Marqeta is rolling out seven new tools that would help businesses offer more banking services, the company said Monday. It’s a significant expansion beyond its core business of issuing cards.

The products, called Marqeta for Banking, would enable clients to offer new capabilities, including bill pay, direct deposit, and free ATM access, the company said.

Marqeta’s bid to expand beyond its core card-issuing business by offering ways for businesses to process financial transactions could expand its revenue and customer base, but also puts it in competition with a range of banking technology providers.

“I've said this many times in the past — that every company's going to become a financial services company,” Marqeta CEO and founder Jason Gardner told Protocol. “This is just an extension of that: How do we help our existing customers become financial services companies?”

The new suite of products also includes ACH features and bank-account verification through a Plaid integration. Marqeta for Banking would enable clients to offer instant funding to customers.

Coinbase, Branch, and Fold are among the first clients to use the products. Sanchan Saxena, vice president for retail product at Coinbase, said the crypto company used the Marqeta platform to allow customers to earn crypto rewards and make crypto purchases.

Gardner said Marqeta designed and launched the new products based on an understanding of the loyalty that consumers are known to have for banks.

The company focused on building “features and functions” to help businesses “better create loyalty and affinity with their customers,” he said.

“You have a lot of affinity and loyalty to a bank,” he said. “It’s sort of weird, but they have your money. You probably have had the same financial institution for many, many years. There's no reason to change. And companies have figured out that I can create pretty significant loyalty by creating a very well-designed experience for my customers.”

Michael Gronager found himself on the back foot at a conference in London a decade ago. Then an executive at Kraken, he was chatting up a Mastercard executive who kept mentioning terms like KYC and AML.

“I did not know what they meant,” he told Protocol. “I knew nothing about finance.” Now CEO at Chainalysis, a top blockchain analytics company, he’s solving customer verification problems for a broad range of financial players. In other words, KYC and AML are driving business his way.

Gronager called the incident “kind of funny and a little bit embarrassing,” but it definitely illustrates the kind of dilemma faced by the technologists who were pioneering crypto then.

It was an odd moment for Gronager, who had co-founded Kraken with Jesse Powell after concluding that bitcoin and crypto was “a big paradigm shift in computing.” But that conversation helped shape his path forward: In just a few years, he pivoted to another segment of the crypto industry focused squarely on the finance jargon that befuddled him in London. It was also an area where he could play to his strengths as a veteran big data technologist.

“I could see that there was a need for a scalable process to do origin of funds and transaction monitoring of crypto,” he told Protocol. “There was an opportunity to build a blockchain analytics company. Back then, that didn't exist. No one really understood what that was.”

In an interview with Protocol, Gronager talked about how Chainalysis blazed the trail in on-chain analysis. He also shared his regrets about how blockchain analytics could have softened the blow of the crypto market crash and his hope that the technology will eventually play an important role in derisking the controversial industry.

This conversation was lightly edited for clarity and brevity.

Can you talk about your decision to leave Kraken, where you were a co-founder, to launch Chainalysis?

That's a great question. It's always fun to tell the story again because every time you remember something new and there's another angle.

My entire career has been around big data. I did my Ph.D. in quantum mechanics. I was doing computational physics on different distributed computer systems. I dived into virtual reality. There was big data in terms of 3D models visualized. Then I moved to doing computational physics at CERN, the particle accelerator there.

I stumbled upon bitcoin in 2011. When I saw bitcoin for the first time, I was like, “This is a paradigm shift in computing. This could be something on the size of the internet, if not bigger. And it's something I need to spend time on.” I left my career in the public sector. I dived deep into bitcoin. I was basically trying to figure out: How do you run a business here?

Of course, there were crypto exchanges. But to be honest, I knew nothing about finance. I can tell you a story that is kind of a bit funny and a little bit embarrassing. I was at a conference in London, probably back in 2012. I'm talking to one of the top people of Mastercard in the coffee break before I go on stage. And he's talking about words like KYC and AML. And honestly, I did not know what they meant. So I'm basically trying to Google it before I go on stage. Suddenly I realized, “Ah, oh, yeah, I actually know what that is. I know what they're talking about.”

