By
Chimamanda U. Martha
April 15th, 2024
Looking to the huge demand in the crypto space, several banks are now starting to offer investment and cold storage services for digital currencies.
For the majority of the time, banks and cryptocurrencies haven’t shared a cordial relationship altogether as the latter’s decentralized distributed ledger technology is supposed to pose a substantial risk to the existing banking systems.
However, in the recent times, regulatory bodies of different countries are seen taking a differing stand on cryptocurrencies that involves global banking institutions as well, and the world is still far away from having a unified and unanimous decision for the use of cryptocurrencies.
Let us have a look at how banking institutions from around the globe have a varied opinion on digital currencies.
Banks in the U.S. Cite Crypto as a Business Risk
According to the latest 10-K annual report submitted by the country’s financial watchdog – The Securities and Exchange Commission (SEC) – a majority of the banks in the U.S. have expressed concern on the use of cryptocurrencies.
WesBanco in the report has said that it sees cryptocurrencies as a possible business risk. WesBanco is currently the second-largest bank by assets in West-Virginia and also holds its operations in other nearby areas like Indiana, Kentucky and Pennsylvania. The bank wrote: “[B]anks and other financial institutions may have products and services not offered by WesBanco such as new payment system technologies and cryptocurrency, which may cause current and potential customers to choose those institutions.”
Another Louisiana-based bank IberiaBank, however, has mentioned the new technological disruption in fintech with a positive connotation, while specifically mentioning Bitcoin. The bank wrote: “Fintech developments, such as bitcoin, have the potential to disrupt the financial industry and change the way banks do business. Investment in new technology to stay competitive would result in significant costs and increased risks of [cybersecurity] attacks.”
Other big giants from the Wall-Street like the Bank of America, JPMorgan Chase, and Goldman Sachs have continued with their critical stand on cryptocurrencies calling them as potential business risks.
Asian Banks Taking a Cautious Stand on Cryptocurrencies
Asia has so far remained as one of the biggest markets for crypto-currency enthusiasts and traders with major economies like Japan, South Korea, (earlier) China, Singapore and other being at the forefront of it. Japan is one of the most crypto-friendly nations and contributed the largest in terms of global trading volumes of digital currencies.
Japan has always promoted crypto-friendly activities as its government and banking institutions are seen working hand-in-gloves while taking the stand on dealing with digital currencies. Japan’s financial services watchdog – The Financial Services Agency (FSA) has been working in coordination with banks and exchanges to make sure that investors have a hassle-free experience while being involved in cryptocurrency activities.
On the other hand, countries like South Korea has recently introduced new regulations in place after having witnessed a huge rise in crypto-trading activities in the country. Banks in South Korea have been working with the government’s regulatory agencies to plug all those anonymous traders from trading, sighting issues of illegal money laundering and tax evasion.
Singapore is also another major economy in this region that has maintained a neutral stance while dealing with cryptocurrencies. The government of this tech-savvy nation earlier announced that it is not willing to take any measures of a ban on crypto-trading activities. However, as recently reported by Reuters earlier this week, the Monetary Authority of Singapore (MAS) has hinted for possible regulations to be implemented in the near time soon.
Managing Director of MAS, Ong Chong Tee stated that “We are assessing if additional regulations are required for investor protection.
European Banks Maintain a Positive Outlook
Small European country like Liechtenstein is one of the major hubs for banking and financial institutions for its tax-friendly laws. With the evolution of the fintech sector, Banks in the country are swaying crypto investors through several interesting proposals.
One of the lending institutions, Bank Frick of Liechtenstein has officially offered for “direct investment” and cold storage of five different cryptocurrencies namely Bitcoin, Litecoin, Ripple, Ether and Bitcoin Cash. Bank Frick says that this move is primarily aimed at “professional market participants and financial intermediaries.”
While commenting on the release of this new feature, Hubert Büchel, chief client officer of the bank said that “Our services are in demand from companies across the whole of Europe.” While further explaining the benefits of dealing with cryptos through the bank, he said: “This is because they know that we can offer them reliable support in implementing their business models with cryptocurrencies and blockchains in line with the existing regulatory framework.”
Neighboring country Switzerland, which too, has been the financial hub and a safe tax haven for many big corporations and individuals alike, has its banks offering several cryptocurrency investment services that date back to 2016.
Rabobank from the Netherlands has also expressed interest and hinted that shortly in the near future, it will be offering cryptocurrency storage services to its cardholders through a product called ‘Rabobit’.