Fintech's Strategic Move into Crypto and Its Market Implications

The fintech sector is undergoing a seismic shift as it strategically pivots toward crypto, driven by institutional demand for digital assets and the need for modernized financial infrastructure. From 2023 to 2025, fintech companies have not only expanded their crypto offerings but also forged critical partnerships with institutional players, positioning themselves at the forefront of a $1.12 trillion fintech market projected to grow at a 16.2% CAGR through 2032, according to a Fortune Business Insights report. This shift is not merely speculative-it is underpinned by regulatory progress, technological innovation, and a growing recognition of crypto's role in portfolio diversification. For investors, the question is no longer whether fintech will embrace crypto, but which undervalued stocks are best positioned to capitalize on this institutional adoption.

Strategic Moves: Fintech's Crypto Expansion

Fintech firms are leveraging their agility to bridge gaps in traditional finance, particularly in institutional-grade crypto solutions. A World Bank report has emphasized the importance of robust digital infrastructure-such as fast payment systems and digital identities-to support this transition, while also cautioning against risks like cyber threats and data privacy. Meanwhile, companies like Marqeta (MQ) and PayPal (PYPL) are leading the charge. Marqeta, a modern payments platform, reported a 60% year-over-year revenue surge in Q4 2024, driven by its API-based card-issuing and embedded finance capabilities, according to a Rewbix analysis. Its partnership with Mastercard and international expansion further validate its institutional appeal. PayPal, meanwhile, has integrated crypto services into its two-sided network, offering users exposure to digital assets while maintaining a strong balance sheet. Analysts argue that PayPal is undervalued by 53%, according to a ValueSense analysis.

Undervalued Stocks: Crypto-First Fintech Innovators

1. Marqeta (MQ): Despite a Q3 2025 P/E ratio of -39.28 (indicating negative earnings), Marqeta's Q4 2024 revenue growth of 60% YoY and a current P/E of 20-below the fintech sector average of 25-suggest undervaluation, as noted in Rewbix's analysis. Analysts have set an average price target of $6.97, reflecting cautious optimism about its embedded finance and crypto integrations.
2. PayPal (PYPL): With a P/E ratio of 10.5 as of July 2025 (compared to the sector average of 14.39), PayPal's valuation appears attractive. Its crypto services, including Bitcoin trading and institutional partnerships, align with the 83% of institutional investors planning to increase digital asset allocations in 2025, according to a Coinbase survey.
3. Nu Holdings (NU): This Brazilian fintech has expanded its crypto transfer features and now serves over 10 million users in Latin America. Its Q3 2025 net margin of 26.19% and ROE of 7.23% highlight profitability, while analysts have set an average price target of $14.60, per a Nasdaq article.
4. Marathon Digital Holdings (MARA): As one of the largest Bitcoin miners, Marathon has a TTM P/E of 7.44-well below its five-year average of 19.03-and a hash rate of 24.7 EH/s as of 2023. Its institutional partnerships, including a $270 million Bitcoin accumulation strategy, position it to benefit from the $110 billion surge in institutional crypto holdings, according to a Marathon press release.

Market Implications: Institutional Adoption and Regulatory Tailwinds

The institutional crypto rally of 2025 is being fueled by regulatory clarity and product innovation. The CLARITY Act and Strategic Bitcoin Reserve proposal are legitimizing crypto as a national asset class, while the CFTC's collaboration with Nasdaq on surveillance tools is addressing fraud concerns, as noted in a Forbes article. For fintechs, this creates a virtuous cycle: institutional demand drives product development, which in turn attracts more institutional capital. For example, 59% of institutional portfolios now allocate at least 5% of AUM to digital assets, with stablecoins and tokenized assets emerging as key drivers (per the Coinbase survey).

Conclusion: Positioning for the Future

Fintech's strategic embrace of crypto is not a passing trend but a structural shift in financial services. For investors, the undervalued stocks discussed-Marqeta, PayPal, Nu Holdings, and Marathon Digital-offer compelling opportunities to ride this wave. While risks like regulatory volatility and market corrections persist, the underlying fundamentals-robust revenue growth, institutional partnerships, and a supportive macroeconomic environment-suggest these firms are well-positioned to outperform in the long term. As the World Bank notes, the future of finance hinges on balancing innovation with resilience. For now, the numbers tell a story of untapped potential.