I'm not from the finance industry. I'm from big data. I joined Kraken because I was probably one of the few people interested in the industry who had a real career, who had a background working at big organizations, building an operational framework, who understood how to work with governments because I'd done that in my research. When I joined the founding team of Kraken, I’d been very, very deep in the source code of bitcoin. I've been contributing to the core protocol, and had built wallet systems that were way ahead of the industry.

Did Jesse Powell invite you to join, and how did that conversation go?

I met Jesse at the first crypto event I attended in New York in 2011. We were both early in the industry. We started talking and basically connected. We had the same views on the industry around a need for running things in a more professional manner. We were looking at the Mt. Gox exchange [hack] and deeply concerned about that. We were discussing [the idea] that someone needs to do something better than that. We stayed in contact from there on. In 2012, I realized that he wanted to build an exchange. I became part of that team and we started building Kraken.

In 2013, FinCEN issued its first guidance around cryptocurrencies. One of the things I keep reminding regulators today when they look back at the industry is everyone in the industry in 2011, 2012, 2013 — they were techies. They knew nothing about finance. There was no idea of this being finance. This was cool. You could buy a pizza with it. Maybe you get rich. That changed in 2013 with the guidance from FinCEN. The banks would not let you use the platform because they were afraid of being part of a money-laundering scheme. They couldn't understand what we were doing.

I realized that with all of the anti-money laundering policies of different countries, everyone talks about transaction monitoring. You could not assess the origin of funds in an online exchange without adding a ton of paperwork and a ton of verification of that paperwork. So I could see that there was a need for a scalable process to do origin of funds and transaction monitoring of crypto. That was the summer of 2014 when we really started to look into those things.

I made presentations for our own banks around what could be done in crypto: It's way more transparent than you think. I had conversations with regulators around the transparency of crypto. I kept saying how transparent crypto is in principle. And they didn’t understand.

One of the things I keep reminding regulators today when they look back at the industry is everyone in the industry in 2011, 2012, 2013, they were techies. They knew nothing about finance. There was no idea of this being finance. This was cool. You could buy a pizza with it. Maybe you get rich.

I basically realized that this is an opportunity. There's an opportunity to build a blockchain analytics company. Back then, that didn't exist. There was no blockchain analytics. No one really understood what that was. That was exactly the company that I wanted to build. I just didn't realize that before that point. I wanted to build something cool in crypto, and it turned out to be blockchain analytics.

I had to leave Kraken. I discussed that with Jesse. He could see it was a good idea. Initially, I was thinking it could be part of Kraken, but it didn’t make sense because it was so different.

There were a lot of people who didn't believe this was even a thing back then. So it was impossible to get funding. There was a belief that crypto was meant to be anonymous, and I was going to break that and that was not right. So there was pushback initially from investors and others.

Can you give an example of a conversation that sticks out for you, maybe an investor or someone saying, “Are you crazy?”

I will not put his name on it, but I talked to an investor who invests in basically everything in the industry and also invested in Chainalysis in the end. I remember sitting in their office.

By mid-2015, I had sold to the FBI and to other government agencies. It was kind of clear that what we are building is useful. But the investor was like, “Yeah, you can sell for like $30,000 to the FBI. But how many other FBIs are there? This is going to be niche.” No one really saw that the size of this market would be counted in billions at some point.

That's a good segue to my next question: How do you make money?

One of the very, very early decisions was basically thinking the most valuable companies on the internet today are selling things online, B2B, and charging money for it. I wanted to build a company where you get recurring revenue, where people subscribe to a service, a good way to grow the revenue over time. The most valuable companies are typically SaaS companies that can build recurring revenue. They have good multiples because there's a lot of stickiness in that revenue. So we did that initially. We are still doing that.

