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Xapo’s Neeraj Sane: Licensed Banks Hold the Key for the Soaring Bitcoin Adoption

Last Updated June 18, 2024 12:42 PM
Teuta Franjkovic
Last Updated June 18, 2024 12:42 PM

Key Takeaways

  • Xapo’s Sane said that more retail banks were considering crypto as a legitimate asset class, partnering with external providers.
  • The complexity of using Bitcoin compared to traditional fiat currency was a major hurdle for wider adoption.
  • Licensed banks could offer a user-friendly experience.
  • Both increasing retail interest and growing institutional investment were driving Bitcoin adoption.
  • Bitcoin ETFs were expected to further mainstream Bitcoin.

Despite prevalent skepticism, increasing retail banks are beginning to treat cryptocurrencies as a legitimate asset class. 

Regarding the evolution of retail Bitcoin banking and current trends in the Bitcoin industry, CCN spoke with Neeraj Sane , VP of marketing from Xapo Bank, the fully regulated bank with over $1 billion in reserve. Sane claims Bitcoin needs banks to become mainstream.

BTC Adoption Driven by Price & Utility, But Banking Needs Improvement

While a few banks are developing their own blockchain expertise in-house, the majority are opting to partner with third-party providers to integrate these services.

CCN asked Sane about the key factors driving Bitcoin’s adoption in retail banking today.

He commented that multiple factors influence this trend. Firstly, there is the potential for price appreciation. Observing the previous bull run cycles and possibly being on the verge of another, people are beginning to recognize the opportunities. Additionally, he says, the utility of Bitcoin is significant; it can be spent and sent seamlessly. Sane concluded by noting that many newcomers to the Bitcoin community  are starting to appreciate its utility as a global currency.

Inquired about the significant challenges confronting Bitcoin banking and the potential solutions, Sane explained that for every bank that plans to enter the Bitcoin retail circle, it’s important that it enables banking with Bitcoin the way one does with fiat currency.

He elaborated:

“So if you put your dollars or your euro in a bank account, it’s obvious to you what you can do. You know, generally there is a reassurance that it will be safe. You can send it, you can spend it, you can pay your bills. If you have to do the same with Bitcoin today, you have to jump through multiple hoops. You probably have to download ten apps to get all of these things done.”

Bitcoin Needs Licensed Banks for Easy Use, Adoption Soaring

Sane further explained that the ability to develop a product that consolidates various financial services within a single app stems from being a fully licensed and regulated bank, not just holding an e-money license but a full banking license. This ensures a physical headquarters, a deposit guarantee, and the provision of interest-bearing accounts.

He concluded by emphasizing that this framework aligns with the traditional ways users are accustomed to interacting with their money.

He said:

“And if they want to work with Bitcoin, Bitcoin has to work the same way as their money today. And so you need a trusted custodian, you need a trusted provider who is regulated licenced, and has been doing this for a while. And I think we, companies like us, are the means with which Bitcoin can start to gain mainstream.”

Regarding the emerging trends he foresees in the Bitcoin industry that could significantly influence retail banking, Sane said it could be a combination of two factors that we’re already starting to see.

He mentioned that retail adoption of Bitcoin was already in place and has only accelerated over the last two bull runs, predicting that this trend will likely continue in the current cycle. Additionally, he pointed out the increasing institutional adoption, which further lends credibility to Bitcoin.

The market outlook for Bitcoin is highly positive, influenced by the introduction of ETFs, the Bitcoin halving, and the pent-up demand following the crypto winter.

Sane explained:

“We now have the Blackrock ETF, for instance. And so I have, for example, I have members in my family who never mentioned Bitcoin in years, and now they’re asking questions about Bitcoin. So I think these two factors are going to help Bitcoin.”

“Next Big Thing is Already Here”

Sane also added that the potential benefits of ETFs include helping to mainstream Bitcoin and providing it with credibility among a larger audience, particularly as they observe significant institutional players entering the market.

He said:

“I think, in the world of Bitcoin particularly, they [ETFs] have the potential to be a very large, welcoming, diverse tent. So anything that helps Bitcoin gain mainstream adoption is in the long term, it’s a good thing.”

He remarked that Bitcoin, like most currencies or financial assets, will go through its cycles and added he believes the long-term trajectory of Bitcoin is upward, expecting the price to rise. Regarding the ultimate value of Bitcoin, he said that it remains to be seen, acknowledging the uncertainty of its future value.

Speaking about the next ‘hot thing’ in crypto, Sane stated it is “already here and has been here”.

“We’ve always believed that Bitcoin is the next big thing. And in fact it is already a big thing. And I think that’s what it’s going to contribute,” he concluded.

 

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