Cryptocurrencies have grown in popularity over the past few years. With this rise, so has the use of these digital assets by major retail financial institutions and investment firms to store value or trade. And it isn’t just small credit unions that are getting involved either. Big name institutions such as Citibank and J.P. Morgan Chase have announced plans to offer their own cryptocurrency offerings to customers, which gives us a better look at how cryptocurrencies might become more accepted in the future. Cryptocurrencies are generally seen as a faster and more secure way to store value than traditional bank accounts or government-backed fiat currency. The main appeal is anonymity - your money is stored in an online wallet which cannot be accessed by anyone other than you without permission from the company itself, so they can’t be used for criminal activity or tax evasion like traditional banking services can be. But because of this anonymity, it also means there is no regulation on cryptocurrencies similar to that imposed on banks and other financial institutions by governments around the world for security and anti-money laundering (AML) purposes. Until now, most cryptos have been relatively niche but with growing interest from mainstream financial institutions, there’s every chance that we could soon see more widespread adoption of cryptocurrencies by banks to make them more accessible to their customers while also offering them some additional benefits not available through standard banking services - including lower transaction fees and greater levels of protection against fraud and theft than regular bank accounts.
Why is Banks’ interest in Cryptocurrencies growing?
Cryptocurrencies are becoming more and more popular, and now major banks are getting involved. Cryptocurrency adoption is still very new, with only a few institutions offering bank-like services for this new form of money. But with the growing interest and utility of blockchains and cryptocurrencies, it’s likely we will see more and more financial institutions offering this type of service. One of the biggest reasons banks are interested in cryptocurrencies is to increase their customer base and attract new customers. Many banks are seeing a decline in customers due to increased competition from online and mobile banking services and more people are now looking for a better way to store value and manage their finances. Digital assets such as cryptocurrencies may provide a solution and banks are now looking to embrace them as part of their overall financial services offerings.
Citibank to offer cryptocurrency exchange and custody service
Citibank has announced plans to offer a cryptocurrency exchange service as well as custody and clearing services for legally compliant investors. This will allow customers to buy and sell bitcoin, ethereum and other digital assets like stocks, commodities and other investment vehicles. It’s not the first time that Citibank has been in the cryptocurrency game. The company received a BitLicense from the New York Department of Financial Services in January 2017, but the company discontinued its Bitcoin product that same month citing “market conditions and customer preferences.” Citibank customers will be able to open an account with the company and use this account to access the new service. Customers will then be able to link their existing bank account to the new service with the help of a Citicoin-enabled application.
Banks launches CDBC, the first licensed cryptocurrency product near future
Banks are set to launch a new security token product in collaboration with blockchain startup Digital Asset or on their own. The product, called CDBC, is a security token that will be used to provide a variety of financial services including custody, settlement and trading. Unlike many companies that launch blockchain products without much thought as to how they will actually operate, CDBC is designed to connect to the existing financial services infrastructure of Banks. The platform is designed to be compliant with regulations such as the Bank Secrecy Act (BSA). These regulations require financial institutions to report suspicious activities as well as deposit and withdrawal limits for customers. Because Banks know better, the weaker fiat currency becomes, the more likely the fragile the infrastructure will be harder to prevent the dollar from losing its domination in the coming years.
In general, cryptocurrencies are becoming more and more popular and are used for payments and trading. However, only a few financial institutions offer cryptocurrencies as a service. Major banks such as Citibank and J.P. Morgan Chase will announce plans to offer their own cryptocurrency services. With growing interest from mainstream financial institutions, there’s every chance that we could soon see more widespread adoption of cryptocurrencies by banks in order to make them more accessible to their customers while also offering them some additional benefits not available through standard banking services.
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