The change that happened in 2015 was the realization that our data and software is actually so powerful, and we don't want it in the hands of the wrong people. So we had to create a vetting process in the sales process where we don't want the FSB from Russia to buy it or others to get access to it. That would today be called enterprise SaaS. It typically moves the deal sizes from thousands of dollars to hundreds of thousands of dollars. So that's where we are today.

We could have predicted that something was about to fall apart.

Our average deal size is more than $100,000. And we see huge growth in our customers because we talk to them a lot. The account sizes are growing 50% year-over-year basically, so there's a lot of growth in the accounts that we are selling to. In the early days, the main customer was government. It still is. So we have 200 public-sector institutions in some 50 countries in the world, roughly, that are our customers. Sixty percent of our revenue today is from the public sector.

They're not touching crypto in terms of buying and selling cryptocurrencies. But they want to be able to trace it. So if a hack happens, if they think it's being used for selling drugs or other things online, they want to trace the funds. They want to build a court case. The product enables them to be smart about crypto and do these investigations. That we ended up becoming a very big business.

Then we have the other side of the business, which is the private sector. In the private sector, the typical customer would be a crypto business. It could be a crypto exchange. It could be a gaming platform. It could be a DeFi platform. It could be others in the crypto space that need compliance and also want to have business intelligence information about their customers.

A lot has changed in the last decade in crypto and blockchain. What has been the most difficult change for the business?

When we see times like the last couple of years, when the entire world was [into] crypto — and we saw that back in 2017, as well — it's actually hard to run a business because, first of all, everyone thinks they're going to be rich tomorrow. Everyone gets weird. You suddenly realize there's a few people in the company who might be key people that suddenly got rich on crypto and don't need to work anymore. I've seen that in Kraken back in the day.

You're basically operating in an ecosystem that’s growing so fast, it's really hard to make the right decisions and do the right things. We have seen some extremely fast bull runs where the market just explodes, capital keeps flowing in, new protocols are being launched, new projects are being launched, and you basically are being pulled in all directions all the time.

I can see the opportunities growing 10x a day, which is amazing. But at the same time, I need to make decisions at a millisecond level in terms of where I should deploy resources. Where should we grow? What should we do? If I make the wrong choice, I might lose out on the biggest opportunity. What we saw last year was hard.

Can you give an example of a decision that was hard, and maybe a mistake that you made?

A good question. One is from the last bull run in 2017. We saw the ICOs. Everyone in crypto did an ICO. They all launched funds that way. Everyone else wanted to do an ICO and everyone was like, “Why are we not doing an ICO?”

My gut feeling told me not to do it. But I wanted to play it out to the team. So I remember an event where we were discussing it and I just pretended to the team that I wanted to do it just to see their reaction. And everyone got a little bit concerned because I was basically telling them we're going to launch an ICO. We're going to raise money this way.

And people are like, “Yeah, but is it legal? We're selling to the SEC as one of our customers. They might not like that we are doing an ICO.” We basically ended up not doing it because of the premise that it's actually not well understood from a regulatory point of view, whether it was legal or not.

Then a few months or half a year later, the SEC actually cracked down pretty hard on ICOs. They felt that this was selling unregulated securities and it was wrong. So I'm happy we didn't do it. But it was also one of these things that had we done it right, it might have been an opportunity. It's hard to say. And I would say this today: I would say I feel that there [could] have been a core piece of regulatory innovation that I could have created to enable the ICOs to be a success.

What do you mean?

What happened in the crypto space in the early days was really interesting. We saw that you couldn't trace cryptocurrencies. It was more and more dangerous and all of that. Because of what we innovated at Chainalysis, it was suddenly not a risk for society anymore. There was no need to go hard on it from a regulatory point of view.

So I always think about every time we see challenges from a regulatory point of view, it's easy to create technology where you can move funds super fast and make investment schemes like we saw with Three Arrows and terra-luna. That's the easy part. The hard part is to create the regulatory technology that enables these technologies to work with low risk or less risk. That's kind of the foundation of Chainalysis.

