When Fintech merges with crypto infrastructure: The next decade of digital finance

Author: Benji Siem @IOSG

Introduction

Stripe acquired Bridge for $1.1 billion. Mastercard acquired Zerohash for approximately $2 billion. Robinhood launched its own L2. These are not isolated bets, but signals of a structural shift—the largest fintech giants are directly embedding blockchain infrastructure, stablecoins, and decentralized finance (DeFi) tracks into their core products. Over the past decade, fintech companies have transformed payments, banking, and investment through software-native platforms and massive digital distribution. The next phase has begun: crypto is becoming the backend. This report analyzes the strategies of ten leading fintech companies in the digital finance space, focusing on their business models, revenue drivers, and strategies for integrating crypto payments with DeFi infrastructure. A consistent pattern is emerging: the most successful companies do not treat crypto as a speculative asset, but rather as backend infrastructure that can improve settlement speed, reduce costs, and expand global financial connectivity. Stablecoins, in particular, are becoming a bridge between the traditional financial system and on-chain markets. Fintech Industry Insights

Consensus in Digital Finance: How Different Players View This Opportunity

The digital finance foundation of these ten companies can be summarized as:

“Financial services should be borderless, real-time, software-defined, and composable—compliance should be imperceptible to end users.”

Different types of players' understanding of the opportunity:

#

• Basic perspective: Transforming the underlying pipeline of fund flows, but not holding customer relationships

• Opportunities: Every new payment track (stablecoin, A2A, instant payment) expands the serviceable market

• Strengthening entry points: Stablecoins reduce settlement friction and enable 24/7 fund management

#

• Basic Viewpoints: Occupy the main financial entry point for users and cross-sell a package of services

• Opportunities: Integrate banking + payment + investment + crypto into one app to increase LTV

• Strengthen Entry Points: Use crypto as a layer to increase activity and monetization (transaction fees, interest-bearing products, cross-border)

High-risk / Poor scalability model

#Pure transaction fee dependence

• Companies whose revenue comes from over 90% of transactions are completely at the mercy of market cycles. In a crypto bear market, trading volume can drop by 70-90%.

• Diversification is important: Coinbase's transaction revenue share has decreased from 96% in 2020 to a projected 59% in 2025. Robinhood now has 11 business lines. #PFOF (Pay-for-Fulfillment) Dependence PFOF is banned in the EU and continues to be scrutinized in the US. Companies relying on PFOF face life-or-death regulatory risks to their core revenue models. A Better Path: Shifting to subscriptions (Robinhood Gold), interest income, and institutional clients (acquiring Bitstamp).

#Crypto businesses without recurring/sticky revenue

• Crypto exchanges that rely solely on spot trading fees, with no staking, no stablecoin interest, no custody, no DeFi protocol revenue, and no subscriptions—this is an extremely pro-cyclical business.

• A good crypto business model will have multiple revenue streams (trading + staking + interest + protocol fees + subscriptions).

#The "Bitcoin Revenue Line" Without Profit

• Block reported $1.97 billion in Bitcoin revenue in Q3 2025, but the cost of Bitcoin revenue was $1.89 billion, and the gross margin of BTC channel revenue was only about 4%. It boosted revenue but contributed little to gross profit.

• Its strategic value lies in ecosystem lock-in (user stickiness is higher when buying BTC on Cash App), rather than directly profiting from BTC.

• Its strategic value lies in ecosystem lock-in (user stickiness is higher when buying BTC on Cash App), rather than directly profiting from BTC.

Framework: What Makes a “Good” Crypto Fintech Business Model?

Fintech Crypto Integration Playbook

The playbook below outlines how ten companies execute the above fundamentals. To understand why these approaches work, please return to the “Key Trends” section above.

The playbook below outlines how ten companies execute the above fundamentals. To understand why these approaches work, please return to the “Key Trends” section above.

#Stablecoin Integration (Most Common, Most Momentum)

• Visa: USDC settlement within the network

• Mastercard: Card partnership with OKX; Acquired Zerohash

• PayPal: Self-issued PYUSD (US$3.6 billion in circulation); Supports DeFi usage

• Stripe: Acquired Bridge for US$1.1 billion for stablecoin orchestration; Built Tempo L1

Low addition cost; can capture retail demand during bull markets; and can deepen user stickiness. ...strong>

Block/Cash App: Buy, Sell, and Transfer Bitcoin

Low cost; can capture retail demand during bull markets; and can deepen user stickiness.

Block/Cash App: Buy, Sell, and Transfer Bitcoin

<

#Self-built Blockchain Infrastructure

• Coinbase → Base Chain (L2 based on OP Stack)

• Stripe → Tempo (L1, in partnership with Paradigm)

• Robinhood → Robinhood Chain (L2 based on Arbitrum)

Owning a Chain = Owning an Economy (Sequencer Fees, MEV, Ecosystem Network Effects). The analogy is that Visa built its own VisaNet instead of relying on a third-party network. # Bitcoin's Full-Stack Approach (Block's Approach) Consumer Wallet (Cash App) → Merchant Acceptance (Square Bitcoin/Lightning) → Self-Custodial (Bitkey) → Mining (Proto) → Open Source Development (Spiral). This is a high-confidence vertical bet: if Bitcoin truly becomes the mainstream payment platform, Block will own every layer; if not, it's a large-scale resource investment with an uncertain outcome.

