Why Coinme Is Targeting B2B Use Cases

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Why Coinme Is Targeting B2B Use Cases

Cryptocurrency exchange Coinme is positioning itself as an infrastructure provider in a crypto B2B market that’s increasingly drawing institutional interest.

The strategy comes at a time when more than 900 financial institutions have joined the Federal Reserve’s FedNow instant payment service, suggesting a growing appetite for digital payment innovation among traditional financial players.

“We’re a platform that provides crypto infrastructure,” says Coinme CEO Neil Bergquist. “That infrastructure is the ability to create an account and conduct know your customer compliance, to enable customers to use a debit card or cash to buy or sell digital currencies, and to custody digital currencies or send them to a customer’s wallet of their choice.”

Building the Backend

Coinme’s B2B strategy centers on three core offerings: payment processing for purchasing tokens, redemption services for selling tokens, and custody solutions for holding digital assets. The company allows business partners to mix and match these capabilities based on their specific needs.

“Because Coinme has these baskets of infrastructure, we’re able to allow the partner or the token project to really pick and choose the user experience that they want to provide,” says Bergquist. “Some just want to distribute the token as a reward and then allow people to sell it, to redeem it for cash. So they might just use custody and use APIs from Coinme. Or maybe they want people to be able to buy it, or they want people to be able to swap it.”

Payment Processing

One compelling B2B use case centers on reducing payment processing costs. Credit card providers typically charge merchants fees ranging 2-3% per transaction. Crypto payments could offer a cheaper alternative.

“Because the merchants don’t have to pay so much to Visa or Mastercard, they theoretically should offer a discount,” Bergquist suggests. “We’ve all seen the signs that say pay in cash and get a discount. I think we will see something very similar around digital currency and get a discount.”

Coinme’s API can also support use cases beyond basic payments. The company enables businesses to create token-based loyalty programs with greater flexibility than traditional points systems.

“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, then redeem those tokens for some kind of value product or service,” Bergquist explains.

The key difference from traditional loyalty programs lies in interoperability. “Your Starbucks points are unique to Starbucks and only able to be used at Starbucks,” Bergquist notes. “What if Starbucks points were on a blockchain and there was a free market around them? That certainly is a very interesting concept.”

Overcoming Regulatory Hurdles

Despite the upside of new use cases and drawing a younger, enthusiastic customer base, many larger corporations have remained hesitant to embrace crypto, largely due to regulatory uncertainty.

“When you deal with companies worth more than a billion dollars and already have a good thing going, they’re less likely to take a potentially unnecessary risk,” says Bergquist.

This caution intensified following the FTX collapse. Banking partnerships that showed promise during the 2021 bull market largely disappeared, and the U.S. Treasury Department and Securities and Exchange Commission pressured banks to limit their exposure to digital currencies.

“Those partnerships quickly evaporated after the FTX fiasco and banks stepped away,” Bergquist recalls.

Now, however, there’s renewed enthusiasm for the prospect of regulatory clarity under an incoming U.S. administration that campaigned on crypto-friendly policies.

“We don’t know necessarily what those policies will be yet, but all signals are that it’s going to be more positive than the current regime,” says Bergquist. “People are actually now understanding it and embracing it as a shift, whereas before they just thought, ‘I don’t understand it, that just sounds like something that criminals would use. Let’s put a bunch of headwinds on it and kill it.’ That doesn’t make sense to me.

“It’s not supposed to be a red or a blue thing. And it does have bipartisan support, which several people in Congress have highlighted.”

Demographic trends are also pointing toward increased crypto adoption among younger investors. Recent data from Bank of America shows that 28% of investors aged 21 to 43 see greater growth potential in crypto and digital assets, compared to just 4% of those 44 and older.

“Data like that makes banks want to participate, but the regulation hasn’t been there,” Bergquist notes.

Institutional Momentum

Nevertheless, some recent developments indicate growing institutional interest in crypto infrastructure. The SEC’s approval of bitcoin exchange-traded funds in January 2024 marked a significant shift in the regulatory landscape.

“The bitcoin ETF received some of the largest capital inflows out of any ETF ever created,” Bergquist notes. “That was a big turning point where everyone talked about institutional adoption coming. Well, here it is.”

For Coinme and other infrastructure providers, success hinges on making cryptocurrency technology accessible enough that end users don’t need to understand the underlying systems. The goal is reaching a point where, in Bergquist’s words, “People who maybe don’t care about crypto will be using crypto and blockchain technology, and it might not be terribly obvious.”

This invisible integration of crypto into everyday financial services could represent the industry’s best path to mainstream B2B adoption. The challenge lies in building seamless experiences while dealing with regulatory requirements. Coinme’s bet on providing foundational infrastructure positions it to capitalize on institutional interest when regulatory clarity arrives.

In the meantime, the company continues developing its infrastructure offerings while monitoring regulatory developments. With $175 million currently deployed in blockchain-based stablecoins and over 370 banks and credit unions already offering real-time payment services through existing networks, the market for B2B crypto infrastructure continues to expand.

The transformation of crypto from a retail-focused market to an institutional technology layer may take time, but signs point to growing acceptance among traditional financial players. For companies like Coinme, building the infrastructure now could position them to benefit from wider institutional adoption in the future.

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Jordan French

Jordan French is the Executive Editor of Block Telegraph. He is a multi-media tech journalist on the editorial staff at TheStreet.com and a Fast 50 and Inc. 500-ranked entrepreneur. He is the founder of Notability Partners and the co-founder of BNB Shield, Lisbon Hill Farms, Status Labs, BeeHex, BlockTelegraph, and Grit Daily. A biomedical engineer and intellectual-property attorney, French is the author of upcoming book, The Gritty Entrepreneur.