Banks Failed to Kill Crypto. Now They Accept It (Slowly). The advent of digital payments technology is forcing the financial system to adapt and change. Banks are concerned that their authority is eroding and seek to reclaim control.
Although officials in New York considered ways to regulate Bitcoin at the timex. Executives at Wall Street’s largest banks expressed concern that regulating cryptocurrencies. It would also legitimate them and therefore pose a threat to the financial system. As a result, they attempted to spread distrust.
During the World Economic Forum in Davos that same year, Jamie Dimon, the CEO of JPMorgan Chase. The nation’s largest bank, described Bitcoin as a “poor” store of value. That was also being utilized for illegal activities. H. Rodgin Cohen, the finance industry’s preeminent lawyer. Informed state regulators at a conference to examine violations of Iran sanctions. That the federal government was “extremely concerned” about Bitcoin and its use. The meeting also held to discuss violations of Iran sanctions.
Those attempts were in vain. The Department of Financial Services of the State of New York. Began giving licenses to Bitcoin firms in 2015. Seven years after its introduction. Bitcoin today has more than 75 million users, an increase from a little more than three million. Seven years ago, and the number of digital currencies has expanded. According to a research published in July by Crypto.com, 220 million individuals around the world use cryptocurrency.
Thomas Olsen, a partner at Bain & Company who advises financial institutions on cryptocurrency. And other digital asset matters, said, “Most people think that in the future. It might be 10 or 20 years or it might be also sooner effectively all assets would be in a digital format.”
The financial industry is now catching up
The banking industry is now scrambling to catch up with the rest of the world. Banks want to compete in this new environment and benefit from it. And they want to do so quickly. Their strategy is two-fold: they are experimenting with cryptocurrency offers. While also lobbying authorities to create rules that are favorable to the financial institutions. Some financial advisors are now offering bitcoin investments to their high-net-worth clientele. Others are debating whether or not to use Bitcoin trading desks. In 2019, JPMorgan even launched its own digital money, the JPMorgan Coin.
Instead of advising authorities to stay away from cryptocurrencies. Leaders from the banking industry are now complaining that regulators. Have not responded swiftly enough and that their procrastination is costing banks. Crucial time in their quest to compete in the digital age.
Their initial distrust, on the other hand, has cost them time. The traditional banking business is being challenged by the emergence of an alternative financial universe. Credit cards and loans are also being offered by cryptocurrency start-ups for the first time. A growing uptake of digital currencies is being witnessed by individuals and businesses all around the world. Even governments are becoming more involved in the process. El Salvador has announced that Bitcoin would be accepted as legal money. The Federal Reserve, following in the footsteps of central banks around the world. Is considering the introduction of its own digital currency in the coming months.
For hundreds of years, the old banking system ruled the roost. Banks also have traditionally assisted governments in controlling the flow of money. In their local economies by accepting deposits and then lending a portion of that money.
Digital currencies allow people to transfer money without banks
Digital currencies, which connect people quickly without an intermediary. Threaten to also displace banks as the central financial institution.
The biggest US banks failed executives have showed little enthusiasm for digital currency. In 2017, Mr. Dimon called Bitcoin a “fraud”. He recently said it was “worthless.” Three years ago, Bank of America CEO Brian Moynihan prohibited wealth managers. From investing client funds in bitcoin.
But some bankers were curious. After years of privately mocking Bitcoin. Bank of America CEO Thomas Montag asked a friend for a cryptocurrency tutorial. Spending hours as banks failed listening to lectures, reading books, and meeting with cryptocurrency professionals. It is according to a source familiar with the discussions who also requested anonymity.