N26 Crypto will allow users to buy and sell 100 tokens including bitcoin and ether.
European digital bank N26 on Thursday announced the launch of a crypto-trading service, starting with Austria as the first market for the product.
The service, called N26 Crypto, is expected to be available to Austrian N26 customers in the coming weeks and will initially include 100 tokens, including bitcoins 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, chief product officer of N26, told CNBC that the bank’s crypto brokerage feature allows users to “dip their toes in water in a way that isn’t frothy.”
To complete a trade, users select a coin and specify the amount they want to buy or sell. Once they complete their order, the money is deducted from their main account balance and appears next to the token of their choice. Customers can also “drag and drop” funds from their main account to their crypto wallet, or vice versa, N26 said.
Berlin-based N26 is a bit behind in the crypto rush. Fintech rivals PayPal and Revolut have long offered their users the ability to buy and sell digital assets, and payment methods Visa and MasterCard also sell cryptographic and so-called “Web3” services to their customers. On Wednesday, Brazilian digital bank Nubank launched its own token, called Nucoin.
“Our users are extremely interested in crypto,” BianRosa said in an interview. “That interest remains very high, even in a bear market.”
N26’s crypto foray could have been better timed. Bitcoin and other tokens have plunged into the red this year after investors fled the market amid fears over higher interest rates and liquidity constraints. While high street banks have shunned the crypto due to concerns over its high volatility and involvement in fraud, N26 – which holds an EU banking license – is dipping its toes into the space believing it’s is more than just a fad. “
“We want to take a pretty 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 a 2.5% fee on buy and sell orders for all cryptocurrencies – other than bitcoin, which it offers at a reduced transaction fee of 1.5%. For subscribers to its paid Metal accounts, which cost 16.90 euros ($16.54) per month, the transaction fee is 1% on bitcoin and 2% for all other tokens.
The feature is powered by Bitpanda, the Austrian crypto and stock trading app that shares N26’s support Peter Thiel as an investor – Bitpanda pocketing a commission on every trade processed through N26. N26 said it plans to support trading other types of assets over time.
The move may embarrass regulators, who have become much stricter in their approach to crypto after the market wiped out $2 trillion this year. The European Union in particular has sought to crack down on the “Wild West” of crypto, with incoming rules that should bolster investor protections around digital assets. N26 has previously been subject to restrictions on its growth by BaFin, the German 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 let them know about our plans, they’re aware, and we’ve covered all the regulatory needs we have for that market,” BianRosa said.
BaFin was not immediately available to comment on N26’s crypto ambitions, which the company previously stated publicly. The Austrian Securities and Markets Authority, which oversees the market where N26 is first launching its crypto service, did not immediately return a request for comment.
Notably, N26’s crypto service does not include support for custodial wallets, which means customers cannot move their assets off the platform. Platforms like Robinhood and Revolut have recently introduced features giving users more control over their crypto assets.
BianRosa said this creates a “closed-loop investment loop” where user assets are sealed in a controlled environment. It’s a feature that some of crypto’s biggest proponents might say is at odds with the technology’s decentralized roots. But N26 argues that this provides better protection for its users. Customers must complete identity verification checks before they can perform crypto transactions.
“It’s not like you can convert those bitcoins and buy something on the dark web with those assets in your wallet,” the N26 product manager said.
N26 is one of Europe’s biggest fintechs, with a valuation of $9 billion in its most recent funding round last year. Like other fintechs, however, the company is losing money. N26 has racked up net losses of €172.4 million ($168.8 million) in 2021, a 14% increase from the previous year.