Frederick Jace
The development of cryptocurrencies is quite likely the most significant event in the world of finance to happen in recent times. Cryptos allow individuals to transfer funds from one part of the world to another seamlessly and at an affordable price.
While cryptos have significantly disrupted the financial sector, this does not mean that banks will soon become a thing of the past, far from it.
So, let’s take a look at why banks are starting to accept cryptocurrencies.
Why are banks beginning to accept crypto?
Adoption rates for crypto are on the rise. Rising inflation and a lack of trust in the government are among the reasons why crypto adoption rates have increased in recent times. In response, banks have begun offering crypto-related services as a means of leveraging on this shift.
Cryptocurrencies are an excellent investment. From JPMorgan to Goldman Sachs, banks have realized that cryptos are incredibly lucrative investments. Thus, some banks have gone the extra step by packaging crypto investments as products for their clients.
Banks can profit from crypto transactions. While digital wallets primarily handle cryptocurrency transactions, not all crypto enthusiasts feel comfortable with this arrangement. Hence this is where banks come into the picture.
As financial institutions are subject to various compliance requirements, they tend to have a better security track record when compared to digital wallets. Therefore, this is one reason why customers prefer to use banks to facilitate their crypto transactions.
Some considerations:
While it is clear that banks and other financial institutions have begun accepting cryptocurrencies, this is no reason for you to get careless. The world of cryptocurrencies is still unregulated, which is why you should certainly always be on your guard.
- Cryptocurrencies are incredibly volatile – so you need to be prepared to lose your entire investment.
- Some countries have outlawed cryptocurrencies. Always be sure to check in with your local authorities to ensure that you’re not breaking any laws.
- Passing your cryptocurrencies through the financial system will likely attract attention; thus, if the tax authorities come knocking on your door, be prepared to answer.
Now that we’ve cleared all of that up, let’s take a look at how you can tell if your bank is crypto-friendly:
- Crypto deposits are accepted
Checking to see whether crypto deposits are accepted is the easiest way to know if your bank is crypto-friendly. For example, in the United States, a growing number of banks have announced that customers will be able to store, receive, and send cryptocurrencies via their bank accounts.
- The bank provides crypto brokerage services
Crypto enthusiasts had to rely on online exchanges to purchase and sell Bitcoin and other cryptocurrencies in the past.
While convenient, these exchanges are unregulated and are a favorites target of cybercriminals. As such, some crypto exchanges have even collapsed after being cleaned out by hackers.
This is why banks have begun offering crypto brokerage services to clients looking for a safe and reliable way to purchase cryptocurrencies. For example, German bank; Fidor has partnered with Bitcoin.de to allow clients to buy and sell cryptocurrencies.
- The government in your country is crypto-friendly
Government policy is another good indicator of whether your bank is crypto-friendly or not. As governments heavily regulate banks, any changes in a country’s monetary policy will probably be reflected by the nation’s banks.
Thus, if your government has taken a pro-crypto stance recently, the chances are good that your local banks will also be crypto-friendly in time. The same applies if your government has begun cracking down on crypto transactions.
Closing Thoughts
There is no doubt that cryptocurrencies are the future of finance. And Tezro has a list of crypto friendly banks in case you want to take a look: https://blog.tezro.com/best-crypto-friendly-banks/
However, despite rising adoption rates, you would do well to remember that these assets operate in an unregulated environment.
