Sebastian Sinclair

British neobank Revolut is pushing ahead with its crypto offerings by giving its customers across the UK and Europe the ability to earn staking rewards.



Customers in supported countries can now earn up to 11.65% annual percentage yield (APY), paid in the respective tokens, on four cryptocurrencies: ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>), cardano (<a href="https://blockworks.co/price/ada" target="_blank" rel="noreferrer noopener">ADA</a>), polkadot (<a href="https://blockworks.co/price/dot" target="_blank" rel="noreferrer noopener">DOT</a>) and tezos (<a href="https://blockworks.co/price/xtz" target="_blank" rel="noreferrer noopener">XTZ</a>), Revolut said in a statement Tuesday.



Revolut is currently offering the most yield on DOT. Staking the token directly to the network as a Polkadot validator generates around 14.43% APY, which means staking DOT via Revolut leaves nearly 3% yield on the table.



Funds are to be held with “trusted custodians” while the platform will manage a user’s private keys. Blockworks has reached out to Revolut to learn more.&nbsp;



Revolut’s staking rewards rollout comes as the platform takes another shot at tapping potential growth from the digital asset sector. The fintech unicorn first dabbled in crypto by allowing users to acquire BTC, ETH and litecoin (<a href="https://blockworks.co/price/ltc" target="_blank" rel="noreferrer noopener">LTC</a>) back in 2017. 



Revolut has since expanded its list of supported digital assets significantly, now advertising more than 90 tokens. It also enabled bitcoin withdrawals to personal wallets in 2021.



Revolut CEO Nikolay Storonsky <a href="https://www.bloomberg.com/news/articles/2022-11-02/revolut-crypto-revenue-plunges-yet-ceo-storonsky-still-believes" target="_blank" rel="noreferrer noopener">said</a> in November that while crypto had contributed 30% to 35% of the firm’s total revenue in 2021, that figure had fallen to around 5% last year.



Still, Revolut’s push for diversifying its digital asset revenue streams echoes sentiment shared by Coinbase CEO <a href="https://blockworks.co/news/coinbase-ceo-touts-subscriptions-to-curb-reliance-on-trading-fees" target="_blank" rel="noreferrer noopener">Brian Armstrong</a> last August.



At the time, Armstrong said his company would shift the way it drums up dollars, which has mostly hinged on fees taken from trading activity when times are good.



Revolut offers a number of products and services including banking, brokerage for traditional equities and digital assets. The firm says it serves 25 million customers across 200 countries, leveraging 29 in-app fiat currencies.



Revolut has raised a total of $1.8 billion in funding over 19 rounds and is valued at roughly $33 billion, <a href="https://my.pitchbook.com/profile/104383-72/company/profile#insights" target="_blank" rel="noreferrer noopener">Pitchbook</a> data shows.



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Revolut Doubles Down on Crypto With Staking Rewards — But Not in US

<div id="highlights-block_62f1e689b714d" class="highlights">
 <ul>
 <li>Revolut plans to move on from its current crypto provider in early September, when the company will offer &#8220;wider and better access&#8221; to crypto</li>
 <li>The company is vying to add an additional 25 tokens to its platform in addition to its existing seven offers for US customers</li>
 </ul>
 
</div>



The US arm of digital banking platform Revolut is switching its main cryptocurrency service provider, according to two sources familiar with the matter. 



Revolut is tapping Chicago-based Apex Crypto, the sources said, moving away from Paxos. An email circulated to customers on Tuesday and confirmed by Blockworks said Revolut intends to migrate from New York State Department of Financial Services-licensed crypto firm Paxos in early September. 



Revolut later sent out an email to customers confirming the custodial change, saying assets will be transferred on-chain. Interruptions to crypto trading are expected to last a few hours on the day, per the email.



It ends a more than two-year partnership with Paxos, which paved the way for the app to offer crypto to US-based customers, initially debuting with bitcoin and ether. New York-headquartered Paxos is a financial institution and tech firm that includes crypto brokerage, asset tokenization and settlement services.



Revolut, a financial super app servicing 20 million customers across 36 countries, launched in the US in <a href="https://twitter.com/RevolutApp/status/1242413400308801536?s=20&amp;t=N433Q2SYEqyIaC3jQ25bBA" target="_blank" rel="noreferrer noopener">March 2020</a>.



