It becomes clear that banks do not greatly welcome cryptocurrency, but why? After all, everyone around understands that blockchain technology has many advantages. With its help, any money transfer can be carried out faster and cheaper. And besides, the distributed block registry has a very high level of security.
Does it really matter to banks? Or are there any pitfalls? Most likely, the banking sector simply does not want to subject a business that has been clear and honed for decades to changes to the introduction of any new and, in their opinion, poorly studied technologies.
Money Market Transformation
In 2018, the increase in the confrontation between traditional financial institutions and the cryptocurrency money industry became most noticeable. From all sources of the media, we are told about the revolutionary changes that digital technologies will bring to our lives, and real financial organizations are in no hurry to accept the virtual currency and continue to criticize it for instability, insecurity, high risks, or excessive anonymity.
At the moment, the market capitalization of all cryptocurrencies is more than $500 billion. ICO alone attracts more than $3 billion. And all these investments were made using the traditional currency. It is clear that they did not come from anywhere; they moved from the banking sector of the economy.
Banks versus cryptocurrency
Although at the beginning of June 2018, central banks received enhanced opportunities at the G7 summit, including permission to use cryptocurrency as their financial instruments to maintain foreign reserves, in practice, the behavior of financial institutions has not changed much.
Banks began to take practical measures to curb the activity of their customers in the cryptocurrency sector: close their groups, stop supporting plastic cards, create problems with crypto investments, etc.
The American multinational company Visa, which provides payment transaction services, has already announced that it is suspending the operation of crypto-debit cards of customers from Europe. Similar actions will soon be taken by the international payment system Mastercard.
South Korea announced a ban on its banking institutions to use tools with virtual money. Also, restrictions will be introduced for minors and foreigners regarding the trade in digital currency and opening bank accounts for its storage.
And this is despite the fact that it is here that the main center of crypto trading is located (almost 1/5 of all Bitcoin transfers are made in this territory). Statistics show us that almost 1 million inhabitants of this country own Bitcoin.
Two exits
In different countries, the restrictive measures of banks have their differences, but they are similar in one: the banking sector must be protected from cryptocurrency and the risks associated with it.
Banks cannot ignore the fact that the share of the digital finance sector is constantly increasing. It concerns them directly. However, instead of meeting and making friends with new phenomena, and jointly establishing a new financial turnover system, they prefer to develop and take measures to slow down the development of the cryptocurrency market.
Banks are fairly conservative institutions. They are constantly trying to minimize risks and are afraid of money, the origin of which they cannot confirm. If any banking innovations occur in the field of financial services, the process will be very slow and balanced. Which directly contradicts entrepreneurial activity, in which every minute is precious.
Therefore, startups also choose blockchain platforms and countries with a loyal attitude to cryptocurrencies. In the world, there are banks and companies that keep up to date. They welcome any bold ideas and see cryptographic encryption technology as an opportunity, not a threat.
The cryptocurrency was just created as an alternative type of money to the overly “regulated” world of money capital. The concentration of finance is constantly increasing and is in the hands of oligarchy corporations and multi-million dollar banks.
The banking sector can develop in two directions:
Either accept the fact that financial technologies are appropriate and, together with blockchain technology, develop the legal side of the interaction;
Either stay on the old scheme and with all their might limit the development of the crypto industry.
The most likely outcome will be that different banks (or different countries) choose their development directions. And we will only have to observe which of them will benefit.