The move, in the eyes of industry participants, is a bullish indicator that somewhat shakes off the sector’s bear market woes — plus the pending trips of crypto lenders Celsius and Voyager to bankruptcy court.
Abra’s move positions the company in what has been a yearslong arms race within crypto to create the first US regulated interest-bearing crypto account — offering consumers crypto exposures with legal safeguards.
All customer deposits into Abra Bank are set to be converted into stablecoins that accrue interest similarly to traditional banks. The bank will allow customers to transfer funds into over 100 cryptocurrencies. Abra also partnered with American Express in June to launch a crypto credit card.
Abra Bank’s services — asset custody, lending and staking — are already offered by a variety of other crypto firms, but Abra Bank’s regulatory guardrails make it stand out from competitors, according to Abra CEO Bill Barhydt.
“As a regulated licensed bank, it’s no longer my opinion on transparency and public disclosures. The banking laws take over and require disclosures on assets, liabilities and risk management processes,” Barhydt said.
Abra’s maneuver comes amid Chapter 11 bankruptcy proceedings for Celsius and Voyager Digital, two companies that operated as ersatz banks offering high yields before going belly-up. Voyager Digital infamously misled customers to believe the crypto lender was FDIC insured. Abra is looking to make good on that premise.
In the US, insured banks must prove to regulators they have enough assets available to support their risk profile. Abra has completed this process and plans to launch sometime before the second quarter of 2023.