#Custody and Institutional Services

• Coinbase Prime: Custodian of most Bitcoin/Ethereum spot ETFs in the US

• Mastercard and Visa: Providing compliance/KYC/AML layers for institutional crypto adoption

Institutional funds require trustworthy, regulated custody—this is a high-barrier, high-profit business.

Institutional funds require trustworthy, regulated custody—this is a high-barrier, high-profit business.

#DeFi Deposits and Protocol Participation

• PayPal: PYUSD supports DeFi lending/trading on Ethereum

• Coinbase: Base Chain hosts DeFi protocols; USDC is the dominant stablecoin in DeFi

• Revolut & Robinhood: Staking services (ETH, SOL)

Integration opportunities between crypto payments and DeFi

• Beneficiaries: Visa, Mastercard, Stripe, Adyen

• Example: Visa settles VisaNet obligations on Solana using USDC

#Tokenized money markets as liquidity

Using tokenized government bonds (such as Ondo OUSG, Franklin OnChain) as interest-bearing reserves neither sacrifices liquidity nor incurs credit risk.

• Beneficiaries: PayPal, Nu, Revolut, SoFi

• Example: Mastercard MTN supports tokenized government bond assets

#Cross-border remittance track

Use stablecoin tracks to replace SWIFT/correspondent banks for B2B and C-end remittances. Instant settlement, lower fees, better FX exchange rates.

• Use stablecoin tracks to replace SWIFT/correspondent banks for B2B and C-end remittances. Instant settlement, lower fees, better FX exchange rates.

• Beneficiaries: Stripe, PayPal (Xoom), Revolut, Nu

• Example: Stripe enables USDC withdrawals for global merchants

#Programmable Compliance Layer

Smart contract-based AML/KYC, transaction monitoring, and sanctions screening. Automated compliance, reduced manual intervention, and real-time risk scoring.

Integrated compliance: Programmable compliance layer.

Smart contract-based AML/KYC, transaction monitoring, and sanctions screening. Automated compliance, reduced manual intervention, and real-time risk scoring.

• Beneficiaries: All regulated players (especially Visa and Mastercard selling value-added services)

• Example: Visa Protect for A2A payments, Mastercard Crypto Secure

Downstream (C-end / Merchant layer)

#Stablecoin-linked cards

Cards that directly spend from stablecoin balances are converted to fiat currency at the POS end.

• Beneficiaries: Visa, Mastercard (basic), Revolut, Cash App (distribution)

• Example: Visa's 130+ Stablecoin Card Program, Mastercard OKX Card

#Crypto Collateralized Lending

Using crypto assets as collateral for fiat currency loans without triggering taxable events.

Using crypto assets as collateral for fiat currency loans without triggering taxable events.

• Using crypto assets as collateral for fiat currency loans without triggering taxable events.

  • Using crypto assets as collateral for fiat currency loans without triggering taxable events.

  • Beneficiaries: Robinhood, SoFi, Block, Revolut

  • Example: Bitcoin-backed securities offered through Cash App or SoFi

  #Interest-generating savings accounts

  High-yield savings products backed by tokenized government bonds or DeFi lending protocols, delivered in a compliant shell.

  Delivered in a compliant shell, using tokenized government bonds or DeFi lending protocols.

  • Beneficiaries: Nu, Revolut, PayPal, SoFi

  • Example: Revolut's "crypto earn" type products, with returns close to staking yields

  #Merchant Stablecoin Settlement

  Allows merchants to settle in stablecoins instead of fiat currencies, reducing FX risk and speeding up withdrawals.

  • This allows ...li>

    This allows merchants to settle in stablecoins instead of fiat currencies, reducing FX risk and speeding up withdrawals.

This allows merchants to settle in stablecoins instead of fiat currencies, reducing FX risk and speeding up withdrawals.

• Beneficiaries: Stripe, Adyen, Square, PayPal

• Example: Mastercard allows merchants to settle in USDC, PYUSD, or USDG via Nuvei/Circle

#Instant Cross-Border P2P

Stablecoin-driven remittances, instant arrival, and fees below 1%. Squeezing out Western Union/MoneyGram in LatAm and Asia.

• Stablecoin-driven remittances, instant arrival, and fees below 1%. Squeezing out Western Union/MoneyGram in LatAm and Asia.

  • • Beneficiaries: PayPal (Xoom), Revolut, Cash App, Nu

    • Example: Nu enables BRL → USDC → local currency transfers in Latin America

    Differentiated / High-Profit Niche Opportunities

    #Self-Custody Wallet-as-a-Service

    A white-label self-custody solution for institutional and high-net-worth users. It allows users to collect custody fees while meeting self-custody compliance requirements.