Every time I see a challenge in the industry, I'm like, “This is an opportunity for us. If we make the right innovation now, we can change the industry.” Otherwise regulators will come in and it's done. I'm always like, “Can we do this fast in that situation?”

I still don't know what we should have done. But I'm always thinking that there might have been a way where we could have enabled regulators to get the right oversight and feel they did the right thing for consumer protection and other things through technology. That would have been an opportunity for the company.

You mentioned Three Arrows and Celsius. What are some of the things that you think could have been done better with blockchain analytics given what happened?

The challenge in the industry today is there's a cross section between traditional finance and crypto. What happens today is that many of the crypto exchanges operate also like traditional finance. Someone is a well-known customer and they will operate on credit. So they will call the exchange and say, “I'm going to buy $10 million of bitcoin tomorrow.” And they say, “OK, you just do it. You can hand in the money later.”

Of course, that happens in traditional finance: Big private equity companies getting loans from very big established banks to buy more private equity that's highly, highly leveraged investments. In the crypto space, we saw the same. We saw it with Three Arrows. We saw it with Celsius and others. Suddenly that's not something I can see on the blockchain. I don't know. I can't see that. So the challenge here becomes: how do we include that information? There were deals happening in terra-luna that were not visible on-chain.

If decentralized means that I'm my own bank, and everything is out of reach of governments, they're wrong.

But I would still say — if I should point fingers at myself and blockchain analytics — I think that when our industry and what we're building at Chainalysis matures even more, there will be a situation where a lot of these schemes and all of these layered investments will actually be more clear. You can build products that can showcase them.

Both on Celsius and terra-luna, we were trying to assess: Could we have predicted this with our data? And the answer was, sadly, yes. We could actually have seen that stuff was going on. We could have predicted that something was about to fall apart. And now, we are, of course, focused on enabling that [kind of prediction].

If we can do these things, it means that that's a very valuable product. It derisks your investment. Suddenly, if you can get early warning that this is falling apart, you can leave in time, and that makes the investment less risky. I think that that product could really help regulate the industry. So I think that there's stuff that can be done in blockchain analytics. But there will be parts where, as I said, if it happens on a phone call, I cannot know about it.

I'm assuming you're using AI to figure these out.

We are. Not on the phone-call side. Not even AI could do that.

Crypto is now 13 years old. What do you say to those who argue that it is no longer as decentralized as it was in the beginning?

If decentralized means that I'm my own bank, and everything is out of reach of governments, they're wrong. But if decentralized means that, like the internet, we build a platform where anyone in the entire world can create a company based on that protocol and participate in that and be a partner in that without any approvals from anyone, then it is decentralized.

Today you can start a business operating on bitcoin in any corner of the globe. You can do that on Ethereum. You can write a smart contract in Bangladesh. You can write a smart contract in Australia. You can write it anywhere on the globe. You can deploy it to the blockchain and you can build a great big business and it's very decentralized and very ubiquitous. Then it's a huge success. And at the same time, you can own it yourself. You don't need a provider. Everything is available everywhere.

But if you then look at the concentration of funds and other things, that will follow another pattern. We will see a concentration of cryptocurrencies. We'll see a concentration of other resources. I think it's a success in that sense. In the sense of the concentration that happens with wealth, that's a law of nature. That's not something we should try to break. It's just how it is. It's fine. It's OK.

But you just described earlier a problem about some transactions that you will not see on the blockchain where people will be able to concentrate their resources and their power to do things that may not be beneficial to everyone.

As the crypto industry grows and it becomes a bigger and bigger part of finance, I think people will see that hiding becomes hard. It's actually hard to hide. Even for North Korea, we've seen they stole a lot of funds over the last year. We have prevented them from cashing out. We have also helped in seizing the funds when they try to cash out. So we have seen that even for a nation-state actor, it's not a free game. You actually meet resistance here, and that's only going to be more in the future. That will be a healthy balance, hopefully.

