Non-custodial crypto cards proliferate as part of wider industry trend

A number of crypto cards linked to non-custodial wallets have popped up over the last year as part of a larger trend seen across the industry.

Events such as the collapse of FTX last November have historically prompted spikes in funds sent away from centralized exchanges and into personal wallets as users seek more control over assets, Chainalysis data shows.

Ilya Volkov, CEO and co-founder of YouHodler, said in a statement he expects to see further integration of DeFi in the coming months and year — particularly self-custodial solutions for traditional finance instruments and payment methods.

“We’re already seeing many major non-custodial wallets…integrated or in the process of integrating fiat bridges, which will continue to expand the adoption of Web3 fintech in everyday life,” Volkov added.

Non-custodial crypto card launches continue

Digital payments company Wirex on Tuesday launched an app chain called W-Pay, which enables dapps and non-custodial wallets to issue non-custodial crypto debit cards.

Previous iterations of crypto cards have typically been integrated into a custodial wallet and linked to a centralized exchange — limiting users’ control over their assets and keys.

But this latest solution was designed to eliminate third-party risk and give account owners exclusive control over their funds, Wirex CEO Pavel Matveev told Blockworks in an email.

Read more: The institution’s crypto self-custody planning guide

Wirex makes card transactions up to a predefined limit, “facilitating the integration of dapps and non-custodial wallets with traditional payment rails while preserving fund access,” the company said Tuesday.

Unlike other debit cards, non-custodial debit cards don’t require users to add money beforehand, Matveev noted. Cardholders earn up to 8% back in Wirex’s native token (WXT) for every transaction made.

“Choosing non-custodial options is part of a bigger trend in the industry, where people want more control over their money and don’t want to rely too much on other companies,” he added.

Indeed, similar offerings have come to market over the past year or so.

Crypto ecosystem SORA in September 2022 introduced a self-custodial crypto wallet with debit card functionality in what it marketed as “a fiat gateway to the Polkadot ecosystem.”

“Centralized decisions can impact a user’s freedom to decide what to do with those assets — just think about multi-day withdrawal freezes that often occur on centralized exchanges,” SORA states in a blog post. “These entities also store your personal data harvested during the KYC process and link it to your trading activity.”

A card by Holyheld — a platform using an interface and smart contracts for users to interact with through a non-custodial wallet — is currently available for residents in 30 countries.

Suberra is another protocol that recently introduced a crypto debit card for which user funds are secured in a non-custodial wallet. It introduced the product in an April X post, and there is currently a waitlist to receive the card.

5/6 To use the Suberra card, users hold stablecoins that will be debited on-chain whenever they make a purchase. If the balance runs low, set up auto-convert to swap tokens like ETH into stablecoins that you can use to spend. 💳

— Suberra (Web 3.0 Payments) (@SuberraProtocol) April 27, 2023

That same month, financial app Curve added a feature allowing customers to transfer crypto rewards from merchant transactions to their digital wallets — a step toward self-custody.

Read more: Can crypto credit cards and self-custody mix?

Gnosis also launched a decentralized payment network — Gnosis Pay — recently that allows the issuance of a Visa-certified card for spending from a self-custodial wallet.

“With the continued accumulation of assets in self-custodial wallets, 2023 will undoubtedly be the year of self-custodial payments entering the mainstream,” Gnosis Pay CEO Marcos Nunes said in a statement at the time.

Evan Steinhilb, vice president of operations at CoinScan, notes that while non-custodial crypto cards offer consumers greater control over their assets, many users may not be aware of the associated security risks due to their novelty.

Holyheld notes on its site that users of non-custodial services must keep their seed phrases and keys safe, for example, adding: “It’s not a password that you can reset if compromised.”

“From my perspective, any innovation in the space that gives crypto investors more options when it comes to managing their assets is a positive advancement,” Steinhilb told Blockworks.

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