Solflare Says Wallets Won’t Replace Banks; FX Fees Hide Cashback

At Consensus Miami, Solflare founder Vidor Gencel said crypto wallets suit a narrow group-people who hold USDC, trade frequently or are paid in stablecoins-but will not replace banks or neobanks for most users. He called the idea that wallets will replace banks “very delusional.”

Gencel warned that many crypto card programs advertise high cashback while funding rewards through other charges, particularly foreign-exchange markups. “Some cards have that FX fee as high as like 3 or 4%, and then do 2% cashback,” he said, adding, “So they effectively earn 1% in all of their spending.” He used Bybit as an example in that explanation.

Solflare’s card uses a simpler pricing model. Issuing, onboarding and KYC are free for users, and the card applies a single 1% FX fee when spending in non-dollar currencies. Gencel described the approach as less flashy than large cashback offers but easier for customers to understand.

The product targets people who already hold USDC. Solflare’s data shows users who make more than two transactions return at higher rates, which the team interprets as a sign the card fits a specific active cohort. For consumers who do not hold USDC, do not trade, and do not use a wallet, Gencel said the card may not outperform traditional banking products.

Solflare will remain focused on the Solana blockchain. The team found that wallets that expanded across multiple chains often saw extra chains contribute “less than 5% of their all-time revenue.” Solflare has concentrated on Solana since 2020 because the network is low cost, fast and active; Gencel acknowledged some markets, such as perpetuals, may differ where other firms have positions.

The crypto card market is crowded, with exchanges and wallets launching cards across regions. Gencel noted many European card offerings lose money unless the issuer controls card issuing and more backend operations. He also pointed out that these products still rely on banking partners, run anti-money-laundering checks and meet the same risk requirements because a bank must approve users.

On stablecoins, Gencel said the market is shifting as issuers like Circle begin sharing incentives. He described USDC and USDT as the only stablecoins to reach significant scale, while noting USDT can be harder to track. He added that PayPal’s stablecoin incentive arrangements resemble business-to-business deals with decentralized finance platforms and can provide incentives to other DeFi services.