Unchained Podcast, Ep. 930 — How Crypto Neobanks Make It Easier to Earn Passive Income

Host: Laura Shin
Guests:

• Itamar La Suisse (CEO, Reddy, formerly Argent)
• Mike Sulegadze (Founder & CEO, EtherFi; Founder, Tophat)
  Date: October 22, 2025

Overview: The Rise of Crypto Neobanks

This episode explores how crypto neobanks—self-custodial, crypto-native alternatives to traditional banks and fintech neobanks—are enabling users to earn passive income, access better financial products, and reimagine everyday banking. Laura Shin interviews Itamar La Suisse and Mike Sulegadze, founders in the space, who explain what crypto neobanks are, how they work behind the scenes, how they tackle security and regulation, and what the future holds for banking as this model gains traction.

Key Topics & Insights

1. What Is a Crypto Neobank?

• Definition & Distinction:

  • Unlike traditional banks and most fintech neobanks, crypto neobanks are non-custodial—meaning they never take control of user assets.
  • "Think of it as a self-custodial version of something like a Revolut or Nubank or Chime." — Mike Sulegadze [02:02]
  • Focus is on transparency, flexibility, lower fees, and direct user benefits due to reduced regulatory surface and intermediary layers.

• Why Custody Matters:

  • “Nobody can come in and just take all your money. The level of transparency is, you know, extreme compared to...a traditional bank.” — Mike Sulegadze [00:00]

• Benefits for Users:

  • Cheaper, faster, higher yield, and frictionless access to DeFi and digital assets.
  • Immediate and complete transparency over deposits.

2. Origins and Philosophy

• EtherFi’s Vision:

  • Initially pitched (in 2020) as a “DeFi bank”: a vertically integrated crypto app to fully replace traditional bank functions, beginning with staking as an “anchor product,” adding card capabilities, and smart contract vaults. [04:06]

• Naming Concerns:

  • “The word bank has very specific implications… Even if you put ‘neo’ in front of it…” — Mike Sulegadze [04:52]

• Argent to Reddy’s Evolution:

  • Started as a self-custodial wallet with DeFi features, later pivoted as gas fees and usability bottlenecks became apparent, shifting towards a focused neobank product to deliver real user value and clarity of purpose. [08:08]

3. Integrating Traditional Services—Credit & Debit Cards

• Challenges with Card Integration:

  • Most “crypto cards” are clunky (high fees, forced fiat conversion, unusable crypto features).
  • True “self-custodial” crypto cards—integrated natively to stablecoins and L2s—required regulatory change and tech advancements.
  • “So it's, it is hard because you have to, you know, put in a bunch of sort of plumbing and make sure that you're on side in terms of regulatory requirements.” — Mike Sulegadze [10:30]

• Recent Enablers:

  • Mainstream institutional appetite, regulatory clarity, and technological upgrades (layer-2s, account abstraction) now make true crypto card experiences possible. [12:18]

• Credit vs. Debit Explained:

  • All “credit” is fully collateralized by crypto assets (no credit score check).
  • “We don’t check credit score because...it's fully collateralized.” — Mike Sulegadze [19:27]
  • “Very similar model ... In US credit works better, in Europe debit works better ... at the end users use on chain loans.” — Itamar La Suisse [20:20]

• Global Regulatory Complexity:

  • Significant legal compliance for each market, made lighter by non-custodial model and partnerships with licensed card issuers (e.g., Rain, Kulipa). [16:28, 17:18]

4. User Experience—Blending Accounts & Investment

• Unified Account Model:

  • No artificial distinction between checking, savings, investment. One account, one wallet for all financial needs.
  • “The protocol sees the entire financial picture of you as a person.” — Mike Sulegadze [22:03]
  • Collateralized loans and products, easily accessible to all users (not just the ultra-wealthy). [23:10]

• Yield Mechanisms:

  • DeFi strategies (staking, lending, token incentives, hedge-fund-like options) curate best strategies and risk-adjusted opportunities for users.
  • “Our job is just to bring the best product to users, ... while being very transparent on the risk.” — Itamar La Suisse [31:49]

5. Security and Risk Management

• Security Innovations:

  • Multi-layered: smart contract audits, formal verification, active monitoring, L2-specific precautions.
  • “We are, I would say rapidly approaching a level of security and robustness that's close to what you would find in tradfi.” — Mike Sulegadze [33:15]
  • Use of smart contract wallets, account abstraction, time delays, trusted addresses, and flexible recovery—no single point of failure. [36:40]

