Will Cryptocurrencies and Big Banking ever make peace? Experts give their Opinion   

Banks Vs. Cryptocurrencies:Can there be any peace between them?

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E-Crypto News decided to crack the tough nut of peace between big banking and cryptocurrencies of recent. We found out that it was indeed a big problem and we couldn’t handle it ourselves so we did the next best thing: We took the matter to the experts. They gave us a clearer picture of what is really happening and if the nut can ever be cracked if at all.

Sang Lee, CEO and Co-Founder of Konstellation, award-winning Blockchain development and consulting company.

 “It is not a matter of peace, but a matter of adoption.  It’s never a good situation where there is animosity between the incumbency and new entrants, however it is a necessary occurrence before large change occurs. Cryptocurrencies will naturally be integrated with the system of the banks, however one of the large changes will be the creation and leadership of new financial entities that will serve a vast majority of the functions that banks do today.  The change is already happening”.

Points to Note

·         It is all about change.

·         There really isn’t any conflict. It is to be expected.

·         Cryptocurrencies will win at the end of the day.

Scott Purcell CEO Prime Trust, ( Scott has more than 20 years of experience in banking, securities, technology, and internet infrastructure)


” Banks have little to no real incentive to make peace with crypto. They are not permitted to hold highly-volatile assets on their balance sheets, so they won’t be funding or trading them directly. Likely divisions of banks will become involved in custody (a la Fidelity) and trading (a la Goldman), but they will be relatively minor initiatives. Lending against assets, viewed more as margin loans than asset-backed loans (at least until tokenization of real assets takes hold, and liquidity options for them) will likely increase. But most of this will be driven by smaller banks, as the internal compliance, regulatory and shareholder issues for major banks are huge and will require significant time and expense for them to overcome”.

Points to Note

·         The Banks have no choice in the issue.

·         New kinds of hybrid institutions will emerge soon.

·         Change is expensive for big banking.

 

 Lance Morginn, President of Blockchain Intelligence Group (BIG) a Vancouver-based blockchain-agnostic search and analytics intelligence firm, working directly with financial services, ATMs, exchanges and banks.

“This is not a question of if they will make peace but when. Technology companies are working furiously to provide the same capabilities in tracking, AML, OFAC in fiat in the cryptocurrency space. Banks know their competitors, and if they haven’t already, will start to educate themselves around what is possible and how they could get involved. 18% of all US and college students hold cryptocurrencies and this is the demographic every bank would like to secure as a client. The banks can then sell the client all the other services that makes the bank its real returns, like lines of credit, credit cards, and mortgages to name a few”.

Points to Note

·         It is only a matter of time before peace happens.

·         Financial and accounting capabilities are increasing in the crypto space.

·         Cryptocurrencies are winning among the younger generation.

·         Banks will want a piece of the action.

 Kayvan B. Sadeghi Partner at Schiff Hardin

“There may never be peace between big banks and cryptocurrency, but they will probably have to learn to live with each other so early movers on both sides stand to profit by bridging the gap.

There is natural tension because, in theory, cryptocurrencies threaten to fundamentally disrupt big banks by offering a “trustless” peer-to-peer alternative to traditional financial infrastructure.  But that threat is a long way off.  For now, much early cryptocurrency enthusiasm has focused, not on displacing the big banks, but on serving those who fall outside the reach of the big banks for economic or geopolitical reasons.  If you already have instant access to your bank account and credit cards through an app on your phone, the appeal of cryptocurrencies is less obvious.  On the other hand, the benefits of crypto need no explanation if you cannot afford traditional banking or you live with an unstable local currency and uncertain access to bank deposits.

 In established markets, large-scale adoption of digital assets may need the big banks.  Complex global regulations, longstanding relationships, and fiscal conservatism ensure that big banks will remain an important gatekeeper in the global allocation of capital for years to come.  Large traditional investors may not be comfortable with exposure to digital assets until they can invest and transact with those assets through legacy financial institutions.

 It is impossible to predict exactly how this new space will evolve, but we can see it maturing. In 2017, enthusiasm got ahead of the market infrastructure, regulation, and real-world use cases of cryptocurrency that are necessary for mainstream adoption. Since then, the hype has died down.  Regulatory uncertainty has kept a lot of money and talent on the sidelines, and we still have yet to see a “killer app” or market disruption to drive mainstream adoption.  But market infrastructure keeps building and regulations are slowly becoming more clear.

 If and when mainstream adoption starts to take hold, the pace of adoption could be dramatic. Among the big banks, the winners may be the first to adapt to interface seamlessly with digital assets, while laggards may find it difficult or impossible to catch up.  We have already seen initiatives along those lines by many big banks and other leading financial institutions, including JP Morgan, HSBC, Fidelity, Vanguard, among others.  If they emerge as winners in the next bull market for cryptocurrencies and digital assets, it will be an overnight success 5 years in the making.  For the rest of the market, finding time and resources now to stay current with the evolving legal and technical landscape may be an investment that you can’t afford not to make”. 

