Plaid, the company building data transfer technologies to power fintech and digital finance products like smartphone-based wallets, today announced that it's adding support for leading crypto exchanges to its data network. While Plaid previously integrated with large exchanges on an ad hoc basis, the move is an indication that the company sees crypto as important to its growth.
"This is something many customers have asked for, particularly companies offering wealth management and financial planning services," Alain Meier, head of identity at Plaid, told TechCrunch in a recent email interview. He pointed out that 16% of Americans reported investing in, using or trading cryptocurrency in 2021, according to the Pew Research Center. "With high volatility in the markets, we think it’s even more important for people to have a clear, real-time picture of their finances digitally, including what is in their crypto accounts for planning and to make important financial decisions."
As of today, through Plaid, users can share crypto account information, including asset types, balances and transactions with other services they use. Developers can incorporate the data through the Plaid Investments API, which now supports crypto accounts for use cases like tax advisory services, financial planning and net worth calculations.
Plaid isn't the first provider to aggregate various cryptocurrency accounts through an API. That distinction belongs to startups such as CoinAPI, BitCombine and Zabo. But Meier makes the case that Plaid is one of the few to offer support for crypto exchanges alongside bank account information and data from other fintech platforms.
Image Credits: Plaid
"If you're working with a platform like SoFi for financial planning, you'll be able to see your crypto assets alongside your other investments, giving you a more comprehensive and unified view of your finances," Meier said. "Once an account is permissioned through Plaid, the service can retrieve read-only information from the connected account."
The crypto market is fraught with risk — and criminal activity. Binance processed transactions totaling at least $2.35 billion stemming from hacks, investment frauds and illegal drug sales between 2017 and 2021, according to a Reuters report. In June, retirement firm IRA Financial filed a lawsuit against Gemini alleging that lax cybersecurity led to millions of dollars' worth of clients' assets being stolen from Gemini's platform.
Meier noted that Plaid's newly introduced support for crypto accounts is read-only, meaning developers don't have access to move money on behalf of users. In addition, he said, all crypto exchanges had to go through a due diligence and risk assessment process by Plaid's risk team before joining the Plaid network.
"More people are delving into crypto each year and it's becoming more mainstream. We don’t see this trend slowing down, and we want to help all customers, not just those in traditional finance. That’s why we want to build the services that will drive the most impact for everyone, regardless of market conditions," Meier said. "We’re extremely bullish on the long-term potential of cryptocurrencies and digital assets to improve the transparency and efficiency of financial services."
The rollout of crypto exchange support comes after Plaid's growth into identity and income verification, fraud prevention and account funding in May — the company's first major expansion in years. Putting the pressure on is Stripe, one of Plaid's chief rivals, which encroached on Plaid's territory this spring with the launch of financial data connections to bank accounts.