To those in the TradFi (Traditional Finance) world, cryptocurrency may seem like a lawless land of frauds, get-rich-quick schemes, confusing terminology, and complicated technology.

Even the words “cryptocurrency” and “blockchain” are barely understood by many in the crypto space. 1 in 3 crypto investors has little to no understanding of cryptocurrencies, let alone the extensive DeFi (Decentralized Finance) ecosystem.

Like the Wild West, the crypto space is a new frontier with cowboys and gold rushes. Everyone wants to find the next Bitcoin and make their millions. Crypto fanatics see themselves as brave frontiersmen and outlaws boldly creating the new financial landscape. Every day, new coins are launched, and a massive amount of money flows in and all around the ecosystem. In 2021, over $14 trillion dollars moved through crypto exchanges alone.

While there’s no doubt that a vast amount of money is flowing through this volatile space, how do we make sense of it? The crypto space may seem chaotic and disorganized for banks accustomed to high standards of SaaS (Software as a Service), data analysis, and regulations.  

However, crypto has become too big for financial institutions to ignore. Even more so, banks and financial institutions integrating crypto into their services are seeing considerable customer growth and profit returns.

Fintech companies like Revolut and Robinhood, who introduced crypto options, saw their customer base double or triple. After introducing cryptocurrencies, Revolut’s customer base grew from 3.5 million users in 2018 to 10 million by the end of 2019. With such potential, it’s easy to see why integrating crypto services is a forward-thinking business decision.

So how do we find calm in the chaos of crypto?

Creating the perfect toolbox using APIs

To do this, we need the right tools. We need a way to access and analyze the data. We need to connect to customers' wallets, exchange tokens, manage portfolios, accept payments, and much more. Thankfully, pioneers in the crypto space are already developing these tools. Crypto APIs (Application Programming Interfaces) can create a bridge between traditional finance and crypto in a way that's familiar to banks and provide the high standards that banks have come to accept.

An API is a software interface that allows one system to communicate with another. So, for banks, APIs enable them to interact with other banks and customer data. Using an API, a customer can allow a bank to access their financial history or manage their finances. Customers can authorize one financial body to make transactions for them through another. Within the crypto landscape, developers are creating similar tools to finesse the chaotic world of crypto into something understandable and accessible.

Why should banks use APIs?

For banks, this means they can access the world of crypto without having to develop their own tools and software. Not only is this cost and time effective, but this can also mean a bank has easy access to the trailblazers and forward-thinkers of the crypto space. These developers are passionate about building a sustainable peer-to-peer economy using TradFi and DeFi. They're bridging the gap by creating bank-standard crypto financial products, mobile toolkits for Web3, digital asset custodial services for banks, and bringing blockchain technology to the securities market.

The APIs and software offered by these companies and many others are helping to usher in a new financial future that merges the best that TradFi and DeFi can offer. Using crypto APIs developed to the same high standards as traditional banking APIs, banks and financial institutions can dive into the deep end of crypto without drowning.

These crypto APIs can pave the way for the crypto space to develop and mature into a new open peer-to-peer economy that involves some of the best aspects of TradFi. It allows customers control over their data and finance. Meanwhile, banks can share data and develop new methods of managing wealth and supplying financial products, just as they have by using banking APIs to create open banking services.

The next step: open crypto

With the PSD2 directive, traditional finance evolved into a new, more open form of finance. Instead of every bank being a closed silo of data, banks shared data and the customer could seamlessly move from service to service. Open banking paved the way for neobanks like Revolut and Monzo to develop by allowing third-party access to financial data.

The primary catalyst for the explosion (and success!) of neobanks was the development of high-quality APIs. Both neobanks and traditional banks then used these to create new and exciting financial products, including instant loan approval and digital banking. Financial institutions can now offer tailored experiences to each customer using APIs.

Crypto is poised to take this next step into the unknown. The crypto ethos has a lot in common with the ideology of open banking. Both prioritize transparency on how financial institutions deal with customer data and privacy regarding individuals. Each allows a customer-centric approach where individuals control their personal data and finances.

As with the PSD2 directive, this move will create a path for new enterprises to develop. When open banking was initially conceived, neobanks were not an end goal or even envisioned. Innovative traditional financial providers used the tools designed by developers to create something different. We stand on the precipice of something new and exciting — if we're willing to take the plunge.

Blockmate: making open crypto possible

Blockmate is the missing link that can make open crypto a reality. We can connect millions of crypto users with your platform through a single API.

Blockmate is built to the same standard that banks have come to expect from open banking APIs such as Plaid or Nordigen. Banks can easily integrate Blockmate into their services without a lengthy onboarding process.

This allows financial institutions to easily access a vast amount of crypto data and use it in any way they can conceive. Financial institutions can employ the tools that Blockmate provides to supply different services, including crypto credit scoring, client data aggregation and categorization, and wealth management. Our open crypto API is a tool or building block that you can use to create anything if you have the right mindset.

Integrating both open banking and open crypto services into a platform can create a seamless financial experience for the customer. It can also increase profit margins and the customer base for banks and financial institutions!

Conclusion

Open crypto is the next logical step in the growth of crypto as a reputable financial alternative or complement to fiat currencies. As adoption grows, banks that offer crypto services alongside their traditional fiat services will be able to attract a growing number of crypto-curious and crypto-fanatic customers.

The simplest way to do this is using third-party APIs like Fireblocks and Blockmate. Banks and FinTechs can use these high-standard tools to create new financial products while keeping true to the core ethos of open banking and decentralized finance.

These tools can be employed to bring in a new financial ecosystem with the individual at the center. Just as open banking APIs created new institutions and products, open crypto APIs will see the creation of exciting new products and services for anyone brave enough to take the next step.

Thomas Savery didn’t dream of the Orient Express after a long day figuring out how to drain waterlogged mines. Now, the steam engine is old news. And soon, we'll be able to take a bullet train from L.A. to San Francisco in under 3 hours. Similarly, much of what we can do with open crypto APIs hasn’t even been dreamt of yet. It’s up to the visionaries of tomorrow to use today’s tools to create the future of finance.