One reason many cryptocurrency users are hoarding their crypto as an investment right now is there are more reasons to save it than to spend it. The fintech
Because crypto investors are now required to report taxable cryptocurrency transactions to the IRS, they have more reason to treat their balances as investments rather than funds for making payments — but that's still a pool of wealth that will someday be spent, according to Fredi Nisan, GreenBox's CEO.
“People who made a lot of money on crypto’s appreciation don’t want to trigger a taxable event, so they’re keeping it in their digital wallet accounts until there’s an incentive to spend it, and that's eventually going to be an attractive target market for businesses,” Nisan said.
GreenBox, helped by a new banking-as-a-service relationship with Cross River Bank and the acquisition of a fintech in Europe that provides access to international payment networks, is poised to expand its platform to streamline cryptocurrency transactions between consumers and businesses.
These moves mark significant milestones for GreenBox, according to Nisan, who co-founded the blockchain technology-based firm in San Diego in 2017 with a vision of developing agile methods for more types of merchants to accept crypto payments.
“Many companies don’t accept crypto because of technical barriers, they don’t understand it or they’re afraid of it. But demand for transacting in crypto is building, and we're preparing our platform for eventual mass adoption by merchants,” Nisan said.
Retailers such as Home Depot, Whole Foods and Microsoft accept crypto, but fewer than one in five crypto users have ever purchased a good or a service using crypto as a payment method, according to a recent survey by S&P’s 451 Research. The survey polled 1,600 U.S. cryptocurrency users during the first quarter of 2022.
“Most consumers seem to see cryptocurrency as a speculative commodity right now, not as a currency,” said James Hiester, a senior consultant with Capco Energy Solutions who specializes in cryptocurrency applications.
Hiester forecasts that within the next five years, cryptocurrency will become a more vibrant currency for online marketplaces including gaming, arts and other types of entertainment.
“Something like half of millennials own some cryptocurrency, and as adoption continues to spread to younger generations we’re going to see more consumers looking to convert these holdings into purchasing power,” Hiester said.
Cross River's pact with GreenBox presents an opportunity to expand the bank’s services to new audiences, said Keith Vander Leest, Cross River’s payments director.
“GreenBox has found some interesting ways to work with crypto, and combined with our platform it opens up multiple options to move these payments, whether it’s through real-time payments, push-to-card, ACH or their own stablecoin,” Vander Leest said.
The GreenBox-Cross River integration will roll out in phases in the next two quarters with a card issued by Cross River on the near-term road map, Nisan said.
GreenBox already has several dozen merchants accepting payments through its platform, including nightclubs, micro-merchants and kiosk operators selling specialty products like CBD, according to Nisan.
These merchants, who often operate in "medium-risk" retail niches, cite the fact that payments are settled instantly at any hour, eliminating the potential for chargebacks, as key advantages for using crypto, Nisan said. He declined to name any merchant clients.
Nisan expects that after the integration with Cross River is complete, GreenBox will attract larger merchants that have expressed interest in using its services for business-to-business and cross-border transactions.
GreenBox — which has longstanding partnerships with Visa and Fiserv — has also developed its own stablecoin, called Coyni, which is tied to the U.S. dollar and enables merchants to convert crypto to government-issued money or other cryptocurrencies, he said.
Merchants using GreenBox can settle transactions via credit and debit cards, direct debit ACH and e-checks, Nisan said. They can also opt for Coyni, bitcoin or Ethereum from an external decentralized crypto wallet to the GreenBox wallet.
This month, GreenBox completed its acquisition of Transact Europe, a Bulgarian-based money transmitter that holds licenses with Visa, Mastercard, China UnionPay and SEPA (covering continental Europe). The $28 million deal, which also brings foreign-exchange capabilities, was announced last year.
“Now we have a footprint in Europe to add merchant accounts there, supporting two-way blockchain and crypto payments between merchants in the U.S. and Europe,” Nisan said.
