With one “simple” move, Galaxy Digital just redefined both the finance and cryptocurrency game.
That’s a bold statement, sure, but the implications of what they’re doing could revolutionize consumer acceptance (and investment) into cryptocurrencies.
It’s a big, big deal.
Here’s what you need to know…
Banking, investing and cryptocurrencies? There’s an app for that!
Nate Wolf with Barron’s gives us the details, but here are the highlights:
Galaxy Digital launched an integrated digital finance app, GalaxyOne, on Monday. The app and web platform offer:
- Brokerage: Commission-free trading of over 2,000 stocks/ETFs in both individual brokerage and retirement accounts – fractional shares, too
- Crypto: Buy/sell/transfer “major blue-chip digital assets” including bitcoin, ether and solana
- Savings: Competitive APY in FDIC-insured savings accounts via Cross River Bank
- “Premium Yield”: The misleadingly-named service offers 8% APY, but isn’t a savings account. Rather, it’s a private investment note – a short-term lending vehicle for Galaxy’s institutional loan business. So if you’re an accredited investor who wants to participate in illiquid loans to unknown third parties, well, this app can do that too.
They’re giving everyday folks access to multiple investment options, including several top-shelf cryptocurrencies, all in one app.
It’s a smart marketing move! I don’t know about you, but I already juggle my bank account, my brokerage account, my 401(k) account and my IRAs all with different companies.
Simple is often more convenient.
GalaxyOne is probably intended for the investor who is already on top of all their financial accounts. The average retail investor can do all these things already (except the “Premium Yield” service, as discussed). So beyond convenience, you probably won’t get immediate meaningful benefits from jumping on and signing up.
What it does signal, though, is the next big step forward in unifying digital money management. And, as you can see, cryptocurrencies are featured right up there with the plain vanilla savings account.
Financial history that points towards the future
Many people don’t realize that many cryptocurrency companies, which started as simple trading platforms, have essentially evolved into banks. Now, those are fighting words in the crypto industry – because there’s an absolute library of regulations and compliance and legal considerations, along with non-trivial costs, that apply to entities identified as “banks.”
Honestly, I’m not that interested in the legal nuances. People save and spend cryptocurrencies and cash. For me, just an everyday guy, it doesn’t matter if the Federal Reserve or the Securities and Exchange Commission call Venmo a “bank” or a “money-services business.” I just use it to split the bar tab with my friends.
Access and usability, convenience, is a lot more important than labels.
With that in mind, the next big step is obvious. Bring together multiple investing and financial transaction options into a single, unified platform.
Like SoFi did with stocks, crypto and savings. Like Revolut did with payments, crypto and foreign exchange. Presumably, the crypto-centric platforms have a lot more to gain from encroaching onto the turf we usually associate with stodgy old traditional finance (savings accounts for example). Otherwise we would’ve seen more aggressive moves from TradFi into crypto?
GalaxyOne aims to take this integration a step further. Here’s why that’s good news: First, the unification of services exposes a new set of customers to crypto (and gives them easy access!) at the same time. That means broader market acceptance of both integrated finance and investing services generally, and crypto in particular.
We can see the acceptance trend already with large investment houses and funds not just dipping their toes into cryptocurrencies, but taking significant stakes.
Of course, that big investor acceptance of crypto is driving mainstream retail interest and broader acceptance already – quite possibly, that’s why we’re seeing record high prices recently. Via Reuters, crypto ETFs drew record inflows the first week of October – pushing bitcoin to a new all-time high.
People and large investment funds both are integrating cryptocurrencies into their investment strategies as a mainstream accepted asset class.
Having said that, don’t be too quick to jump onto that ship.
GalaxyOne: Not for everyone
There are two caveats to acknowledge with GalaxyOne and integrated investing and finance, though.
The first caveat is that GalaxyOne is, by Galaxy Digital’s own statement, “for more sophisticated, mature investors.”
This means that it isn’t designed for the average retail investor.
That’s not to say that the app isn’t significant. It certainly is in that it signals efforts to make fully hybrid digital finance (where you handle your banking and investing, including cryptocurrencies, all digitally through one app) a reality.
That integration is coming, and this is a great first step towards making that fully hybrid integration mainstream.
But we’re not there yet. So, while this app will drive continued increasing interest into cryptocurrencies from the broader retail investor market (driving crypto prices even higher), it won’t bring that simplification and fully hybrid integration to that broader market soon.
And the second caveat that I mentioned is possibly the biggest hurdle to making fully hybrid digital finance accessible to the average person: Will it pass regulatory scrutiny?
In the long run? It probably will.
In the short-term, though, it’s questionable how quickly that will happen. In general, regulatory updates aren’t known for their speed – but the current administration may act more quickly than I expect.
In the meantime, those of us who aren’t accredited investors can still diversify with digital assets in a regulated and fully compliant manner today. Without the per-transaction tax headaches of crypto trading. You can open a Digital IRA anytime, day or night, right here in less than 10 minutes.
Not sure whether cryptocurrency diversification is right for you? We got your back – just request your free Essential Guide to Digital IRAs now, or call 1-(800)-299-1567 to speak with a Digital Asset Specialist.
