- Key insight: SoFi and Kraken are connecting some of their products to each other in a collaborative partnership.
- What's at stake: Decentralized finance technology is on track to become the invisible infrastructure layer for institutional finance firms interested in digital assets.
- Expert quote: "The SoFi view is that fiat and digital asset accounts will become like multi-currency accounts in corporate banking - no bank can serve global corporations without them." —Simon-Kucher's Leo D'Acierno
Digital bank SoFi Technologies is partnering with Payward, the parent company behind Kraken, to connect the crypto exchange to SoFi's dollar settlement network and add SoFi's stablecoin to Kraken.
Payward joining the SoFi Exchange Network will enable Kraken's institutional customers to clear and settle U.S. dollar transactions outside of conventional banking hours, according to a company statement. SoFi will also use Kraken Prime, Payward's prime brokerage service, as an additional source of digital asset liquidity for the bank and put its
"SoFi is betting on a vision of core banking fully integrated with digital assets," Leo D'Acierno, senior advisor at Simon-Kucher, told American Banker. "If you're counting on rapid transformation, you need partners to expand your capabilities and seed the market. That's what's behind SoFi's steady stream of new initiatives in digital assets, including today's partnership announcement."
The partnership announcement is the latest in a series of digital asset initiatives for the student loan provider-turned digital bank. SoFi reintroduced
"The SoFi view is that fiat and digital asset accounts will become like multi-currency accounts in corporate banking," D'Acierno said. "No bank can serve global corporations without them."
The deal is an indicator of collaborative relationship-building between digital assets and traditional finance, according to cross-asset analyst and Coin Bureau founder Nic Puckrin.
"The relationship emerging between regulated financial players and digital asset service providers is a symbiotic one," he told American Banker. "Neither side is trying to take over the other anymore. They've recognized their services are complementary."
In this case, Puckrin said, SoFi gets liquidity and execution via Kraken Prime and distribution for its stablecoin, and for Kraken and Payward the partnership provides coveted access to regulated U.S. banking infrastructure, which still remains a challenge for digital asset companies.
"Money and markets are converging into a new financial paradigm, and the infrastructure underneath has to catch up," said Payward co-CEO David Ripley in a statement. "Collaborating with SoFi lets us close that gap, and it works in both directions. Millions of people will buy their first crypto asset inside the app they already use for their paycheck, and the infrastructure behind that experience should connect them to deep, liquid markets built to operate at scale."
Puckrin doesn't anticipate that decentralized finance will become mainstream, but instead that it will turn into the invisible infrastructure layer for institutional finance firms like SoFi.
"It offers all the advantages of cryptocurrency trading – the 24/7 markets, tokenized assets and faster settlement – without traditional players having to build that infrastructure in-house," he said. "It's the best of both worlds, and we're only just beginning to see the shape that traditional and digital finance partnerships will take in the future."
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The partnership was announced the same day as the Office of the Comptroller of the Currency
The stablecoin bill
The subsidiary approval was initially issued by the OCC on July 23, but the agency did not publicly release the decision letter until Thursday. The OCC did not immediately respond to a request for comment from American Banker.
