Why don't banks work with cryptocurrency?

[VictorProsh]

There is a logical explanation for this.
First, the volatility inherent in digital assets. The fact is that the main goal of every bank is to make a profit. The slightest fluctuation in the cryptocurrency market increases the risk of reducing all projected profits to zero. Today, cryptocurrency is showing a certain stability, but even despite these indicators, most financial institutions still prefer to provide traditional banking services for corporate clients, whose activities they understand.

Decentralized Cryptocurrency is not controlled or limited by anyone alone, there is no single administrator and regulator. Not a single financial, tax, government organization can influence the actions of participants in the payment system.
Ethereum is a multifunctional virtual platform on which blockchain-based applications (online services) are created. Applications work as "smart contracts (smart contracts)" that exclude third parties (intermediaries) in the transaction process. On their basis, it is possible to create a platform that will stimulate banks to lend against the security of cryptocurrency without fear of losses, and this, in turn, will interest the financial sector to place its assets in cryptocurrency?

In solving this problem, I took as an example the existing US financial system.
Assuming that Ethereum is the Dollar, and the smart contract is the Office of the Comptroller of the Currency of the United States (OCC), and ETH-WORLD tokens are the Securities of the US Treasury, we get a financial model of a new decentralized economic system based on cryptocurrency. I implemented all this in my project, in contrast to the existing Fiat, it completely lacks an external emission regulator and is managed by the smart contract program.
http://prosh.info/smart_eng.html

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[Pandji02]

Because the majority of them afraid of crypto regulation, thats all. Crypto is still a shady thing in almost every country

[Haunebu]

Isn't it obvious? Why would they want to embrace decentralized cryptocurrencies over their centralized currencies? That would cause them losses in several ways which is why they usually dislike cryptocurrencies.

On the other hand, many banks have openly embraced the technology behind cryptocurrencies like BTC which could help their improve their centralized currencies.

They could offer cryptocurrencies as alternate payment methods though if their governments permit them to do so.

[Kittygalore]

Because the majority of them afraid of crypto regulation, thats all. Crypto is still a shady thing in almost every country

The shady part is what worries them the most I think, remember that businesses work on reputation and you have more clients if you have a big reputation and seeing as crypto is used for illegal things sometimes, they don't want to be associated with especially if there is an investigation which is a big hassle for them and hassle in business is a money loss.

[Rruchi man]

Some reasons why Banks are having a hard time accepting to work with cryptocurrency and Don't work with it is because the entire concept and mechanism behind the workings of cryptocurrency threatens the banks ability to make money for its continuing existence and relevance. So for the old generational banks and others, it is in their best interest if people stick with the traditional fiat.

Another reason is as a result of government policy and control. We all know the banks are subject to a central bank controlled by the government, so it is not going to be easy to accept to work with something that has not been approved by the government.

[Kakmakr]

Nope.. The real reason is this.

Governments control Reserve currencies and they have the power to print money. The Reserve Banks dish out that Money to Banks and they distribute it to the people in the form of loans. Now, why would Banks piss off the hand that feeds them and also the guns that protects them?

Also, when Banks fail... governments jump in with huge bailouts that are funded with taxpayers money to save them... So it is in their best interest to support the hand that feeds them. 

[Leviathan.007]

In my own idea the main and most important reason is the crypto regulations. Since that's way too hard to track the crypto transactions, there would be many abuse from it such as money laundry, and illegal trades with crypto. In the other hand, the governments will not take the risk using and working with crypto because they can take more advantage from people's money by using the old fiat system. However, I believe crypto is the new generation and surly the banks and government should deal with it.

[dataispower]

Cryptocurrency transactions are almost untraceable as there are no names and date written on any Blockchain to ascertain who owns a certain wallet and the transaction carried out on it, so it would be difficult for banks to trace shady deals associated with cryptocurrencies and regulations is another major culprit. The existence of cryptocurrencies in general threaten the banking institutions.

[Sterbens]

I will make an illustration.
Jack has no money but he only has $100 worth of Bitcoin, he plans to convert it into Dollars, he will sell it to Alex, then Alex sends $100 money between bank accounts. then Jack cashed it into dollars, he used the money to buy house needs.

well, from the illustration above how banks think, which they do not recognize the existence of the Bitcoin price. it would clearly be said to be money laundering. Jack, who originally had no money, became able to have money. Isn't it for the bank to create something that has no value and then have value without a clear agreement. Bitcoin price is determined by a few specific communities that make it have a price.

while the position of the Bank in a country is to control the money supply. if Bitcoin continues to soar in price, the money circulated by the Bank will automatically experience large-scale printing.

[just_Alice]

Wow, I looked through your project, though I didn't understand all of it, I think this might be something big and gives a chance to solve the problem. Did you come up with this idea on your own?
Also, am I right in the understanding, that for your project to work there is a need for constant new smart contracts and token emitents? And in the end, a very large portion of ETH holders need to participate in this system, right? How do you attempt to achieve that?

[fiulpro]

At the same time there are many other problems, the banks are mostly controlled by government and other powerful individuals and for them an unregulated system like bitcoins and other cryptocurrencies is a threat. It's already killing their long line of rich hierarchy.

