Crypto transfers are typically instant and seamless—unless, that is, users want to convert their digital currency into cash. In those cases, users in many countries are obliged to navigate a slow, complex conversion system. Customers of the crypto exchange Kraken have long complained about this problem, which is why the firm has partnered with the payments network MoneyGram to let users exchange crypto for fiat, the two companies announced on Tuesday.
Many of Kraken’s most profitable customers are deep-pocketed traders and investors in the U.S. and Europe, but the crypto exchange has a growing portion of users in countries with more volatile currencies. Some of these customers use Kraken just like a bank, Arjun Sethi, the exchange’s co-CEO, told Fortune.
“They want to store in USD or USD equivalent,” he said. “They want to be able to get yield. They want to be able to do payments. They want to be able to move money back and forth.”
They also want to cash out their holdings. With almost 500,000 locations worldwide, MoneyGram gives Kraken’s customers many brick-and-mortar options to choose from, where they’re charged a variable exchange fee to cash out their crypto. “That off ramp is really important,” said Sethi.
Old horse, new tricks
MoneyGram’s partnership with Kraken is part of the legacy payments firm’s broader push to revamp its business. “This is just another step in that process of digitizing,” said Anthony Soohoo, MoneyGram’s CEO.
Long a brand associated primarily with paper money orders, MoneyGram lost ground over the past two decades to upstart fintechs and online banking. In response, the company leaned into new technology. The firm built out a noncustodial crypto wallet and has incorporated stablecoins, or cryptocurrencies pegged to real-world assets like the U.S. dollar, throughout its operations. In 2023, a private equity firm took MoneyGram private.
Kraken, meanwhile, has steadily built out its ensemble of products and businesses as it eyes an IPO. Although institutional crypto traders are core to its business model, over the past year, the crypto exchange has acquired the U.S. futures exchange NinjaTrader as well as the derivatives platform Bitnomial. Kraken began the IPO process in November but hasn’t indicated when it plans to hit the public markets.
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