Apple is raising the prices of several of its subscription services: The company began charging $10.99 for Apple Music on Monday, a $2 per month price increase. The price for Apple TV+ is also being increased by $2 to $6.99 per month, while the company’s Apple One subscription bundle now costs $16.95 per month, $2 more than before. It’s the first time the company has increased the price tag of its entertainment subscriptions since it launched Apple Music in 2015.

Apple is also increasing prices for discounted subscriptions, including annual and family plans, where available. 9to5Mac, which was first to report the news, has a detailed breakdown of all the changes, as well as a company statement that blamed the Apple Music price hike on increased licensing costs. "In turn, artists and songwriters will earn more for the streaming of their music," an Apple spokesperson told the publication.

Apple's spokesperson also argued that the Apple TV+ price increase was justified because of the company's ramped-up content slate. The company isn’t alone in its strategy of passing rising costs onto the consumer. Google announced a price hike of its YouTube Premium family plan last week, and Disney+ prices are going up in December. And the price increase for Apple Music could give other music subscription services, including Spotify, cover to follow suit.

However, the price increase also comes just a week ahead of Netflix’s introduction of a lower-priced, ad-supported tier. That plan is priced the same as Apple TV+ after today’s price hike. Before those changes, Netflix’s cheapest plan was twice as expensive as Apple's offering.

There have been unconfirmed reports that Apple is looking to introduce an ad-supported Apple TV+ plan as well.

Good morning, and welcome to Protocol Fintech. This Monday: how Brex and Ramp’s paths to market diverged, Fireblocks’ plan for crypto payments, and Ripple celebrates its Hinman win.

Off the chain

Rishi Sunak appears set to become the U.K.’s next prime minister, but I don’t think that country’s crypto sector should celebrate quite yet. True, Sunak championed crypto-friendly policies as finance minister. But if he hopes to keep his job longer than his predecessor, he’s best off focusing on fixing fiat.

Diverging and converging

Corporate spend management has entered a period some analysts call “the great convergence.” Companies like Ramp, Brex, Mercury, and Airbase are increasingly moving toward offering all the same services, like charge cards, bill pay, and even B2B "buy now, pay later." But as the market matures, leading companies Brex and Ramp are surrendering their dreams of owning the entire market — even though much of it has yet to be tamed — and moving toward more of a “divide and conquer” mentality.

Brex is still facing an identity crisis. When Brex controversially let its SMB customers go in June, Eric Glyman, the CEO of rival Ramp, told Protocol it was a “very, very good month” for his company.

• Brex co-founder Henrique Dubugras said during a talk at the TechCrunch Disrupt conference last week that trying to serve both SMBs and startups was the company’s “biggest mistake.”
• But his definition of SMBs feels shaky. Back in June, Dubugras told TechCrunch that Brex’s definition of SMBs was companies without “professional” funding. Yet at Disrupt, Dubugras seemed to contradict that, saying his company was totally down with “boot-strapped” startups too. Generously, you could say the common thread for Brex is serving companies with an accelerated growth strategy.
• Ramp, meanwhile, likes customers with money — slower-growing companies that are profitable earlier on. “I think in the startup world, people forget most businesses are profitable,” Glyman said. He argues that small and medium-sized businesses without a moonshot strategy are a strong, sustainable customer base.

Because they’re targeting different customers, their marketing is different. Brex is appealing to startup hype culture, and Ramp to an ethos of humble growth.

• Brex’s marketing feels straight out of the year the company was founded, 2017, when WeWork was hosting beer-soaked getaways for employees with Florence + the Machine performing. At LA Tech Week, Brex’s two buzziest events were a media-restricted yacht party and a mansion party serving Captain Morgan and Bombay shots, no chaser, at what was once the influencer-filled Hype House. At TechCrunch Disrupt, attendees were greeted by a giant floating “Brex” sign and a built-out coworking area immediately upon entering the expo floor.
• Brex touts customers like DoorDash and Coinbase: the kind of companies its startup clients hope one day to be.
• Glyman, meanwhile, described Ramp’s marketing persona as “nice but understated.” Much of the credit card industry’s marketing, historically, has been to play up the wonders of all the extravagant things you can charge on a card, like fancy flights. Glyman said he wants to do the opposite.
• “If you can help people go home earlier and spend time with their families and do more things for less, I think that should work,” he said. Ramp wasn’t even on the expo floor at Disrupt.

