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Embracing cryptocurrency for virtual banking

As we recently discussed, the concept of e-money is beginning to evolve with cryptocurrencies gaining momentum as a legitimate alternatives are backed by currency issued by governments (or fiat currency).

Sweden is developing a blockchain-based version of its currency, the e-Krona, and Iceland has become the first country to officially allow its currency to be used as electronic money over blockchain, with the Financial Supervisory Authority of Iceland (FME) recently approving Reykjavik-based Monerium to provide fiat-payment services for the Icelandic krona on a blockchain. Russia and Venezuela are also working on their own national cryptocurrencies.

One of attractions of using blockchain is the boost it brings to security and the fact it makes e-money more flexible than it is today. These developments also demonstrate how the evolution of e-money will shape the future direction of digital payments more widely.

The advance of cryptocurrencies is a trend that traditional banks tend to shy away from. However, it’s an area that virtual banks, with digital payments and the internet at their core of their operations, are well placed to cater for.

The limitations of financial institutions often get in the way for users of cryptocurrency, as they make it difficult to send and receive of cross-border payments.

In contrast, cross-border payments are one of the big strengths of virtual banks. Their low operating costs, digital processes and online integration mean they can offer such payments at a low cost and quickly.

And virtual banks like ePayments are also licensed by the UK’s Financial Conduct Authority as an issuer of e-money, meaning they offer legitimate financial services, can verify identities and comply with all anti-money laundering regulations.

Throw in the fact that they’re also at the forefront of financial services innovation, and virtual banks are in a strong position to offer services around cryptocurrency.

With some of the businesses and individuals that ePayments counts as customers looking to make or receive payments using cryptocurrency, there was clear demand to move beyond e-wallets that only hold fiat currency.

However, in order to provide such services – which require the handling of various cryptocurrencies in a secure environment and administering the exchange of cryptocurrencies – ePayments needed to tap into the expertise of a company that was already embedded in the cryptocurrency world.

It therefore integrated the cryptocurrency exchange capabilities of its partner DSX, using APIs to gain an easy-to-use process secured with blockchain.

As a result, ePayments customers can now use cryptocurrency to top up their ePayments wallet with fiat currency. Funds can also be taken out of their wallet in the form of cryptocurrency, with the necessary processes taken care of by crypto exchange DSX.

With the ability to use cryptocurrency through their virtual bank, customers don’t have the complication of also dealing with a crypto company.

Whether they’re dabbling in cryptocurrency or using it in a big way, ePayments customers can conduct all of their financial transactions through a single virtual banking provider. And the demand clearly exists with cryptocurrencies now accounting for about 20 per cent of the total value of payments processed by ePayments.

With traditional banks making moves to ape the services offered by virtual banks, this type of innovation is another example of how virtual banks have what it takes to stay a few steps ahead.

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Embracing cryptocurrency for virtual banking
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