Investing app Stash expands crypto access

Banking and investing platform Stash on Tuesday announced expanded cryptocurrency access for users through a separate crypto account for its 2 million users, with the opportunity to buy eight cryptocurrencies including Bitcoin, Ethererum and Bitcoin Cash.

“We look at this as a growth opportunity [for users] to be able to invest and get exposure to this growing asset class,” said Douglas Feldman, Stash’s chief investment officer. “We have a very strong view over the long term … that crypto and the blockchain technologies that crypto relies upon, will become more prevalent.”

The announcement comes nearly a year after the company introduced crypto exposure in its managed Smart Portfolio accounts. Despite the volatility of the crypto market, buying crypto directly through Stash — a feature customers asked for — is a longer-term play to help users build wealth over time through diverse portfolios, Feldman said.

Stash is partnering with Apex Crypto, which will act as a custodian. Stash joins a growing number of traditional financial services companies expanding their reach into crypto this year. Fidelity Investments was considering allowing individual investors to trade Bitcoin on its brokerage platform, The Wall Street Journal reported last month. 

“We’re trying not to focus on the downturns and focus on some of the long-term indicators,” Tom Jessop, president of Fidelity Digital Assets, recently told the Journal about the move.

The ability to buy crypto directly through Stash accommodates users who want a more hands-on approach to building their portfolios, said Claudio Esposito, senior vice president and head of product at Stash. 

Stash said it’s recommending users make crypto a relatively small proportion of their asset mix, and offers a calculator tool and in-app alerts that advise when they have too much crypto exposure relative to their risk profile. Customers also must read through educational material before investing in crypto, the company said.

While customers can buy crypto through the Stash platform, they won’t be able to send crypto they buy through Stash to an external wallet. Stash said it’s open to enabling that capability in the future, but has no plans to do so right now. (Investing app Robinhood, by comparison, includes the capability to transfer crypto into and out of Robinhood crypto accounts and recently launched a noncustodial crypto wallet.)

The ability to buy crypto through Stash represents the first product offering on its new core system, which rolled out last month. The company is in the process of winding down its use of Green Dot’s core system, a move it said gives it more control over product offerings.

“When we started, we weren’t sure how much we were going to get into banking at the time and the best thing for us to do was have an all-in-one partner who provided everything that we needed,” Esposito said. “As we’ve scaled and grown … what we’ve wanted is more control over the experience and more control over the infrastructure, and that’s just not the type of offering that Green Dot has today.”

Stash, which is reportedly valued at $1.4 billion, said it has $3 billion in assets under management and $125 million in annual revenue. 

Adding crypto will help Stash with customer acquisition and retention, said fintech industry analyst Grant Easterbrook. For existing clients, crypto might be a tool to bolster engagement within the platform versus looking for those offerings elsewhere, he noted.

“Prospective customers often compare and contrast features when choosing a provider, and not offering crypto trading would have become an increasingly important gap if Stash did not offer it,” he said. 

While the educational tools may help introduce new clients to crypto, the inability to transfer crypto and out of the Stash platform may present challenges over the longer term, he said.

“The major centralized crypto exchange alternatives that Stash clients might consider for crypto trading all offer the ability to send crypto in and out of their platforms,” he said. “To be competitive in this industry, someday Stash will need to offer customers the ability to send crypto in and out.”