&#8220;We’re excited to be partnering with Apex Crypto LLC to provide wider and better access to crypto for you and the Revolut community,&#8221; Revolut wrote in the email.



Representatives for all three companies declined to comment. 



The company is eyeing adding an additional 25 or more tokens to its platform following the migration to Apex, adding to its existing seven offerings in the US. Apex is a broker-dealer offering execution, settlement and custody as a service via its turnkey solutions platform.



Revolut also said it would eventually enable crypto withdrawals, deposits and staking &#8220;in the near future.&#8221; Users are currently able to buy, hold, sell and transfer crypto peer-to-peer through the app.



Crypto peer-to-peer transfers will be temporarily halted during and after the migration until further notice, the neobank said.



&#8220;This was a tough decision, but one we had to make as a preemptive measure to ensure that the process is completed successfully, Revolut said of peer-to-peer transfers in its email. &#8220;We&#8217;re working hard to enable this feature again in the near future.&#8221;



Purchases of Polygon (MATIC) for New York State residents will be temporarily disabled following the migration to comply with local regulations. 



Users will be allowed to opt out of the migration process by closing their positions and liquidating their assets at current prevailing market rates by authorizing Paxos to do so.



During the migration, customers will be unable to buy or sell their digital assets while the crypto section of the app will be hidden. Account balances will remain unaffected, according to the email.



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Neobank Revolut To Dump Paxos in Favor of New Crypto Provider

<div id="highlights-block_62cf560e7b235" class="highlights">
 <ul>
 <li>Research has found that only 16% of unbanked Americans cite a distrust of banks as their primary concern</li>
 <li>The minds behind Wallex believe that crypto can help the unbanked through blockchain-driven neobanks</li>
 </ul>
 
</div>



The largest obstacle among the unbanked isn&#8217;t know-your-customer requirements. It&#8217;s that they don&#8217;t have an income — <a href="https://www.worldbank.org/content/dam/Worldbank/Research/GlobalFindex/PDF/N2Unbanked.pdf" target="_blank" rel="noreferrer noopener">59% cited</a> that as the primary reason why they do not have a bank account, and <a href="https://www.worldbank.org/content/dam/Worldbank/Research/GlobalFindex/PDF/N2Unbanked.pdf" target="_blank" rel="noreferrer noopener">18% cited</a> a lack of documentation.



Trying to convince someone with no income to open an account sounds like a tall order, and offering a crypto address as an alternative doesn&#8217;t look like much of a solution either. But people much brighter than I seem to think crypto can help. And it begins with understanding why 59% don&#8217;t have an income — or enough of an income worth storing somewhere safe.&nbsp;



We sat down with <a href="https://bit.ly/3PvW5Iz">Wallex</a>, an asset and digital asset services provider, to learn more.



<h3 class="wp-block-heading">A vicious cycle</h3>



The global banking system excludes a staggering <a href="https://www.worldbank.org/en/topic/financialinclusion/overview" target="_blank" rel="noreferrer noopener">1.7 billion</a> people.



Behind that number lies a vicious circle of economic conditions and banking alternatives perpetuating global income inequality.&nbsp;



Financial exclusion is expensive. Let&#8217;s take El Salvador, for instance — <a href="https://debanked.com/2021/09/el-salvador-becomes-first-bitcoin-nation-as-70-of-country-remains-unbanked/" target="_blank" rel="noreferrer noopener">70% of Salvadoreños are unbanked</a>, with many relying on overseas remittances. Yet without a bank account, money transfer services such as Western Union will charge them considerably more in fees for cash payouts.



<h3 class="wp-block-heading">The identity issue</h3>



Many mistakenly draw a line of causation between lack of credentialed identity and lack of banking services. Both are issues connecting to the hierarchy of needs. Rather than a line between both, it is better to visualize the causation stemming from the cycle of poverty.&nbsp;&nbsp;



No matter where you live, credentialed identity costs money. People living in a country with a developed economy are more likely to pay that cost because they have met basic day-to-day survival needs. For people struggling financially in countries with developing economies, the incentive to pay for living essentials far outweighs what little their government can offer. Even though it can ultimately help break the cycle of poverty, it doesn&#8217;t put food on the table.&nbsp;



