Omid Malekan, an author and adjunct cryptocurrency professor at Columbia Business School, said in a Nov. 22 post on X that Binance, the largest crypto exchange in the world, has been more successful than many traditional financial institutions in expanding financial inclusion to underserved populations. The platform's wide reach and user-friendly tools are key components of this success.
"It [Binance] did a reasonably decent job of onboarding tens of millions of poor, brown, and otherwise underprivileged people into the financial system, something the world’s compliant financial firms have chronically failed to do (which is OK—it’s not considered redlining when the AML department holds the pen). Binance's net contribution to a more inclusive financial system is something to be commended. What remains to be seen is if firms like that can keep serving underserved populations now that they too have agreed to play the game, and do the paperwork," said Malekan.
A report from Finance Magnates found that crypto payment tools, such as the contactless payment platform Binance Pay and the crypto debit card Binance Card, increase financial inclusion by enabling people who are unbanked or have limited access to traditional banking services, to incorporate their crypto holdings into daily transactions.
Approximately 1.4 billion people around the world are "unbanked," or do not have bank accounts or access to traditional financial tools, according to a report from the World Bank. Unbanked individuals are frequently women, people living in poverty or in remote areas, or people who received minimal education.
In a Senate Banking Committee hearing on crypto in February, Professor Linda Jeng of the Georgetown Institute of International Economic Law highlighted the "social value" of crypto, which she said she had already seen in action, according to a copy of her testimony. She pointed to financial inclusion for unbanked individuals as one example. "A substantial percentage of adults around the world today lack access to basic banking and financial opportunities...Although lack of access is more significant in developing countries, it is also common in advanced economies," Jeng said.
Many people who do not have bank accounts are unable to pay the associated fees or might have a poor credit score, but through decentralized finance (DeFi), "unbanked" individuals can access financial services such as borrowing and lending, trading assets, and earning interest, according to CoinTelegraph.
A September report from Nasdaq found that philanthropic organizations are increasingly utilizing cryptocurrency and blockchain technology to make their efforts more efficient. Accepting donations in the form of crypto enables charities to cut banks out of the process, which is key for servicing under- or unbanked areas. Providing donations in crypto, instead of cash, also reduces taxes, hidden fees and the risk of theft, the report said.
Malekan is the author of several books including The Story of the Blockchain: A Beginner’s Guide to the Technology That Nobody Understands, according to the Columbia Business School website. He teaches an introductory course to blockchain and cryptocurrency at Columbia and his writing has been featured in publications including Wall Street Journal and Financial Times.