Even the companies’ founding stories reflect their diverging strategies. As they grow, each company is increasingly reflecting its origins.

• Brex’s co-founders set out, from an early age, to found companies that might create major change and make major money. Dubugras and co-founder Pedro Franceschi started innovating as teens in Brazil, speaking the lingo of Silicon Valley as they built their first startups.
• Glyman founded a startup specializing in price tracking, Paribus, before starting Ramp. But he was inspired to start it, he said, by a teenage job at retailer Express, after experiencing the difficulties of business banking.

There are other key differences. Ramp has about 400 employees, while Brex had around 1,100 before it laid off 11% of its staff this month. Brex, first to market, courts well-known companies as customers, while Glyman boasts that one of Ramp’s top customers is a hardware business selling “screws and fasteners.” Brex and Ramp’s rivalry is covered like a horse race because it is. The companies have raised around the same amount of money, and are the two biggest startups in corporate spend. They are competing for the same investor checks, employees, and press mentions. But as the companies mature, the founders’ worldviews are pulling them further apart.

A MESSAGE FROM AUTOMATION ANYWHERE

Today, we expect instant results from our every action, from calling an Uber to ordering a t-shirt. Companies can no longer afford to not adopt technologies like automation. We are now living in the Automation Economy – a new world that requires agility and a complete reimagining of how we work.

Learn more

On the money

On Protocol: Fireblocks is laying the groundwork for crypto payments’ mainstream moment.

FTX will compensate phishing victims. Sam Bankman-Fried said the crypto exchange will compensate victims of a scam this weekend with up to $6 million, calling it a "one-time thing."

Bitcoin can't match the highs and lows of the stock market. The cryptocurrency's 20-day rolling volatility fell below that of the Nasdaq and S&P 500 for the first time in two years.

American Express says consumers are still spending. AmEx reported a 21% jump in card-member spending in the third quarter.

DeFi lenders are tightening things up. Borrowers on DeFi app Maple must now sign legal agreements that include a provision for submitting independently audited financial accounts annually.

The Hinman docs are out

After months of legal wrangling, the SEC finally agreed to release documents that Ripple says could shed light on the agency’s thinking on crypto as it pursues a lawsuit against the crypto company. The case, over whether XRP is a security, remains closely watched, as it could set a legal precedent affecting the entire industry.

The documents deal with a 2018 speech by former SEC director William Hinman in which he said ether is not a security. The crypto powerhouse's leadership marked the win by ripping into the regulator now widely viewed as the industry’s nemesis.

“The SEC wants you to think that it cares about disclosure, transparency and clarity,” Ripple CEO Brad Garlinghouse said in a tweet. “Don’t believe them. When the truth eventually comes out, the shamefulness of their behavior here will shock you.” An SEC spokesperson said the agency had no comment.

The SEC and Ripple have been embroiled in a legal battle since 2020, when the agency sued the company for alleged securities laws violations. The SEC has argued that Ripple failed to register roughly $1.4 billion worth of XRP, the cryptocurrency used on the Ripple network, as securities.

Read the full story on Protocol.com.

Coming up

Money20/20 started Sunday and runs through Wednesday in Las Vegas. Calling itself “Fintech’s Biggest Conversation,” the supersized fintech conference includes speakers from Serena Williams to JPMorgan Chase’s Takis Georgakopoulos. If you’re going, join Protocol Fintech reporter Veronica Irwin and other colleagues at our Tuesday happy hour.

WSJ Tech Live is today through Wednesday in Laguna Beach, California. The exclusive tech event is both in-person and online with programming tailored to tech executives. The eclectic list of speakers range from Sam Bankman-Fried to Hailey Bieber.

Discover announces earnings today. According to Zacks Investment Research, the EPS forecast is $3.66 versus $3.54 for the same quarter last year.

