New EU law: Banks allowed to hold and sell Bitcoin as of 2020

[electronicash]

why would someone store their coins in a bank?

them offering such services will be good that means they somehow wanna find a way to be relevant still in the crypto age. if there are people going to store the coins in the banks, these are the ones who wanna be fucked by the banks. these banks may appear crypto friendly but they really aren't. exchanges today that end being scam can get away too. banks are more powerful that these exchanges they can get away if they messup as they always do.

[gentlemand]

why would someone store their coins in a bank?

I think it's the only way many will be tempted and reassured. Huge swathes of the population are not prepared to pay enough attention to secure their funds correctly or don't feel confident enough. They want their hand held. It's a long way from ideal but I can get why they feel that way.

[gantez]

I don't think this would have a huge impact though, to be honest. The banks will still not want to work with crypto-currency and definelty not bitcoin, when it is literally the opposite of the values that they support.

It's going to make the small amount of banks that wanted to work with bitcoin easier to do so, but no one is going to start jumping to offer crypto services.

What's the exact date for this issuance BTW? So, I'm assuming banks can't work with BTC and other cryptos rn?

My own curiosity about bank storing bitcoin is that I think is going to be a cumbersome exercise on how to identify individual wallet. Are the owners of crypto or bitcoin going to transfer to the bank store from being at home or they must go to the bank to ensure proper documents is taken. I don't know if I'm properly understood in my view.

[eaLiTy]

first draft = banks being the proxy poker player for someone else that has no clue
newest draft = banks being the 'house' able to shuffle the deck and hand out the cards

That simply means that exchanges will have a tough competition from the banking sector when they start handing out cards  . With the millions of dollars worth of hack we hear every few months it is better than a different financial sector who has some experience dealing with fiat hacks and the positive aspect i see is that they will be having insurance for the amount of money each customer lost rather than the rest of the hacks we saw in the market where the end user suffers the loss, the next five years is really interesting in this market space as we will see major changes.

[nicecrypto]

Banks don't mostly do things that will benefit the people except it benefits them and from the way the government and some of the financial institutions have reacted towards crypto over the past few months it is a bit surprising to see this sudden change, although it is certainly good news as this will have a positive impact on crypto, from the look of things, 2020 is already looking promising i must say.

[joniboini]

If things start to roll, I think they'll mass-produce Bakkt. Get the service fee and make more money.

But the scenario of an average joe buy Bitcoin from a bank and ask them to hold it, while it looks weird, definitely could happen. Lots of people still love the convenience and push the risk to other parties.

[Ozero]

Do we have a better source for this? I could only find one similar article, but no one else seem to be reporting on it.

I don't think this would have a huge impact though, to be honest. The banks will still not want to work with crypto-currency and definelty not bitcoin, when it is literally the opposite of the values that they support.

Some US banks have already gone around, so I wouldn't close the doors here. At the end of the day, they'll have no choice but to provide a service if there is demand for it, or they risk getting left behind by competitors.

Banks have a choice. They can continue to ignore cryptocurrency and work as before under the protection of the state. This cryptocurrency has no particular choice. It will develop further only if it cooperates with other payment systems, and in this case cryptocurrency can not do without cooperation with banks. Therefore, the appearance of such a law for the states of the European Union will be very useful for cryptocurrency.

[figmentofmyass]

In the new draft law, the requirement for separation, which still existed in the first version, was deleted. The separation requirement stated that the retention of Bitcoin and other digital assets must not originate from the same legal entity as other banking transactions. Accordingly, banks would have had to resort to external service providers who offer an appropriate custody service.

The custody thing is what most intrigues/alarms me. Banks screw up all the time. If they do get into this area then someone someday is going to make a monumental mistake and I wonder how it's going to be resolved.

yep, that's one of my fears with open-ended ETFs and physically settled markets like bakkt as well. if institutions become significantly exposed to BTC, wall street custodians could become the "richest" bitcoin holders in the world. that has some slightly scary implications for contentious forks.

if some dodgy exchange gets hacked (like binance last year), of course the idea of a rollback would be laughable. but how about if fidelity gets hacked for 15% of the entire bitcoin supply 10 years from now? not only will the "too big to fail" mentality of 2008 be applied from a top-down political perspective, but the economic incentives to coordinate with miners on a rollback would be massive!

so much for immutability.

[Zionatin]

I don't understand. Why would a bank want anything to do with crypto? They make more with fiat. We all know crypto is against banks and viceversa. Crypto is freedom and decentralization and banks are you being controlled and centralized. They are natural enemies so why would a bank hold crypto for any reason? I can understand if the bank secretly holds crypto if they believe in it but don't want that present that message as what they are about. A bank can't make crypto since you hold it in your wallet so why would you need a bank? I am sorry if maybe I missed an answer to this in a comment here but I am not quite understanding this.

why would someone store their coins in a bank?

I think it's the only way many will be tempted and reassured. Huge swathes of the population are not prepared to pay enough attention to secure their funds correctly or don't feel confident enough. They want their hand held. It's a long way from ideal but I can get why they feel that way.

That makes sense. But then the bank will most like make its own coin and not use an existing one. One where the transactions can be reversed by them. Hopefully, it is a decentralized bank owned by believers in crypto and not the usual you find in the banking system trying to get people into debt and offering you loans when you can't even afford to buy anything extra beyond the basics.