Points to Note

·         There may never be peace between banks and cryptocurrencies.

·         Ultimately cryptocurrencies will replace banks.

·         2017 saw way too much speculation.

·         Investment by banking in cryptocurrencies is quite expensive.

·         Some banks are already trying to live in peace with digital assets.

 

David Bakke Financial Expert Moneycrashers

“Although in the beginning cryptocurrencies and big banks seemed to have gotten off to a rocky start, there are several signs which point to that relationship being mended. JP Morgan Chase recently announced its plans for its own cryptocurrency, which would lead one to believe that the relationship is viable, and plenty of other banks reportedly are soon to be offering Bitcoin-like currencies or actually tokens. Does this signify a resolution between the two financial entities? Probably not. And plenty of big banks, rightfully so, have mentioned the risks of Bitcoin and cryptocurrency, because there are many. That said, it’s an incredibly volatile asset, subject to a variety of external factors that other entities don’t face, such as security and fraud, yet others have said that cryptocurrency has its deserved spot in certain situations, such as countries which are trying to develop their economies while also maintaining a modern sense. At the end of the day, either peace will eventually exist, or cryptocurrency will fall by the wayside as a viable economic entity. Only time will tell, but some experts suggest that cryptocurrency is here to stay, however in what way shape or form remains to be seen”.

Points to Note

·         The beginning of the relationships between cryptocurrencies and banks was rough.

·         Some banks want to mend the rift by creating their own cryptocurrencies.

·         Many in the banking world believe cryptocurrencies are risky.

·         Only the future can determine if there would be peace.

 

 

Christopher Mitchell Founder Blockchain Built

Christopher Mitchell is an attorney and founder of Blockchain Built, a management consulting and investment advisory firm that works with blockchain-based businesses, investors and service providers.  He gives many lectures, provides curated training and market analysis for clients building businesses and investing within this space.

  • Big banking and cryptocurrencies have had an “odd relationship” primarily because big banks have not yet resolved the best way to utilize cryptocurrencies as a complement to their traditional banking solutions.

  • It is evident through blockchain-based patent filings by big banks such as Capital One, Bank of America and JP Morgan Chase, that they are not completely at war with cryptocurrencies.  However, until they develop and release their own cryptocurrency solutions, they will continue working to counter the message that non-bank or government-issued cryptocurrencies will be used to ultimately replace the traditional banking system.

Points to Note

  • Big banking and cryptocurrencies are not exactly at war.
  • Big banking also have their cryptocurrency projects which will increase adoption in the cryptospace.
  • Big banking is still trying to figure out cryptocurrencies.

 

Sukhi Jutla Co-Founder and COO of Marketorders, Author “Escape the Cubicle: Quit the Job You Hate, Create a Life You Love”.

 

“Big banks no doubt feel nervous to be upstaged by new smaller innovative startups disrupting their markets. It’s becoming more apparent that Big Banks are not doing enough to innovate or give their customers what they want. Customers are now demanding more options and cheaper ways to transact financial payments.

Big Banks are at a disadvantage as they are slower to respond to change and also, they are reluctant to change if they are already making money (even if this is at the cost of losing customers in the long term).

So, how to resolve this? Big Banks should understand that their key strength is in the assets and resources they own; they should be working and partnering with smaller innovative companies and learning from them.

By working together, Big Banks can leverage these new innovations and the startups can benefit from access to networks and resources the Big Banks have. The question remains, do Big Banks want to share or do they want to swallow up competitors whole?”

Points to Note

  • Big banks are nervous about the emergence of cryptocurrencies.
  • Banks don’t adapt easily.
  • Banks have the strategic advantage of being on the ground first with vast resources at their disposal.
  • Collaboration between the two is possible but big banking always swallows up most of its junior partners.

 

What do you think? Will there be peace between Banks and cryptocurrencies?

Please let us know in the comments below!

 

1 Comment
  1. MR B E JAMES says

    With the greatest possible respect to all contributors I’m afraid they lack both the in-depth knowledge and historical perspective which would allow them to go much beyond conjecture.

    I started my career 40 years ago with a major UK national bank and followed that with a five year stint for a major global bank (now HSBC) even then over 30 years ago struggling with technological change and legacy systems’. I’ve spent the last decade at the barricades at the forefront of Fintech and now Blockchain and Crypto so would be more than happy to provide some new insights at what is I believe a crucial juncture for the future not just of banking and Blockchain, but for us all – if you’d like a followup interview?

    Barry E James
    Chair
    BBFTA.org

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