Visa announces earnings Tuesday. Zacks has its EPS forecast at $1.86 against $1.62 for the same quarter last year.

Apple, Amazon, Shopify, and Mastercard announce earnings on Thursday. According to Zacks Investment Research, the EPS forecast for AAPL is $1.26 against $1.24 for the same quarter last year. The EPS forecast for AMZN is $0.23 where it reported $0.31 for the same quarter last year. The EPS forecast for SHOP is -$0.23 versus $0.01 for the same quarter last year. Last, the EPS forecast for MA is $2.57 where it reported $2.37 in the same quarter a year ago.

Join Protocol Enterprise for the event “AI and chips: What the future holds for the U.S. and China” next Thursday, Nov. 3, at 10:30 a.m. PT/1:30 p.m. ET. Protocol senior reporter Kate Kaye will moderate two panels on cross-border AI tech and the AI “Values Competition.”

A MESSAGE FROM AUTOMATION ANYWHERE

Today, we expect instant results from our every action, from calling an Uber to ordering a t-shirt. Companies can no longer afford to not adopt technologies like automation. We are now living in the Automation Economy – a new world that requires agility and a complete reimagining of how we work.

Learn more

Thanks for reading — see you tomorrow!

Crypto payments are a long-promised feature of the technology, dating back to the original bitcoin white paper. But many obstacles have left crypto payments mostly limited to geographies with runaway inflation or tied up in the operations of crypto businesses like miners.

But more companies are building the necessary parts of a system for mainstream crypto payments and expect adoption to happen, even if it may take some time. Mastercard, PayPal, and Stripe have recently made moves to accommodate crypto in consumer payments.

Fireblocks, the crypto infrastructure startup with 1,500 clients including Revolut and Prime Trust, is the latest to do so. The company is releasing a product Monday that enables payment service providers to settle a variety of different types of crypto transactions.

Fireblocks’ new Payments Engine has been used by Checkout.com in a pilot phase and done $1 billion in crypto transactions this year. Now FIS has signed on to do merchant settlement with Fireblocks. FIS’ Worldpay unit already handles card-to-crypto transactions for four large U.S. crypto exchanges, offers USDC settlement, and is planning further moves into crypto.

By providing technology for large institutions to manage and transfer crypto securely, FIreblocks is providing a key piece of the puzzle that these financial firms need to enable crypto payments. While all the other elements needed may not be in place yet, Fireblocks’ offering is laying the groundwork for a future in which spending with crypto is commonplace.

Fireblocks does not handle fiat-to-crypto conversions and doesn’t intend to get into this aspect of payments directly. Instead, it provides technology to handle settlement and other services related to handling crypto.

For example, if a consumer buys crypto on an exchange with fiat currency using a Worldpay-based credit card, the exchange handles sending the crypto to the consumer. Worldpay can then use Fireblocks to settle securely with the exchange via stablecoins in minutes, using a wallet transfer instead of sending fiat, which could take two to three days to settle. Transactions can also be sent 24 hours a day instead of between 9 and 5 on weekdays.

Fireblocks also provides the compliance and reporting that large financial institutions need to do these types of transactions, said Ran Goldi, vice president and head of payments.

Besides helping merchants take payment in crypto, the startup’s new tools could be used for other payment scenarios, including cross-border transactions, creator payouts, and subscriptions. That’s potentially helpful for marketplaces and other companies that currently deal with a wide range of fiat currencies.

For some merchants, the ability to settle almost instantly in stablecoins may be attractive even if they aren’t crypto companies, Goldi said, for the cash flow benefits. Still, he acknowledged, crypto payments have a ways to go. Barriers include regulatory questions, a lack of infrastructure for required identity checks, and the paucity of banks willing to hold stablecoins for customers.

Some banks like Silvergate and Signature are offering digital assets custody services for merchants. If more banks offer support for stablecoins, more merchants will use them, Goldi said. While now there may be “tens” of banks worldwide that support crypto, he expects that number to increase.