applications, enabling financial access for those with limited physical infrastructure. Additionally, the lower transaction costs associated with crypto banking can make financial services more affordable and viable for individuals with limited resources.
Anjali Kochhar: What regulatory frameworks and policies are being developed or implemented to govern global crypto banking and ensure consumer protection?
Kumar Gaurav: Many countries are actively working on legislation specific to cryptocurrencies and digital assets. These regulations aim to provide clarity on the legal status of cryptocurrencies, establish compliance requirements for crypto businesses, and mitigate risks associated with money laundering, terrorist financing, and fraud. Additionally, regulatory authorities are focusing on know-your-customer (KYC) and anti-money laundering (AML) measures to enhance transparency and security in the crypto banking sector. Some jurisdictions are also introducing licensing frameworks to regulate crypto exchanges and custodial services. The objective is to strike a balance between fostering innovation and protecting consumers, promoting market integrity, and mitigating potential risks associated with digital assets. Collaboration among regulators globally is increasing to address the cross-border nature of crypto banking and ensure consistent standards across jurisdictions.
Anjali Kochhar: What are the privacy and security concerns associated with global crypto banking, and how are they being addressed by the industry?
Kumar Gaurav: Privacy and security concerns are important considerations in global crypto banking. While cryptocurrencies offer pseudonymity, the public nature of blockchain transactions raises concerns about privacy. Users’ transaction history and wallet addresses can be traced, potentially compromising their anonymity. However, industry players are actively working on enhancing privacy features, such as implementing privacy-focused cryptocurrencies or protocols, like zero-knowledge proofs and advanced encryption techniques, to protect user data. Security is another crucial aspect. The decentralized nature of cryptocurrencies exposes users to risks, including hacking, phishing attacks, and malware. To address this, the industry emphasizes educating users about best practices for securing their wallets and employing two-factor authentication. Moreover, advancements in blockchain technology are enhancing security measures, such as multi-signature wallets and decentralized exchanges with enhanced security protocols.
Anjali Kochhar: How do traditional banks perceive and respond to the competition posed by global crypto banking, and are there any collaborative efforts between the two sectors
Kumar Gaurav: Traditional banks have varied perceptions and responses to the competition posed by global crypto banking. While some banks initially viewed cryptocurrencies as a threat, there has been a notable shift in recent years. Many banks now recognize the potential benefits and opportunities presented by the crypto industry. Some have chosen to embrace the technology and incorporate crypto-related services into their offerings. This response is driven by the desire to remain competitive, attract new customers, and adapt to changing consumer preferences. Additionally, there have been collaborative efforts between traditional banks and crypto entities. Some banks have formed partnerships or invested in crypto startups, leveraging their expertise to navigate the regulatory landscape and explore innovative solutions together. These collaborations aim to bridge the gap between the traditional financial system and the crypto industry, fostering mutual growth and driving further innovation in the evolving financial landscape.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