• Chargebacks and Dispute Resolution:

  • Handled via standard Visa/Mastercard dispute systems; refunds issued in stablecoins. [38:03]

• Insurance:

  • No FDIC-like insurance yet, but equivalent products are anticipated for the future. [58:18]

6. Economic Model & Monetization

• Profit & Scale:

  • High-efficiency model, low operational costs (e.g., EtherFi: $80–85 million ARR with only 32 employees). [41:44]
  • Revenue streams: not from card interchange, but from spreads on lending/borrowing, DeFi strategy yields, staking revenue, and upcoming on-chain FX. [41:44, 43:33]

• Competitive Dynamics:

  • Card product as a “go-to-market” tool, not a major profit center—focus remains on investment, yield, and FX.
  • “Once you move all of that...much more efficient FX market, then there is an order of magnitude more money to be made.” — Itamar La Suisse [45:46]

• Opportunities in FX:

  • Huge margins in developing markets due to inefficient remittance rails; stablecoin FX potentially transformative. [46:15]

7. Advice for Users

• How to Choose Providers:
  • Heed red flags (no KYC, suspect cashback offers, products “too good to be true”)—“If a card program doesn't do KYC...there's probably an issue there.” — Mike Sulegadze [51:15]
  • Focus on products tailored to your assets and needs (BTC, ETH, inheritance, family, etc.).
  • The key is finding the right fit and avoiding platforms likely to be shut down due to legal shortcuts/excessive risk. [52:09]

8. The Future: Exponential Change in Banking

• Adoption Curve:

  • Shift will appear slow—then accelerate rapidly at “inflection point,” similar to the online advertising shift. [55:45]
  • “We're in that phase where all those building blocks are being built...In three to six months the core things, it will feel like a Web2 trade fi product and then hypergrowth can start.” — Itamar La Suisse [56:46]

• Competition with TradFi:

  • Both crypto-native and conventional neobanks are racing to integrate these features.
  • Lower fees, better yield, and improved UX are the main draws. [40:16, 41:14]

Notable Quotes & Memorable Moments

• Custody and Transparency:

  “Crypto alternatives do not take custody of user assets...the level of transparency is, you know, extreme compared to...a traditional bank.”
  — Mike Sulegadze [00:00]

• Regulatory Transformation:

  “The regulatory surface is much smaller which means users have a much better UX. It's really a direct benefit to users. It's not just philosophical.”
  — Itamar La Suisse [07:02]

• On Security:

  “We're way past the point. I'm just like, okay, here's a wallet, just please don't lose this phrase or else it's all gone.”
  — Mike Sulegadze [37:14]

• Efficiency and Scale:

  “If we were a TradFi institution with $12 billion in deposits, we would have probably 5, 600 employees. EtherFi currently has 32 employees.”
  — Mike Sulegadze [39:00]

• On Product Focus:

  “Card is not how you make your money...it's a go to market marketing angle.”
  — Itamar La Suisse [43:33]

• On Market Opportunity in FX:

  “The average effects on the African market is 7.5%. One of the markets, I think Ghana, was at 20%...It's a 10x improvement already and you can still make another...nice margin there.”
  — Itamar La Suisse [45:46]

• On Future Growth:

  “Things change slow until they don't and then they move really fast. So I think we're in the tail part of the exponential growth curve.”
  — Mike Sulegadze [55:45]

Timestamps to Key Segments

• Definition and distinction of crypto neobanks: [02:02–03:54]
• Origins of EtherFi and Reddy (Argent): [04:06–10:05]
• Challenges of card integration and recent tech/regulatory enablers: [10:05–13:23]
• Credit vs debit, collateralization, and user experience blending: [19:27–24:23]
• Yield mechanics and backend DeFi strategies: [28:38–32:36]
• Security architecture and user protection: [33:15–37:58]
• Economic model and profit structure: [41:44–45:01]
• FX opportunity and stablecoin future: [45:01–47:00]
• Advice for users & how to choose providers: [51:15–53:25]
• Predictions for the future of banking: [55:45–58:05]
• On insurance and FDIC equivalency: [58:05–58:26]

Takeaways

• Crypto neobanks provide a fundamentally new model—self-custodial, transparent, and accessible—to eliminate much of the friction, cost, and restrictions of legacy and fintech banking.
• The model is rapidly maturing thanks to regulatory acceptance, technological advances, and consumer demand for better financial products and passive income generation.
• While risk and regulation remain, both founders see a coming “inflection point” that will make this approach mainstream—potentially transforming banking for billions globally.