The lack of incentive isn&#8217;t just limited to impoverished people. It costs banks hefty administrative overhead with little promise of return. As a result, small traditional banks are less likely to be proactive in developing know-your-customer (KYC) and anti-money laundering (AML) solutions for these communities.&nbsp;



On top of that, <a href="https://www.fdic.gov/analysis/household-survey/index.html" target="_blank" rel="noreferrer noopener">research</a> has found that 16% of the unbanked in the US cite a distrust of banks as their primary concern. <a href="https://responsiblepayments.org/pdfs/UN-ResponsiblePayments.pdf" target="_blank" rel="noreferrer noopener">Similar studies</a> put that figure at 32% for Latin America and Central Asia.



The current policy has been ineffective when it comes to solving the problem of financial inclusion. What is needed is the application of the existing KYC/AML policy but with an entirely different methodology — one that is proactive in making onboarding easier and less expensive for these populations.&nbsp;&nbsp;



<h3 class="wp-block-heading">Neobanks can help</h3>



The minds behind Wallex believe that crypto can help the unbanked through <a href="https://bit.ly/3Ptt5Bd">blockchain-driven neobanks</a>. Neobanks originated as an online banking services alternative. But with advancements in blockchain technology and crypto currency integration, it can now offer these services in faster and more user-friendly ways. But most importantly, it lowers cost barriers for the unbanked.&nbsp;



These app-based fintechs are platformed on mobile infrastructure. Mobile phone ownership is already high in the developing world and continues to grow yearly. Wallex has embraced <a href="https://bit.ly/3Ptt5Bd" target="_blank" rel="noreferrer noopener">neobanking</a> with an app-based offering that facilitates both fiat and cryptocurrency, with seamless payments and transfers.



Unlike conventional banks, which are locked into legacy systems, neobanks have the flexibility to take a more innovative approach to KYC. Some neobanks have taken to offering tiered levels of service based on the level of credentialed identity provided by the user. This approach means that at least the most basic level of financial services can be provided to customers who can&#8217;t provide documentation or those opposed to doing so.



It goes beyond onboarding. Greater wealth disparity occurs when people don&#8217;t have the opportunity to access savings and investment products. It&#8217;s not just a case of access, but an ability to maintain and grow wealth through access to savings products. <a href="https://www.gfmag.com/global-data/economic-data/worlds-most-unbanked-countries" target="_blank" rel="noreferrer noopener">Studies</a> have shown that access to savings and lending products can boost gross domestic product (GDP) by 14% to 30% in developing countries. Crypto can help move value around the economy far more efficiently than at an individual and community level.



<h3 class="wp-block-heading">Stablecoins — a borderless innovation</h3>



International remittances is another area of high importance for the unbanked. They offer a critical lifeline to those in need. This is where cryptocurrency, more specifically, stablecoins, can play an important role, given that they&#8217;re borderless and lack the volatility of other cryptos.&nbsp; Furthermore, they enable access to the online global economy. <a href="https://intelligence.weforum.org/topics/a1Gb0000001SH21EAG" target="_blank" rel="noreferrer noopener">70% of new value created</a> worldwide over the next decade will be based on digitally enabled platform business models.



As Wallex founder and CEO Simone Mazzuca puts it, blockchain represents an evolution of SEPA and SWIFT systems, with the bonus that it&#8217;s accessible to everyone and facilitates transfers in real time.



The fact that public blockchains are transparent is essential, as it will allow regulation to evolve to an “identity last” approach. Data and pattern recognition can be used to chase down illicit activity. Meanwhile, everyone gets equal access to finance without any cause for financial exclusion.



Through <a href="https://bit.ly/3o2aoZC" target="_blank" rel="noreferrer noopener">TOKASH</a> — Wallex&#8217;s system for tokenized cash payments — the company is working toward being the first CBDC — Commercial Bank of Digital Currencies — by planning to deploy 12 stablecoins in Q3 this year. With this expansion, the company is building on its experience of launching EURST, a euro stablecoin that is fully asset-backed with FDIC-insured USD reserves that are audited in real time.



It is a time of great innovation in finance, and with the aid of cryptocurrency and neobanking, there&#8217;s every reason to believe that we can finally make financial exclusion a thing of the past.



This content is sponsored by <a href="https://bit.ly/3PvW5Iz">Wallex</a>.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.