It’s no surprise that a number of businesses have recognized cryptocurrency’s importance in the present and future, given the steady increase in individuals investing in and spending it over the last few years. Banks are no exception; in recent months, an increasing number of banks have stated their intentions to adopt cryptocurrencies.
What are the main causes for this, though?
Before we get into the reasons why banks are adopting crypto, let’s quickly discuss what has happened in the past in this respect. Back in 2014, before the crypto boom took place, Wall Street executives were already starting to sweat over the concept of digital assets replacing—or at least competing with—traditional legal tender.
While banks are centralized and have a single authoritative individual or group, cryptocurrency uses a decentralized system, wherein no one person holds all the data or power of the network at any one time. Not everyone is a fan of this power-to-the-people model, and banks began to worry that crypto was a threat.
Several countries throughout the world have taken steps in recent years to prohibit the ownership, sale, or mining of cryptocurrencies in order to preserve their national currency as the exclusive form of legal money. Cryptocurrencies have been banned in China, Algeria, Ecuador, and North Macedonia, with other nations such as Russia and Vietnam taking steps to restrict their use.
Even in places where bitcoin is completely legal, the relationship between cryptocurrencies and banks has been tense to say the least. However, several institutions are increasingly revising their minds about cryptocurrencies and the rules that govern it.
With the rise in popularity of cryptocurrency, there is a greater demand for services that can help people adapt digital currencies and keep up with current trends. Take the United States, for example. According to Gallup, Bitcoin is owned by 6% of all investors in the United States. Of course, this is a significant figure, and banks are beginning to see that cryptocurrencies will play a significant role in the American economy’s future.
One good example is US Bank. The business offered a Bitcoin custody solution for institutional investment managers in October of 2021. In May, another bank, Wells Fargo, said that it will start offering crypto money to its wealthiest customers.
While most countries accept payments in traditional legal cash such as dollars, euros, or pounds, this is not always the case. Some governments have made cryptocurrency their official currency. This is frequently caused by a national currency crisis or a reliance on external financial sources.
Given how cryptocurrencies have the potential to revolutionize people’s financial fortunes, and the fact that there is currently a large quantity of cryptocurrency in circulation, it makes sense for banks to get involved.
Consider the example of Wells Fargo, which was previously highlighted. Wells Fargo declared in 2021 that it will only sell crypto money to high-net-worth customers, rather than all customers.
There’s little doubt that crypto will continue to grow inside the financial industry in the next decades, with more and more banks adopting it in some form or another every year. What are the chances? One day, our own national currencies may be completely superseded by crypto. With this one, only time will tell!