Cryptocurrencies are growing in popularity every day. We are also past the days when Bitcoin dominated the market – although it is still the biggest name in crypto, there are new contenders for the title.
The future of cryptocurrency is not yet clear, however. It operates entirely separately from mainstream banking and the stock market, and how it will be integrated – if ever – is still unknown. Here’s how banking institutions treat cryptocurrency.
The biggest problem banking institutions have with cryptocurrencies is their volatility and the risk that comes with it. We’ll talk about regulation and adoption next, but these two factors are the biggest sticking points for banks right now.
Crypto markets are far too volatile for banks to feel comfortable with the mass adoption of coins as part of their services. Even though it happens with stocks and the like, cryptocurrencies have a long way to go here.
Regulation has been a hot topic in the crypto world lately. Governments and banking institutions around the world are starting to shut down mining operations and trading platforms.
The biggest problem for most crypto buyers and sellers is that there is no real attempt to incorporate the currency by their governments or financial institutions. Instead, the powers that be have opted for blanket bans.
Nigeria has emerged as a cryptocurrency hub, with many of its citizens turning away from traditional investment methods and opting for blockchain. This met with swift sanctions from the government, and almost all investors now trade on foreign platforms.
Regulation is also becoming a major problem because it is not applied consistently. Complete closures of trading platforms and mining operations don’t really count as regulations, and most crypto investors want some sort of official guarantee that their investments are legitimate.
Countries like China and Vietnam have outright cryptocurrency bans in place, with massive fines imposed if you are caught buying or selling. Some banks have also followed suit.
Since so many people turn to investing in cryptocurrencies, banks are losing money. Not only are people moving away from banks as their only investment platform, they don’t even use them to store their assets.
On the other hand, the idea of adoption is gaining popularity with some major financial players. In February of this year, the JP Morgan The co-chair made it clear that Bitcoin adoption is on the table, but will be decided by demand from its customers.
The biggest recent step in the fight for crypto adoption came in El Salvador, when banks took steps to recognize crypto as a legitimate currency format and accept it for transactions nationwide.
A big problem that banks face is that the growth of cryptos is not slowing down. Every day people are turning away from stocks or wallets and all types of traditional investments, and instead choose to invest in cryptocurrency.
This means that if the banks don’t get ahead of this wave, they will be left behind. Some banks are trying to get the best out of regulation and adoption.
Some banks are currently in the process of creating their own coins. This not only allows them to use blockchain and get involved in crypto, but it means that they will be able to regulate and control coins in a way that works for both them and their customers. .
It also seems to be the dominant thought in the banking world right now. Instead of accepting Bitcoin, Etherium, or any of the other major coins, banks will instead create their own. This means that the room is specially designed and can be regulated.
It also almost eliminates one of the biggest concerns that banks have with cryptocurrencies: whether they are easy to use for illegitimate or illegal purposes.
Earlier this year, BlackRock, the world’s largest asset manager, added Bitcoin futures to two of its funds. This is a huge gesture from the financial giant and indicates that slow and steady adoption is very much possible.
PayPal, one of the largest online funding platforms in the world, has now decided to allow the buying and trading of Bitcoin and other cryptocurrencies on its platform.
At present, it is not clear how cryptocurrencies will be implemented in everyday life. What is certain, however, is that as companies begin to adopt, others will be able to see the risks and rewards associated with it.
At some point, mass adoption will become the norm. Unless there is an outright ban on all cryptocurrencies and digital currencies, people will continue to buy and trade them. Add to that the fact that Bitcoin and other coins are on the rise again, more attention will be drawn and more people will become crypto owners.
Many banks are currently struggling to find the best way to adopt crypto into their existing systems, but once these hurdles are overcome, widespread adoption could be almost inevitable.
Interesting Related Article: “The Latest News From The Crypto Market”