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As cryptocurrency continues its push into the mainstream financial world, crypto exchanges are working to position themselves as key infrastructure providers enabling broader adoption.
Known primarily for its network of bitcoin ATMs and kiosks, Coinme is now expanding its focus to business-to-business crypto services. In a recent interview, Coinme CEO Neil Bergquist outlined the company’s vision for becoming a comprehensive crypto-as-a-service platform for businesses looking to integrate digital asset capabilities.
“We’re a platform that provides crypto infrastructure,” Bergquist explains. “That infrastructure is the ability to create an account and conduct KYC [know your customer], so that Coinme and our partners can be compliant with various state and federal regulations, but also so customers are able to use a debit card or cash to buy or sell digital currencies. Then we can custody digital currencies or send them to a customer’s wallet of their choice.”
This pivot allows Coinme to leverage its existing regulatory compliance and technical infrastructure to help other businesses integrate cryptocurrency offerings into their own platforms and services. Bergquist sees significant potential in providing the backend plumbing for companies wanting to dabble in crypto without building everything from scratch.
“There’s various use cases and opportunities, and we see ourselves as just having all the ingredients to let the partner make whatever amazing dish they want to create for their customer,” he says.
Crypto-as-a-Service
The move comes as the broader crypto-as-a-service market is projected for rapid growth. According to industry forecasts, the global CaaS sector could reach $84.6 billion by 2031, expanding at a 59.3% compound annual growth rate.
Bergquist outlined several key components of Coinme’s CaaS offerings. One is enabling fiat on-ramps, allowing customers to use traditional payment methods like debit cards or bank transfers to purchase cryptocurrencies.
“If you have a token and you want someone to be able to buy it, you’re going to need to offer a fiat payment processing to be able to purchase that token, and that’s where Coinme comes in,” he notes.
Equally important is providing off-ramps to convert cryptocurrencies back into fiat currencies. “Coinme is able to provide that piece of infrastructure,” Bergquist says. “If you’re earning a token reward, how do you redeem it?”
The third crucial component is secure storage and custody of digital assets. As Bergquist explains: “If you have a token, how do you allow people to hold it? And so that’s a custody solution where we can enable the partner to put their name on it. Coinme provides the back-end technology to custody that digital asset in a secure manner.”
One of the goals of offering this full stack of services is to lower the barrier to entry for businesses interested in crypto integration. Rather than having to build complex infrastructure and navigate regulatory compliance from scratch, companies can leverage Coinme’s existing platform.
Use Cases
The potential use cases for crypto span a wide range of industries and applications. Bergquist sees opportunities in areas like gaming, where bitcoin or other cryptocurrencies could serve as in-game currencies. Loyalty and rewards programs are another avenue, with businesses potentially tokenizing rewards points to increase engagement and create new possibilities for redemption.
“We’re seeing opportunities really around consumer engagement and retention,” Bergquist notes. “So think of it kind of like a rewards program where a company can tokenize some type of a reward and be able to use that as a reward when people make purchases or do a particular behavior and then redeem those tokens for some kind of value product or service.”
He adds that while such programs may not differ drastically from traditional loyalty programs, tokenization opens up new possibilities around interoperability. “Whereas your Starbucks points are unique to Starbucks and only able to be used at Starbucks, what if Starbucks points were on a blockchain and there was a free market around them? That certainly is a very interesting concept.”
The payments space is another area ripe for innovation. Bergquist points out that cryptocurrencies can offer faster and cheaper transactions compared to traditional payment rails, especially for cross-border transfers. This could make crypto an attractive option for businesses looking to reduce costs associated with international payments, and for customers who rely on remittances.
Regulation and Adoption
Bergquist acknowledges that regulatory uncertainty remains a significant hurdle for more widespread B2B crypto adoption, especially among larger, more established companies.
“I think there’s a lot of partners that are more traditional, Fortune 1000 types that are in a wait-and-see mode from a federal regulation perspective,” he says.
The banking sector, in particular, has pulled back from crypto engagement in the wake of high-profile collapses like FTX and increased regulatory scrutiny.
Despite these headwinds, Bergquist remains optimistic about the long-term trajectory of crypto adoption, especially among younger demographics. He cited research showing that investors under 40 are significantly more likely to see growth potential in crypto and digital assets compared to older age groups.
“There’s a lot of great data and research out there that shows how individuals under the age of 40 are more interested in investing in crypto and believe that crypto has more upside than stocks,” Bergquist says. “Data like that makes banks really want to participate, but the regulation isn’t there and it’s not supportive.”
As younger customers increasingly demand exposure to digital assets, banks may feel pressure to find ways to safely offer crypto-related services. Partnerships with companies like Coinme could provide a path to do so without taking on the full regulatory and technical burden themselves.
Greater regulatory clarity at the federal level would go a long way toward giving larger companies the confidence to more actively engage with digital assets. The upcoming U.S. election could also shift the regulatory landscape, potentially creating a more crypto-friendly environment.
In the meantime, Bergquist believes there are still plenty of opportunities for businesses to experiment with crypto integration and potentially gain a competitive edge. He suggested several ways companies could incentivize crypto adoption among their customers:
“Offering discounts on merchandise if someone pays in crypto, because obviously the merchants not having to pay so much to Visa or Mastercard, they theoretically could or should offer a discount,” he suggests. “And sometimes they’ll make the crypto trading and custody free to get people onto their platform to then do what their core business is, like take out a credit card, and so crypto can be used as a customer acquisition tool.”
Bergquist also emphasizes that simply enabling easier spending of crypto could drive greater holding and usage. “If you don’t have to sell your bitcoin before going grocery shopping and you can just sit on your bitcoin and spend it at the store, it’s really an incentive for holders or people that want to hold,” he notes.
