SoFi is a California-based startup that came into the limelight for helping students to refinance their student debts. The company recently announced that it would offer commission-free crypto trading to its clients. Initially, the company will offer trading for ETH, BTC, and LTC via the SoFi Invest platform.
Details of the Move
SoFi first announced plans to launch crypto trading in February 2019. This came after a number of other fintechs launched their own crypto trading platforms such as eToro, Robinhood, and Square. According to the company’s CEO, the ability to buy crypto has long been requested by users of the platform. He noted that this new crypto option would complement the existing trading options on the platform that include active and automated stock purchases as well as ETFs.
The CEO of the platform recently said that he had long been interested in crypto, especially BTC. He added that he believed in the power of the DLT. However, he noted that crypto was not easily available and transparent to most people. This was amongst the reasons he decided to add crypto to SoFi.
According to SoFi, they will get the crypto to fulfill customer requests from Coinbase, the crypto exchange. When the platform launches crypto trading, it is not going to charge any commission. However, it will add a fee of 1.25% in the coming weeks.
After months of the crypto bear run, when the price of BTC fell to as low as $3000 after rallying to almost $20,000 in December 2017, BTC rallied back up in Spring 2019 to hit $13,000. Most people expected that it would get to its former peak price point of $20,000 and above but that did not happen. The price has since fallen to around $8,500.
This Move Makes Sense
SoFi styles itself as a financial firm that builds a community amongst its borrowers. The decision to add crypto offerings is the latest attempt by the company to make cash outside of the students’ loan business. The company has not managed to get the traction it had hoped for when it launched its mortgages and loans business. In fact, the company had to cut down its workforce by 7% in 2018.
However, the CEO is quite confident about this latest move. He said that its internal market research had shown it was on-boarding customers faster than the competition. No concrete figures were given but someone familiar with the project shows that SoFi Invest has managed to onboard more than 100,000 customers.
The SoFi crypto trading platform went live on September 24. However, it will only be offered in a few select states. In some states like New Jersey and New York, the platform will not be available. This is due to the tough regulatory environment in those states. The company will try to get the licenses to operate in states with strict regulations soon. Eventually, it hopes to be available nationally. According to the company estimates, this could happen in the next few months.
Image Source: SoFi