Just Like The Fintech Firms Shape The Cryptocurrency Market, The Market Shapes Them Too.
The fintech giants are shaping the cryptocurrency market, all while the market shapes them tooThe rising demand for such investments is driving the traditional wealth management clients to capitulate and fight for customersCatering to the user demands, fintech firms are at the forefront of digital transformationMajor fintech firms, PayPal (PYPL) and Square (SQ), with their substantial investments and dedicated promotions, all while offering crypto trading platforms to their clientele, have been the torchbearers of cryptocurrency’s investor adoption. SQUARE & PAYPAL’S CRYPTO CONTRIBUTIONSLast year, Square invested over $220 million, i.e., around 5% of its cash holdings into cryptocurrency, which has swelled up to more than twice the amount added. And last month, PayPal launched its cryptocurrency buying, selling, and holding platform, Venmo. David Trainer, CEO at New Constructs, believes it’s a two-way process, where the fintech giants that are shaping the market are also being shaped by the market, reported The Street on Monday.
TRADITIONAL INSTITUTIONS VS. FINTECH FIRMSAccording to Trainer, the rising demand for such investments is driving the traditional wealth management clients to “capitulate and fight for customers in the new, younger demographic.” And this battle is against none other than the fintech startups, as they are far more quick and efficient in adopting “these new assets and categories.” Agreeing with Trainer, Ed Lopez, the managing director and head of ETF product at Vaneck, said there’s “a demographic of people who are used to operating digitally and are demanding it,” and catering to those demands, fintech firms are “on the forefront of this digital transformation.”Zev Fima, the research analyst at Action Alerts PLUS, stated that following the realization that they dropped the ball on fintech, the banks are certainly under some pressure, “from not wanting to drop the ball on cryptocurrency,” too. And as for shaping the crypto market, Fima admitted, it was PayPal’s Venmo launch that made him realize that fintech is a key to widespread adoption of digital currency.“IT’S A NETWORK EFFECT”To develop with the market, PayPal acknowledges the need to offer a crypto trade option. And simultaneously, Venmo became a medium and brought in millions of people to the ecosystem. Reaching a conclusion similar to Trainer and Lopez, Fima believes “it’s a network effect” and “goes both ways.”