Who said fiat is not volatile ? When you talk about a developing country, you will understand how Volatility is normal in their currencies it might not be as intense in cryptocurrencies but it is there therefore it is not a big deal, but the honest thing is "acceptance of cryptocurrencies"

Laws are changing !
They are changing according to the benefits the government will get from cryptocurrencies. I don't see any county saying no to the tax coming from "online casinos".

[Bitstar_coin]

There is a logical explanation for this.
First, the volatility inherent in digital assets. The fact is that the main goal of every bank is to make a profit. The slightest fluctuation in the cryptocurrency market increases the risk of reducing all projected profits to zero. Today, cryptocurrency is showing a certain stability, but even despite these indicators, most financial institutions still prefer to provide traditional banking services for corporate clients, whose activities they understand.
~

I believe the quoted above is the main reason why banks are feeling very reluctant to accept crypto, banks are set up for profit making, almost all banking transactions must involve them taking interest or commission, if crypto with the high volatility will prevent bank from making that profit, i don't think they will be interested in working with crypto, at least not anytime soon.

[Mauser]

It is actually not true, a lot of banks are already involved in the crypto market. Volatility is the bread and butter of banks who run trading desks. Traders will go where the money is, so after the recent rally we will see more and more banks to take advantage of the crypto market. Just check out Goldman Sachs for example, they have been trading Bitcoins for a while now and recently expanded into ETH (https://cointelegraph.com/news/goldman-sachs-crypto-trading-desk-expands-to-ether). The more banks will get involved with cryptos, the more products they are going to offer for the consumers.

[barbara44]

Personally I don’t think banks should have anything to do with cryptocurrency. Maybe the central banks can allow their smaller banks to help their customers in exchanging their cryptocurrencies into fiat. I don’t see anything wrong with that, and that’s if the bank is ready to function as an exchange and take the risks. But when it comes to engaging fully into cryptocurrency, I don’t think that’s necessary.

Moreover we already have exchanges, many of them like Binance, Coinbase and even lots of P2P exchanges. So, what’s the need of having banks again operate as the same? Finally, I think what you have said here about each country having their own currency is right, every country should have their currencies.

[ILuckyGuyI]

Cryptocurrencies have a completely different system than fiat money and they are also very volatile. These can be some reasons for banks to think twice before adding cryptocurrencies to their system. But it looks like this is going to change. Because some banks have decided to add cryptocurrencies. And it'd be for the benefit of them if we think about the future.

[BrewMaster]

there is only one reason and it is not really that complicated, cryptocurrency like bitcoin doesn't need any type of centralized middleman to handle transactions and storage. it is designed so that you can easily do it yourself and be in full control. in other words if you use bitcoin you are making banks obsolete.

[judaspriest]

You mean? many banks have implemented their systems with cryptocurrencies or blockchain,
have you not seen the news that is happening in the world? Asia such as Japan and Korea have given the green light to Bitcoin,
and Panama, ELsavador have also legalized Bitcoin, of course the Bank there is also doing that

[palle11]

On the other hand, many banks have openly embraced the technology behind cryptocurrencies like BTC which could help their improve their centralized currencies.

They could offer cryptocurrencies as alternate payment methods though if their governments permit them to do so.

I think you are talking about the blockchain technology but not cryptocurrency adoption directly or maybe I'm yet to observe that but the issue for the banks is control and regulations. Fiat is regulated by the government but no control of cryptocurrency, although few countries are considering such

[verita1]

Banks do not work with cryptocurrencies because they are decentralized and are not accepted due to their volatility. But thanks to the continuous work and the growing acceptance of the community they are gaining more interest in these institutions.

We can add that bitcoin and cryptocurrencies now have Crypto Friendly Banks. As the following article in Tezro points out, a list of banks compatible with bitcoin and cryptocurrencies located in the United States, Canada, and Europe.

What is A Crypto Friendly Bank?

Before we look at some of the best crypto-friendly banks, it is crucial to understand what a crypt-friendly bank is. Just like businesses, cryptos need banks to grow. If there was no access to the fiat economy, for instance, it would have been virtually impossible for Bitcoin to gain the value it possesses today.

https://blog.tezro.com/best-crypto-friendly-banks/

[UKprod]

Secondly, banks are reluctant to accept cryptocurrency due to the current rules for the circulation of electronic money. By the way, these rules will be tightened even more. For example, Russia plans to pass the draft law “On digital financial assets” (DFA). But this project contains a number of contradictions. It recognizes digital currency as a means of payment, however, prohibits the use of it to pay for services or goods. This inconsistency will result in financial institutions simply not being able to process cryptocurrency transactions.

This is quite true in the case of India as well. In India, RBI had issued a notification banning banks/regulated entities from entering into transactions with entities that dealt with cryptocurrencies in 2018. All the banks then refused to service any crypto exchanges due to the notification. However, this was successfully challenged before the Supreme Court and which quashed the notification and thereafter dealing in crypto was made very smooth.

Recently, some banks were found quoting the quashed notification to refuse services to crypto exchanges. Therefore, RBI again issued a confirmation that its previous notification was no longer valid and that banks are allowed to provide services to crypto exchanges.

You can read my article on real news on Indian crypto news here