While there is distrust around crypto in the mainstream financial industry, crypto use and adoption continue to grow. The global market for cryptocurrency was worth $4.67 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 12.5% from 2023 to 2030. 

The average daily trading volume for crypto sits at around $50 billion. In 2020 there were over 120 million financial transactions made with Bitcoin, the largest and most valuable crypto.  

Traditional banking institutions have been skeptical about crypto adoption and transacting with crypto exchanges. The problem has grown more acute in the short term, as major players in the cryptocurrency banking industry, such as Signature Bank and Silvergate Bank, have pulled out of the sector. 

Allowing users to deposit and withdraw fiat funds through crypto exchanges is key to onboarding the growing base of crypto users. This gap in the fintech market has created a space for forward-thinking alternatives to traditional banking. 

Why Exchanges Are Turning To Closed-Loop Payments

One solution that seems to be gaining traction in the fintech space is closed-loop payments. A closed-loop payment system is where both the end-user and the merchant share a common payments ecosystem. 

If both a crypto exchange and its users hold accounts with the same banking partner, then payments between them would be fast, approval would be almost guaranteed, and cross-border payments wouldn’t be an issue.  

User accounts could also be linked to debit cards enabling individuals to more easily spend or withdraw their funds, thus adding to the utility of the account. 

Closed-loop payment systems are seeing increasing popularity, with almost two-thirds of fintech and payment firms saying they will launch a closed-loop payment product by the end of 2023. A reason for their popularity is their high transaction approval rate and their ability to simplify and increase the speed of cross-border transactions.

FinXP is a leading provider of closed-loop payments for crypto exchanges. As an award-winning payments and banking solutions provider, FinXP stands out by not just providing banking solutions to the crypto industry, but they also offer several payment processing solutions. 

The company works with crypto exchanges and crypto wallet providers to provide specialized custom payment solutions. It believes that many crypto investors are willing to open an IBAN account specifically to facilitate trading and investing in crypto. It’s confident that its solutions can help boost crypto adoption and increase customer loyalty for its clients.

Visit FinXP’s website to learn more about the company, or stay up to date with the industry’s news and subscribe to FinXP’s newsletter. 

Read prior coverage by Benzinga on FinXP here.

Image used under license from FinXP from stock.adobe.com.

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