Neobank Volt partners with crypto exchange BTC Markets

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The neo-banking model in which internet-only banks deploy digitally-driven services has been in the spotlight after Xinja’s collapse and Westpac’s acceleration of banking-as-a-service offerings.

Westpac has partnered with Afterpay and Society One, providing the banking back-end for new digital products.

Volt has a similar bank-as-a-service strategy, effectively leasing its banking license to organizations such as Railspay, AFG, Australian Mortgage, QPay and now BTC Markets, which become the customer-centric entity powered by the license and infrastructure. Bank Volts.

The strategic bet is that Volt will be able to earn deposits and ultimately mortgage referrals from other start-ups looking to integrate financial services into their applications.

It’s like a backstage bank where our partners will tell us what they need for their customers rather than asking customers directly, Mr. Weston said.

Given the murky regulatory environment, Volt and BTC Markets have spent 18 months reaching a deal that will meet the requirements of the Australian Prudential Regulation Authority.

In Australia, it’s comfortable to rely on the financial infrastructure of an exchange or have custodial relationships in place for a third party, said Caroline Bowler, managing director of BTC Markets.

A Senate committee is examining whether big banks are hindering access to financial services for fintech start-ups and is also developing a policy on digital assets.

A custodial solution needs to be developed, says Caroline Bowler, CEO of Australian cryptocurrency exchange BTC Markets.

Cryptocurrency exchanges have long argued that Australian banks are reluctant to provide services to crypto companies, highlighting concerns about money laundering and the processing of possible proceeds of crime.

Our experience probably reflects a lot of things already in the public domain regarding relations with financial institutions in Australia, Ms. Bowler said.

We have certainly had a lot of changing relationships with financial institutions.

BTC Markets, which was founded in 2013, has 325,000 clients and has traded $ 17.1 billion in assets.

In addition to eliminating the banks that crypto firms say they face from traditional institutions, the industry has called on regulators to put in place guard settings to protect retail investors in crypto products.

I want regulation around custody so that it takes care of the retail investor who just takes their place, Ms. Bowler said.

There is a lot of natural trust in financial institutions in Australia, which is often reflected in regulations, so investors don’t have to think about custody of securities.

As it stands, the only cryptocurrency license that exists in Australia is for the Anti-Money Laundering and Terrorist Financing Act, which is administered by AUSTRAC, under which the exchanges were made in 2018.

Otherwise, there are no other rules, no external audits or IT standard requirements that Australian crypto exchanges must adhere to.

Ms Bowler pointed to the wide movement towards decentralized financial protocols, or DeFi, where blockchain-based software is replacing many traditional financial processes.

She suggested that investors can access DeFi through centralized exchanges, which demand anti-money laundering, know your clients’ compliance but also manage Australian dollar accounts.

There is no real need for bank accounts in DeFi because you have your crypto wallets, she said.

But what’s going to be interesting starts to bleed in between.

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