US Cogni bank launches non-custodial crypto wallet
US digital bank Cogni has launched a non-custodial wallet as it seeks to enter the Web3 space. It will be directly integrated into the banking services instead of using a third-party solution.
The startup, founded in 2018 as part of the Barclays accelerator program, initially aimed to provide banking services to Gen Z and millennial users.
More recently, the company pivoted to web 3.0, just like competing neobanks, such as Revolut, N26, and Step. Still, Cogni focused on decentralization and user control, showed by the firm’s decision to provide a non-custodial solution.
According to a Dec. 21 report, Cogni’s wallet will act as a shell that enables users to hold, send, and receive cryptocurrency. A forthcoming partnership with an unnamed exchange will allow users to purchase cryptocurrency in-app.
Per Cogni founder Archie Ravishankar, the wallet integrated with a bank account will connect directly to the exchange, allowing the startup to offer institutional rates to regular customers.
Other fintech companies typically use external providers to connect to exchanges when providing cryptocurrency services, which can result in extra transaction fees for consumers. In contrast, Cogni’s wallet seems to be integrated with its existing banking services in the app, allowing users to view everyday transactions and bills alongside on-chain transactions in a single interface.
The startup is also looking to expand into non-fungible tokens (NFTs), with an integration set to be rolled out after the wallet’s launch. There are also plans to enable NFT-based profile pictures.
What is a self-custody wallet?
Self-custody refers to individuals or organizations holding their private keys and storing their digital assets. It means they control their financial affairs and have exclusive access to cryptocurrencies.
Self-custody can help improve security by allowing individuals to take greater responsibility for protecting their assets. It reduces the risk of loss or theft when a custodian is compromised. Finally, self-custody ensures total control over owned assets and reduces reliance on intermediary traditional financial institutions.
Despite those advantages, only some in crypto believe that self-custody is how most users should treat their assets. Changpeng Zhao, the CEO of major crypto exchange Binance, recently claimed that more cryptocurrency was lost to self-custody than centralized service providers. He suggested that self-custody is not right for 99% of the users.
