Level 0 : Education, strategy and planning
This stage involves designating the key stakeholders for such crypto initiatives across multiple functions, as well as the executive who will be leading the charge. FIs at Level 0 should also start learning about the cryptocurrency exposure they have today – the specific crypto businesses they or their customers have interacted with – and measuring the resultant risk, and consider screening them using an industry intelligence tool like Chainalysis Kryptos. Additionally, FIs should start building their intellectual capital through educational content, social media and engaging the crypto community. Industry leaders regularly publish content that can help financial institutions better understand the opportunities and risks in the crypto ecosystem. Examples from Chainalysis include the Chainalysis Academy with video lessons on crypto basics, blog posts and reports with in-depth research, and live webinars featuring Q&As with industry experts
Level 1 : Open for business
Once Level 0 has been conquered, FIs can begin supporting and interacting with cryptocurrency businesses the same way they would with any other. An important step to take note of here is the development of crypto expertise within FIs. Luckily, this can usually be accomplished through hiring rather than an all-out acquisition. Building out a digital assets team means recruiting seasoned crypto experts across compliance, security, and the roles corresponding to the specific services the firm wants to offer.
Level 2 : Synthetic cryptocurrency products
FIs at this stage would have become comfortable working with cryptocurrency businesses and may want to help both retail and institutional customers get exposure to cryptocurrency markets. This does not necessarily mean accepting cryptocurrency deposits or holding crypto on customers’ behalf. Instead, financial institutions can offer synthetic, cryptocurrency-based investment products that allow customers to capture some of cryptocurrency’s upside without the financial institution actually accepting crypto deposits.
Level 3 : Enable crypto deposits
In this stage, FIs are giving customers direct access to crypto markets and allowing them to deposit crypto with them – and potentially holding it on their behalf. This is a big task, and FIs can benefit from partnering with crypto-native firms to fulfil virtually all of the necessary functions for accepting and holding crypto deposits.
Level 4 : Beyond deposits : Complex products, DeFi, and more
FIs in this stage are rare to see, but not unheard of. There’s a world of opportunities beyond deposits. For instance, DeFi is perhaps the fastest-growing, most exciting area of cryptocurrency, and businesses operating in the space can use Chainalysis Address Screening to automate the customer screening process.
With cryptocurrency becoming increasingly mainstream, banks are no longer viewing it as money for criminals or looking for ways to ban it. Instead, they’re recognising the ways it can help their customers while driving revenue and trying to incorporate it into their larger strategies. While this may seem daunting at first, the Crypto Maturity Model shows that banks can adopt cryptocurrency in a structured, incremental fashion that allows them to test and improve their offerings at each step of the way.