How does Crypto.com make money?

  • Crypto.com is a cryptocurrency exchange app founded in Singapore by Bobby Bao, Gary Or, Kris Marszalek, and Rafael Melo.The company was founded on the belief that consumers have a basic human right to control their money, data, and identity.
  • Crypto.com makes money via debit card interchange fees and maker-taker fees that it collects for matching buyers with sellers.
  • Crypto.com also collects loan interest and charges two different sales fees in its NFT marketplace. Through Crypto.com Capital, the company also makes money by investing in emerging start-ups and selling its stake for a profit.

Origin story

Crypto.com is a cryptocurrency exchange app founded in Singapore by Bobby Bao, Gary Or, Kris Marszalek, and Rafael Melo. 

In a 2020 interview by FinTech Magazine, CEO Kris Marszalek gave the following reasons for the creation of the trading platform: “Crypto.com was founded on one belief: that it’s your basic human right to control your money, data, and identity. By harnessing the technology of blockchain and cryptocurrencies built on it, we can democratise finance and bring much needed transparency to banking systems, shifting the balance of power back to individuals and away from society’s most powerful institutions.

The company was initially founded as Monaco in 2016, with plans to offer a Visa debit card where transactions were settled using a native currency called MCO. The company secured a $26.7 million round of funding and signed deals with exchanges such as Binance and Bittrex to give it more exposure. Though a functioning product was yet to be released, the company also managed to secure approval from financial regulators in Singapore in November 2017.

Monaco became Crypto.com in 2018 after the domain name was put up for sale and acquired for the sum of $12 million. Three months later, the rebranded company shipped the first cards to Singaporean customers with regulatory approval then coming from the United States. Native token CRO was released around the same time, which to some extent helped the platform surpass 1 million users by September 2019. 

Rapid growth ensued after the platform offered derivatives trading and expanded into 31 European countries. Crypot.com then acquired Australian fintech company The Card Group to secure a license to operate in that country, with an NFT marketplace unveiled in March 2021. Additional new features included a free tax filing tool for crypto traders and a start-up fund dedicated to investing in crypto start-ups.

Today, Crypto.com has approximately 10 million users in 90 countries. Since March 2020, the company has processed more than $415 billion of trades on its exchange.

Crypto.com revenue generation

Crypto.com makes money via interchange fees, various trading fees, loan interest, NFT sales fees, and investment capital gains.

Below is a general look at the multi-dimensional revenue generation strategy of this private company.

Interchange fees

The Crypto.com branded debit card gives users access to various perks, including cashback rewards, cheaper subscriptions to Spotify and Netflix, and access to premium airport lounges, among other things.

The company makes money on interchange fees which are paid by the merchant to the card-issuing bank to cover the cost of facilitating the transaction. The fee is usually around 1% and is split between Visa and Crypto.com.

Trading fees

Like many cryptocurrency exchanges, Crypto.com works on the maker-taker trading fee structure. Makers create buy or sell orders that are not carried out immediately, which increases liquidity when certain price conditions are met. Those who do buy and sell instantly are called takers, who fill the orders created by the makers.

Crypto.com makes money by charging trading fees for matching buyers with sellers. Makers tend to be charged lower fees than takers because they are adding liquidity to the exchange. Having said that, any trader can receive a discount on trading fees if they stake more of the native coin CRO or execute more trades.

The company also charges withdrawal fees, with the exact fee reliant on the destination of the funds and the type of currency withdrawn.

Loan interest

Crypto.com also offers margin loans to traders and more general loans to any account holder using the branded debit card. Loan collateral can take the form of CRO, BTC, or ETH and the loan itself can be issued in either USDC, USDT, TUSD, or PAX.

The company collects interest on these loans according to the total loan amount and other factors such as the amount of staked CRO and the collateral provided. 

NFT sales

Crypto.com operates an NFT marketplace where users can buy, sell, display, and even create NFTs. 

For every NFT sale, the company charges creators a 15% fee. Sellers involved in secondary NFT sales are also charged a 5% processing fee to cover the operational costs of the marketplace.

Investment capital gains

In March 2021, the company launched Crypto.com Capital, a $200 million venture capital fund dedicated to investing in crypto start-ups at the seed and Series A stage.

Similar funds have been launched by competitors such as Binance and Coinbase to realize capital gains in emerging companies. However, this strategy also gives the investing company access to private data that is used to guide future business direction and product development.

Connected Business Concepts

blockchain-economics
According to Joel Monegro, a former analyst at USV (a venture capital firm) the blockchain implies value creation in its protocols. Where the web has allowed the value to be captured at the applications layer (take Facebook, Twitter, Google, and many others). In a Blockchain Economy, this value might be captured by the protocols at the base of the blockchain (for instance Bitcoin and Ethereum). However, according to blockchain investor Paivinen due to ease of forking, incentives to compete and improved interoperability and interchangeability also in a blockchain-based economy, protocols might get thinner. Although the marginal value of scale might be lower compared to a web-based economy, where massive scale created an economic advantage. The success of the Blockchain will depend on its commercial viability!
proof-of-stake
A Proof of Stake (PoS) is a form of consensus algorithm used to achieve agreement across a distributed network. As such it is, together with Proof of Work, among the key consensus algorithms for Blockchain protocols (like the Ethereum’s Casper protocol). Proof of Stake has the advantage of security, reduced risk of centralization, and energy efficiency.
proof-of-work
A Proof of Work is a form of consensus algorithm used to achieve agreement across a distributed network. In a Proof of Work, miners compete to complete transactions on the network, by commuting hard mathematical problems (i.e. hashes functions) and as a result they get rewarded in coins.
non-fungible-tokens
Non-fungible tokens (NFTs) are cryptographic tokens that represent something unique. Non-fungible assets are those that are not mutually interchangeable. Non-fungible tokens contain identifying information that makes them unique. Unlike Bitcoin – which has a supply of 21 million identical coins – they cannot be exchanged like for like.
vbde-framework
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
ethereum-blockchain
Ethereum was launched in 2015 with its cryptocurrency, Ether, as an open-source, blockchain-based, decentralized platform software. Smart contracts are enabled, and Distributed Applications (dApps) get built without downtime or third-party disturbance. It also helps developers build and publish applications as it is also a programming language running on a blockchain.

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