Australian neobank Volt has joined forces with Melbourne-based digital asset exchange BTC Markets, in what’s believed to be a world-first partnership between a traditional regulated financial institution and a cryptocurrency platform.

The partnership will provide integrated banking capabilities to BTC Markets customers using Volt’s banking-as-a-service platform, BTC Markets chief executive Caroline Bowler told Stockhead.

“It’s so innovative, so forward-looking, a real feather in the cap for fintech in Australia,” she said. “It’s a global first, I haven’t seen anywhere else in the world that has a partnership of this kind.”

The tie-up took three years to execute, mostly because of the regulatory hoops that Volt had to jump through.

“The idea behind this really started out as a conversation over coffee and an exploration of the pain points that BTC Markets was experiencing, and this is a couple years ago,” Bowler said. “Volt was very forward-thinking to even have this conversation.”

Bitcoiners dissed by banks in the past

Banks, both in Australia and around the globe, have been extremely cautious about cryptocurrency, to the point of even cancelling customer accounts for buying it.

In 2015, more than a dozen Aussie Bitcoin companies had their accounts closed by major banks, the Australian Financial Review reported at the time.

The smaller player in the partnership, BTC Markets had to demonstrate to Volt that it had a rigorous anti-money laundering/know your customer (AML/KYC) program, which gave the neobank confidence to move forward, Bowler said.

Volt chief customer and partnerships officer Andrew Clouston told Stockhead the bank wanted to support the 10 to 13 per cent of Australians who want to buy digital assets.

“It didn’t happen overnight, it was a long journey,” he said. But the team was “super impressed” with the professionalism of BTC Markets and how the company observes regulatory frameworks, even when it doesn’t have to.

“We also thought it was a really good proof point about our banking as a service capability, because there’s probably no industry where speed of transaction capability and the ability to operate that technology — there’d be no industry where it’s actually more important,” Clouston said.

Volt has also offered its banking-as-a-service product to other partners such as Railspay, AFG, Australian Mortgage, and QPay.

Clouston said Volt has a list “as long as both of my arms” of companies eager to partner with the neobank, ranging from customer loyalty programs to fintechs that haven’t yet acquired their first customer.

How the tie-up will work

The partnership will mean that instead of depositing their Australian dollars into BTC Markets, they will use their own Volt accounts embedded within the BTC Markets platform.

All the funds in their accounts will be protected by a government guarantee of up to $250,000 per account holder under the Financial Claims Scheme.

Bowler described it as a “Chinese wall”  between the two platform internally, but customer’s interaction with Volt will all be done on the BTC Markets website.

Some features will be rolled out this year with others coming early next year.

“I think that for both Volt and BTC Markets, the way that we both intend to grow together and separately is doing this partnership model, looking for the best of best and working with them, rather than trying to be the jack of all trades and the master of none,” Bowler said.

“I think this is really red-letter day for fintech in Australia and you know, in particular for Australian investors in for crypto who for so long have been kind of bandied around and treated as not a priority customer, for some financial institutions.

“Crypto in Australia, it’s gone from a standing start, from nothing, to where we are now, and the technology has gone along with it. … This is the inflection point, the tipping point, where the whole thing is going to go gangbusters.”