In a banking industry, neobank Cogni adds a non-custodial Web3 wallet for the first time
Neobanks like Chime, which lack physical branches, have found a niche that offers services like direct deposits, checking accounts, and paycheck advances within an app. Now, a neobank called Cogni is adding a unique Web3 capability to its app: a no-custodial crypto wallet.
While many financial firms let customers buy and sell crypto, they typically do so through so-called hosted wallets, which are ultimately controlled by the firm. Noncustodial wallets, on the other hand, give the wallet holder ultimate control over their crypto using a series of code words known as a seed phrase.
In the case of Cogni, customers set up the wallet where they can send and receive Bitcoin, Ethereum, and a handful of other cryptocurrencies, as well as NFTs. They control the wallet via the seed phrase they receive, but they can also use facial recognition.
While the wallet sits alongside other services in the Cogni app, it isn’t linked to the customer’s bank account and the app doesn’t — for now — offer access to an exchange to buy crypto. In an interview, Cogni CEO Archie Ravishankar said wealth that the company plans to tie the wallet to bank accounts in the future and let customers buy and sell crypto.
Cogni launched in 2018 as a lifestyle brand that offered users discounted gift cards for companies like Adidas and Southwest Airlines. The company started focusing on crypto and Web3 earlier this year.
Cogni does not want to publicly reveal how many customers Cogni has, and even among neobanks the name is not a household name. But her announcement is significant in that she appears to be the first FDIC-insured bank to offer a non-custodial wallet, which could lead others to follow suit. (Fintech giants Robinhood and PayPal both offer no-custodial wallets, but aren’t technically banks).
Like other neobanks, Cogni relies on a “rent-a-charter” agreement with an incumbent bank and pays the bank to come under its regulatory umbrella, in this case the Community Federal Savings Bank in Queens, New York.
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