What opportunities are there for founders?

1. Embedding products and services

Customer needs have changed over the past 18 months. There’s a huge demand for startups who help consumers get more of their financial jobs done. One way to do that is to offer cryptoassets at a point at which it's relevant to suggest cryptoassets, such as when planning for their own or their loved ones' futures.

US digital-only bank Current's mission is to help bring 'premium financial services to everyone with a variety of modern lifestyles to help improve their financial outcomes'. It will offer customers a high-yield account available through its existing app, where the returns come from converting fiat into stablecoins.

The product is powered by Compound, which handles the complexities of engaging with Decentralised Finance (DeFi), enabling Current to offer its customers a new way to make their money work harder for them without going through the resource intensive process of providing the service itself.

2. White-labelling existing services

Businesses that have a way to help consumers get more of their jobs done using cryptoassets should consider distributing those services through third parties, especially if they are new to the market.

This has already worked well in the wealth management space—Betterment saw significant growth once it started offering its technology to advisors and has since raised funds specifically to expand its business-to-business (B2B) units. Within crypto, exchange Bitpanda recently launched Bitpanda White Label which enables other companies to offer their customers access to stocks, cryptoassets, and metals.

As more companies look to embed cryptoassets within their existing offerings, there will be greater demand for more providers with specialist products and cryptoasset expertise to help them do so.

3. Smoothing access to cryptoassets

Making the most of cryptoassets is still difficult for the average user due to complexity of common transactions. Cryptoassets can be bought to trade relatively easily from an exchange using a credit or debit card, but doing something further with that crypto requires moving it to a wallet before engaging with yet another platform to access other assets like NFTs.

Startups can improve that experience by reducing the number of steps involved—such as enabling consumers to fund crypto wallets directly from their bank account. Infrastructure provider Plaid helps a number of companies do this, including Coinbase.

Another opportunity lies in making DeFi easier to interact with. Ramp, for example, enables third parties to embed fiat cryptoasset purchases into existing customer engagement channels, reducing the number of steps needed for customers to start transacting. So far this is limited to companies that offer decentralised apps or crypto wallets, but it's not hard to imagine it expanding into a broader set of customers.

4. Developing new financial products and services

Cryptoassets and their underlying infrastructure enable companies to develop new financial products and services—both those that resemble existing financial instruments and completely novel offerings.

High yield accounts are one area for founders to focus on. Existing products offered by Current and Ziglu are gaining traction: their similarity to savings products and their high returns make them easier for providers to market and for consumers to understand. These can help build loyalty and engagement with larger financial companies.

NFTs have become increasingly popular among consumers as well as corporates (offered as rewards or perks by companies such as Amex). There’s a huge opportunity to develop services surrounding NFTs, as well as for an infrastructure provider that can help banks and retailers offer NFT-based loyalty and reward programs.

Green cryptoasset offerings remain limited—mainly due to the lack of common standards on what makes products or services ESG-compliant. Cryptoassets have received a lot of negative publicity around their energy-intensive production (more on that below). For founders, this opportunity for development is huge, either through developing products which can be shown to be ESG-compliant through existing standards, helping larger providers make existing crypto offerings greener, or by helping customers understand the ESG scores of their crypto holdings.

5. Developing value-add products and services

Aside from offering cryptoasset products and services directly, there is a significant opportunity for companies to provide value-add offerings.

Tax is one such area—a challenging area to understand given the complexity of the guidelines set out by tax departments, as well as cryptoassets’ decentralised nature and propensity for fluctuation in value. Companies like CryptoTax offer tax calculators, but as consumers’ cryptoasset holdings become more diverse, there’ll be a growing need for startups to meet this demand.

Protection is another area for development. As cryptoassets become more commonplace in portfolios, people will want to know there is protection in place as with traditional investments. Large exchanges like Coinbase offer insurance against theft, while others use specialist products like Coincover, but there remains an opportunity to offer direct protection to consumers or to cryptoasset providers.

Finally, investment advice remains limited and inaccessible to the ordinary consumer, and this is even truer for crypto-specific advice. Advisors that can provide cryptoasset-specific advice will find a ready market if they can do so in an accessible way. You may need to use a specialist third party platform to do this, while platforms will find it much easier to scale by providing a white-label offering.