[figmentofmyass]

I don't understand. Why would a bank want anything to do with crypto? They make more with fiat. We all know crypto is against banks and viceversa.

banks have no problem with bitcoin. to banks, bitcoin is just another financial asset to profit from. if people want to pervert bitcoin's purpose and deposit it at banks, they will be happy to lend it out at fractional reserve, collateralize it, securitize it, etc.

it's people who should be avoiding banks. bitcoin provides us a means to do that.

[Artemis3]

I don't think this would have a huge impact though, to be honest. The banks will still not want to work with crypto-currency and definelty not bitcoin, when it is literally the opposite of the values that they support.

It's going to make the small amount of banks that wanted to work with bitcoin easier to do so, but no one is going to start jumping to offer crypto services.

What's the exact date for this issuance BTW? So, I'm assuming banks can't work with BTC and other cryptos rn?

Banks can work with bitcoin, but there is a risk they will be tempted to do fractional reserve. If they don't, then naturally custody fees would need to exist. Its probably not going to have much demand, but it might entice some people in Europe that were more skeptical before.

As i have said before, banks have the opportunity to be exchanges, they could even get into lending, but it would be highly unethical if they did following fractional reserve thinking, and it will surely lead to drama later (bubbles and crashes, bankruns, etc).

Since all bitcoins always have to be accounted for, they can't really pull this off as easily as they can with fiat. The blockchain can always tell you in what wallet a coin is, and unlike fiat they just can't make bitcoin out of thin air. With fiat they can work with a fraction, because you don't care what serial your banknotes have, and you don't follow the serials of the banknotes that you deposited.

It would be better if the law somehow blocked the banks from fractional reserve practices, which might be the reason some countries treat bitcoin as asset rather than "money". You are not supposed to have fractional reserve of your gold ingots, for example...

In the end the whole world needs to adopt Austrian school economics, there is simply no other way.

[Carlton Banks]

to banks, bitcoin is just another financial asset to profit from. if people want to pervert bitcoin's purpose and deposit it at banks, they will be happy to lend it out at fractional reserve, collateralize it, securitize it, etc.

that almost sounds convincing, but I get the feeling something else is going on. I mean, they do check out the viability of any service before offering it, typical fractional reserve isn't possible, unless the banks intend either to denominate the BTC in fiat (!!!) or to eventually default on their deposit obligations. The chances that defaulting debtors can actually repay BTC is so unlikely in this kind of immature market that I just can't see how it could possibly work, the collateral for the loan would need to be so secure that barely anyone would be either eligible or willing to borrow.

Other derivatives could work, but what's the likelihood they get too greedy and screw it all up?


I second the call for more sources on this story. It seems the only reason they'd really do this is: desperation. I'm sure there are at least a few Bitcoiners who got into it as gambling addicts, looking for a way to boost their money pool (and possibly to pay off some lingering debts). That's also a pretty good description of modern banking as an institution, so maybe this could be true, and that they simply can't stand the sweet smell of hot profits any longer (and have a few little cash-flow issues that need handling at the same time )

[Samsungs10]

Banks are allowed to hold and sell Bitcoin in 2020?

I hope that in my country banks accept bitcoin, it almost sounds convincing. but I feel something else is happening. because in my country it is said that bicoin is illegal.

I hope our government has a new policy

[DreamStage]

Those are such good news as market will get more people to invest and buying so price can grow even faster.

Bitcoin and other digital assets must not originate from the same legal entity as other banking transactions

I agree that should be a thing as banks could specify their own prices and maybe boicote the market.
Still it's awesome that more countries will get this law active for their banks as more adoptation

[posi]

Those are such good news as market will get more people to invest and buying so price can grow even faster.

Bitcoin and other digital assets must not originate from the same legal entity as other banking transactions

Firstly, I want to clarify that the article information was wrong because Germany was the only EU country planning to authorize their banks to hold and sell cryptocurrency in the year 2020 while the EU governments and new rules is to create their own national cryptocurrency.

I agree that should be a thing as banks could specify their own prices and maybe boicote the market.
Still it's awesome that more countries will get this law active for their banks as more adoptation

The last time I check EU was among the top countries where crypto is consider as legal tender. Although, there are some governments from there which still detest cryptocurrency but that we change once the national crypto is implement.

[jseverson]

Firstly, I want to clarify that the article information was wrong because Germany was the only EU country planning to authorize their banks to hold and sell cryptocurrency in the year 2020 while the EU governments and new rules is to create their own national cryptocurrency.

Thanks for the clarification. I couldn't find reputable sources that confirm that the entire EU would be allowing banks to hold crypto, but that might be because the info has been mistranslated. This is apparently what actually happened:

The bill was passed by the Bundestag, the lower house of the German Parliament, earlier this month,  and approved by the upper house, the Bundesrat, today.

It amends a clause in the European Union’s Fourth Anti-Money Laundering Directive that currently prohibits banks from dealing directly in cryptocurrency. It  allows them to legally sell and store cryptocurrencies, just as they do stocks and bonds, to retail as well as institutional investors.

So the EU as a whole didn't amend the clause, Germany did.