FIS & NYDIG Open Bitcoin Floodgates for Banks

Bank technology provider FIS is partnering with NYDIG to allow customers of its bank clients to buy, sell and hold cryptocurrency through their bank accounts.

As part of the agreement, FIS’ venture arm has made a strategic investment in NYDIG, the digital asset subsidiary of Stone Ridge Asset Management, for an undisclosed sum, according to a Wednesday press release.

“We believe that digital assets that have a well-defined offering that is also highly regulated should be part of each bank’s ecosystem rather than just a standalone solution offered by various fintechs,” Rob Lee, FIS head of Global Core Banking and Channels, told Blockworks by email. “Our core banking and digital relationships with many banks well positions FIS to ensure our banking clients retain these deposits and provide value-added services as part of their integrated offering.”

Lee also said FIS has discussed providing the ability to accrue interest on banking clients’ bitcoin balances and “will be maturing ideas with NYDIG over the coming weeks.”

“As demand for bitcoin as a store of value continues to grow, FIS is focused on enabling our core banking clients to respond to growing market demand and better serve their customers,” Rob Lee, head of global core banking and channels for FIS, said in a Wednesday press release. “Unlocking these capabilities for financial institutions of all sizes levels the playing field for banking with bitcoin and can drive further innovation.”

FIS competitor Fiserv is working on similar capabilities. Last month First Foundation, a holding company whose subsidiaries include a wealth management firm and a bank, began working with Fiserv to allow customers to buy, sell and hold bitcoin through its own banking platform. First Foundation also made a strategic investment in NYDIG, which provides bitcoin investment and technology solutions to insurers, banks, corporations, institutions and high net worth individuals.

But while Fiserv’s client base comprises mostly small banks and credit unions, FIS serves bigger banks, where pressure to step up modernization efforts and adapt the fintech and digital finance trends are greater.

The moves from FIS and Fiserv come as the largest banks in the US grapple with increasing client demand for bitcoin and other digital assets. Institutions including JPMorgan Chase, Morgan Stanley and Goldman Sachs have begun making various bitcoin products available, but to only their wealthiest clients.

Additionally, Visa now provides an API for its bank customers, in partnership with Anchorage, to allow consumers to buy, sell and hold bitcoin through their banks’ existing platforms.

“Where cryptocurrencies are highly regulated and supplemented with crypto education, we think cryptocurrency can play a role in financial inclusion going forward,” Lee added. “FIS and NYDIG are helping to level the playing field to offer to all retail banking customers access to the most mature digital asset — bitcoin. It is no longer an asset offered solely to high net worth individuals or institutional clients.”

This story was updated at 5:05 p.m. EDT.