Banks Want in on Crypto this Year, but Obstacles Remain
With 2021 being a highly successful year for decentralised crypto in terms of popularity and value, obstacles remain for banks looking for ways to fight issues that differ from their core values and carve their way into the crypto craze in 2022.
Traditional banks currently are not able to trade in digital currencies whose outstanding have tripled to more than $2 trillion since 2020. Still, despite the scepticism from top luminaries from the banking sector and vested interest from their customers, banks are keen on shaking hands with the crypto industry.
While the concept of a decentralised currency is the key agenda of the crypto universe, banks are completely cut off from their business model and, instead, are seen as their competitor.
One of the key factors that would unleash the full potential of banks in exploring the crypto sphere would be the regulation of digital assets. Currently, lucrative hedge fund clients are risking money and going elsewhere for their crypto needs.
According to Reuters, while the Federal Deposit Insurance Corp has expressed openness to increased crypto exposure, the Office of the Comptroller of the Currency has sounded sceptical, and the Securities and Exchange Commission has essentially promised a crackdown if it ends up in charge of crypto.
Another problem that banks have to tackle when working with cryptos- the always-open markets.
While banks work under fixed hours for trading and making transactions that take time to settle, digital currencies operate in seconds.
The massive drawback for digital currencies is that trades cannot be unwound even if mistakes are not regulated or transparent. In such a scenario, banks will have to come up with ways to manage risks with third-party digital custodians.
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