Dakota: A New Banking Solution for Crypto Startups

Former CEO of Coinbase Custody, Ryan Bozarth, has launched his new startup, Dakota, which aims to provide crypto startups and foundations with a reliable, crypto-native banking solution.

The platform intends to resolve the increasing difficulties that crypto organizations have encountered in obtaining traditional banking services, especially highlighted by the collapse of Silvergate Bank. Many cryptocurrency companies, particularly international foundations, have historically struggled to find banking partners as the crypto sector grapples with regulatory uncertainty.

According to Bozarth, Dakota is designed to offer crypto firms access to traditional banking services:

> "Crypto foundations are largely overseas entities, so international. Because they are international and affiliated with crypto, they have an extremely hard time and limited options in getting a bank account."

He estimates that thousands of crypto foundations with billions of dollars are finding it challenging to leverage conventional banking services.

> "What we saw over the last few years is that we had a banking system and a kind of regulatory position that made it quite hard for crypto organizations to get access to bank accounts. What Dakota solves, and what we set out to do … we can work with a series of bank partners under the hood to basically decouple some of the banking."

Dakota operates as a crypto-native internet banking platform, allowing clients to make U.S. dollar transfers without facing common fees like ACH, Fedwire, SWIFT, or SEPA charges. Additionally, customers can earn rewards on U.S. Treasury holdings, with their deposits fully backed by Treasurys.

When clients open an account with Dakota, their funds are automatically converted into an “on-platform” stablecoin backed by U.S. Treasurys:

> "So you send in a dollar that automatically, and under the hood, is converted to a Treasury that's held onchain."

The on-platform stablecoins are functional only within Dakota’s ecosystem, a feature designed by Bozarth to mitigate any potential risk of depegging. Customers can also earn rewards on their U.S. Treasury holdings as their deposits are fully backed by the bonds.

Even though Dakota is only now widely available, it already boasts over 200 customers, according to Bozarth.

> "It’s a night-and-day difference from what we've experienced with other bank accounts," said Tyler Butts, a partner at Webslinger Advisors, which is a Dakota customer.