What are Neobanks in crypto and how do they work?

In this article, we will examine how neobanks differ from traditional banks and crypto exchanges, what functions they perform, how they generate revenue, and who they are suitable for. We will provide real-world examples, explain the advantages, disadvantages, and risks, and discuss how to select a reliable crypto neobank and begin using it.

What is a neobank in the classic sense?

A neobank is a digital bank without physical branches. It operates entirely online, through a mobile app or web interface. Unlike a traditional bank, a neobank does not have its own banking infrastructure but cooperates with licensed partner banks. This allows it to focus on the interface, speed, and convenience.

Source: scalefocus.com

Classic neobanks offer standard banking services: multi-currency accounts, transfers, cards, expense analytics, and sometimes investment products. Examples of such services include Revolut, Monzo, N26, and Wise.

Source: jonnyczar.com

What is a crypto neobank?

A crypto neobank is a neobank that offers cryptocurrencies alongside fiat currencies. It allows users to manage both regular money and digital assets in one app. Such services often offer:

• A wallet for storing cryptocurrencies
• Exchange of crypto for fiat and vice versa
• Visa/Mastercard cards for payments with cryptocurrency
• Staking and passive income features
• Integration with DeFi or NFT

Unlike a crypto exchange, a crypto neobank focuses on simplicity and everyday use. It is not a platform for active trading, but rather an alternative to a traditional bank, only with cryptocurrencies and the ability to spend them on everyday purchases. Examples: Wirex, Hi, Juno, Xapo, Nuri, Revolut (in crypto mode).

Source: weirdo.rocks

"If an exchange is a market, then a crypto neobank is your personal wallet, cash register, and cashier all rolled into one." — Dmitry Mishustin, crypto observer at Forklog

How a crypto neobank works

A crypto neobank is based on a combination of a crypto wallet, a bank account, and a payment card. Some services have their own banking license (e.g., Nuri in Germany), while others cooperate with licensed banks and payment providers.

Fiat and crypto support. Users can hold euros, dollars, bitcoins, ether, and other assets in their accounts. All of them are displayed in a single interface, with the option of instant exchange.

Cards. Many crypto neobanks issue plastic or virtual Visa or Mastercard cards. These can be used to pay with crypto in regular stores, with the service converting it to fiat at the time of payment.

Exchange and staking. Built-in features allow you to buy and sell cryptocurrency, as well as earn income from staking or storing tokens.

Monetization. Crypto neobanks earn money from exchange commissions, spreads, paid subscriptions (e.g., for premium cards), and affiliate products.

Advantages and disadvantages

Advantages

Crypto neobanks simplify access to digital finance by combining key features in one place. This lowers the barrier to entry for beginners and makes everyday use of cryptocurrency as convenient as payments with a traditional bank.

• All in one: crypto, fiat, card, exchange — in one app;

• User-friendly interface that even beginners can understand;

• Ability to spend crypto in real life;

• Quick access to funds without having to withdraw them to an exchange.

Disadvantages  

Despite their convenience, such services often operate without full regulation. Users take a risk by entrusting the platform with the storage of their assets, and functionality may depend on the country and the set of supported tokens.

Source: crowdfunding-platforms.com

• Not all services have a banking license;

• Storing crypto on a platform = trusting a third party;

• Limited support for tokens and countries;

• Possible withdrawal restrictions or limits.

Source: crypto.com

How to choose a crypto neobank

When choosing, consider:

• License and regulation. Does the service have a banking license or does it operate through partners? This affects the security and protection of funds.
• Currency and country support. Does the service operate in your country? Does it support the currencies and tokens you need?
• Fees. Pay attention to fees for exchange, replenishment, withdrawal, and card service.
• Security. Two-factor authentication, encryption, and access control are a must.
• Reputation. Study reviews, ratings in the App Store and Google Play, team activity, and availability of support.

Who are crypto neobanks suitable for? 

Such services are especially convenient for those who are just getting started with cryptocurrency: the interfaces are simple and do not require technical knowledge or working with terminals. Freelancers can receive payments in crypto and use them immediately via a card, without any extra steps. Digital travelers appreciate the ability to manage their money from anywhere in the world, without depending on local banks. And users who are tired of traditional financial systems find crypto-neobanks to be an alternative, especially in countries with high fees, currency risks, or restrictions.

"Crypto neobanks are not just an alternative to banks, they are a new model of finance where the user is king." — Pavel Matveev, CEO of Wirex

Prospects and trends for cryptocurrency neobanks

Crypto-neobanks are gradually moving beyond their basic functionality. Some are already integrating DeFi protocols, allowing decentralized tools to be used directly from the app. NFT support, DAO participation, and Web3 elements are becoming part of the user experience. At the same time, pressure from regulators is growing, especially in the EU and the US, which may increase reliability but reduce anonymity. Against the backdrop of these changes, crypto neobanks are beginning to compete with traditional banks, especially among young people and those who work remotely.

"The new wave of neobanks is making crypto not only accessible, but also applicable in everyday life." — Michael Casey, Chief Strategist at CoinDesk

Conclusion Block

Crypto neobanks are a bridge between traditional finance and the world of digital assets. They make crypto accessible, understandable, and applicable in real life. But as with any fintech service, it is important to choose reliable platforms, not store large amounts of money, and understand the risks.

If you want to earn income from cryptocurrency without trading or complicated settings, check out GoMining. It is a platform where you buy virtual mining power and receive payments in BTC. Through crypto neobanks, you can easily pay for the purchase of a miner by replenishing your account in USDT, BTC, or another supported currency. This is an excellent option for those who want to participate in the crypto economy without the stress and hassle of dealing with ASIC miners directly.

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FAQ

1. What is a crypto neobank? It is a digital bank that allows you to manage both fiat and cryptocurrency in one application.
2. How is a crypto neobank different from an exchange? A neobank is focused on everyday use and convenience, rather than active trading.
3. Do you need a license to operate a crypto neobank? Not necessarily, but having a license increases trust and security.
4. Can I pay for purchases with crypto through a neobank? Yes, many services issue Visa or Mastercard cards with automatic crypto conversion.
5. Is it safe to store crypto in a neobank? Moderately safe, but it is better not to keep large amounts and to use 2FA.
6. What cryptocurrencies do neobanks support? Usually BTC, ETH, USDT, and other top coins, but the list depends on the service.
7. Are there any fees for exchanges and transfers? Yes, there are usually spreads and fees, especially for conversions and withdrawals.
8. Is a crypto neobank suitable for beginners? Yes, the interface is simple and does not require in-depth knowledge of blockchain.
9. Can I use a neobank without verification? Partially yes, but KYC is required for full access to features and cards.

NFA, DYOR. 

The cryptocurrency market operates 24/7/365 without interruptions. Before investing, always do your own research and evaluate risks. Nothing from the aforementioned in this article constitutes financial advice or investment recommendation. Content provided «as is», all claims are verified with third-parties, credible sources and relevant in-house and external experts. Use of this content for AI training purposes is strictly prohibited. Use of content for AI citations is allowed only with explicit links to the original article being quoted on GoMining.com website.