Bitcoin captured global curiosity when its’ value skyrocketed in 2017. Yet, financial institutions have been slow to add operational value to the crypto market.
The common denominator among places where governments and banks have restrained digital markets is the lack of transparency and control they have in exchanges. Many research initiatives launched by global fintech leaders remain in developmental stages, while government officials and financial actors grapple with the learning curve of the new technology.
The two biggest crypto concerns of global banks are debt liability from customers who have no protection from market volatility; and security risks associated with unregulated exchanges, such as terrorism funding, scam operations, money laundering and other financial crimes.
Market observers attribute the severe fluctuations in market price to the haphazard restrictions that ill-equipped governing bodies have placed on virtual transactions. Governments and banking executives have leveraged Anti-Money Laundering (AML) laws and “Know Your Customer” (KYC) requirements, among other existing regulations, in order to gain more control and transparency in transactions since the disruption of cryptocurrency in financial markets.
Contrary to restricting crypto exchanges, financial institutions have embraced the revolutionary potential of Blockchain. Over 90 central banks across the globe are engaging in research and development of the technology. Various platforms have been co-opted by banks in an effort to make operations more secure and efficient. Blockchain networks could eliminate high structural costs of financial services, provide a shared ledger that minimizes risk for banks, and strengthen regulatory reporting of banking activity.
Tax authorities, securities and exchange agencies, creditors, and national governments all have a stake in the unregulated crypto market, whether voluntarily or not. In response, leaders from every sector have made a concerted effort to address the new industry, and have promised forward-looking, well-informed strategies to develop regulations as the market evolves.
The role of financial institutions in the tech marketplace is still undetermined, but examining the evolutionary relationship between the two can give an idea of what to expect for the future of banking and fintech.
Source link:
https://cointelegraph.com/news/banks-and-the-crypto-industry-asia
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