    • Beneficiaries: Robinhood (Bitkey), Block, Stripe (via Bridge)

    • Example: Block's Bitkey hardware wallet

    #Blockchain-based loyalty program

    Issuing points in token form enables cross-ecosystem redemption. Increases stickiness and creates new revenue from tokenized rewards.

    Issuing points in token form enables cross-ecosystem redemption. Increases stickiness and creates new revenue from tokenized rewards.

    • Beneficiaries: Mastercard, Visa, PayPal

    #DeFi Protocol Integration for Institutions (Huge Potential)

    Provides institutions with regulated DeFi lending, staking, and liquidity mining access through compliant middleware.

    Provides institutions with regulated DeFi lending, staking, and liquidity mining access through compliant middleware.

    • Beneficiaries: SoFi (Galileo), Stripe (Bridge), Mastercard (MTN)

    • Example: SoFi Galileo provides white-label crypto staking for banks

    #Privacy-protected payments

    Achieving "both private and compliant" stablecoin transfers using zero-knowledge proofs. Supports confidential corporate payments while meeting AML compliance requirements.

    • • Beneficiaries: All companies (especially B2B Visa/Mastercard)

      Unbundling-Rebundling: A Structural Perspective

      Insights connecting to another report: The Architecture of Value: Structural Evolution of Financial Innovation and Deep Dive Report on Venture Capital Strategies

      (https://claude.ai/30284df5d6ec8003aa52f792bb549832?pvs=25)

      #Three Key Dependencies for Rebundling's Success

      Dependency 1: Funding Source (Banking License = Compound Interest Moat)

      • Winners: Nu (US$19 billion in deposits, 3-4% funding cost, 17.7% net interest margin), SoFi (banking license allows for deposit absorption)

      • Losers: PayPal (unlicensed, unable to absorb deposits), Revolut (UK license delay, unable to compete in the lending market)

      Enterprises want stablecoin settlements, but don't want to run their own nodes, manage wallets, or deal with licenses in all 50 states. The winning product: A single API handles multi-chain routing, liquidity optimization, compliance screening, and tax reporting simultaneously. Enterprises only need to call POST/transfer, and the infrastructure handles everything else. Economic model: Charging a 0.5–1% take rate on massive transactions, with zero marginal cost per transaction, but extremely high switching costs once integrated. It also boasts a 90%+ gross profit margin, but is applied in the $2 trillion+ stablecoin settlement market. Investment Theme 2: Vault-as-a-Service ("Fireblocks" Approach) PayPal, Robinhood, and Nu all manage billions of dollars in crypto assets. Custody requires OCC compliance, MPC/HSM security, $100 million+ in insurance, and disaster recovery. The opportunity lies in providing the "AWS of crypto custody"—enterprises access via API, with it handling key management, policy engines (e.g., "withdrawals over $100,000 require 3 approvals"), compliance reporting, and OFAC screening. Every encrypted fintech company needs it. Zero CAC (B2B sales cycle) High retention (switching to custody = 12+ months of security audit) Winners: Fireblocks ($8 billion valuation), Anchorage Digital (OCC license holder), Copper.co What's currently missing is a "Stripe for DeFi yields." It should be able to aggregate yields across Aave, Compound, Morpho, and tokenized government bonds (Ondo OUSG), while also abstracting gas fees, generating tax reports (IRS-compliant 1099), and providing an insurance shell and compliance layer. Vault Curator Opportunities: Ondo Finance: Tokenized Treasury Bonds, 5% Yield. Backed Finance: Tokenized Corporate Bonds. Maple/Goldfinch: Institutional-Grade DeFi Lending with Underwriters. Specific Example: SoFi has billions of dollars in deposits on its balance sheet, but traditional accounts only offer 0-1%. If its B2B platform, Galileo, could provide a "DeFi Yield API" that connects to 5% tokenized government bonds, SoFi could offer customers a 4% APY, keep a 1% spread for itself, and avoid putting assets on its balance sheet. This middleware approach, positioned between protocols and regulated fintech, handling compliance and tax reporting, fills a current untapped market. Framework: Evaluating Fintech Business Models (Image of a PNG file) The future of fintech lies in the integration of traditional financial platforms with programmable financial infrastructure. Blockchain technology is not replacing existing systems, but is increasingly being integrated as a behind-the-scenes settlement and liquidity layer. Stablecoins, tokenized assets, and on-chain markets bring faster settlements, cheaper cross-border payments, and new financial products, largely invisible to end users. Ultimately, the companies that will be best positioned to capture value in digital finance are those that simultaneously possess large-scale distribution, regulatory trust, and infrastructure control. Whether through payment networks, developer platforms, or consumer finance ecosystems, the winners will be those platforms that abstract away the complexities of finance while orchestrating across multiple payment tracks. As programmable money becomes more widely adopted, fintech companies that successfully integrate traditional finance with blockchain infrastructure will shape the next generation of global financial services.