Why don't banks work with cryptocurrency?

[Dread Pirate Roberts]

Agree with 3 point your mention on thread, just summarize in my thought real bank is responsible of their customer account and if something worst in bank happen like hacked etc it would be big loss for them. and also every country had regulation for bank and most of those regulation are not match with crypto characteristic. its not that easy to just make a bank like creating an exchange.

[VictorProsh]

Agree with 3 point your mention on thread, just summarize in my thought real bank is responsible of their customer account and if something worst in bank happen like hacked etc it would be big loss for them. and also every country had regulation for bank and most of those regulation are not match with crypto characteristic. its not that easy to just make a bank like creating an exchange.

Sooner or later, banks will still have to work with crypt currency, this is inevitable, which means they need a condition under which the crypt currency will evaluate financial assets as the dollar does now.
If you read my project, you would understand a lot.
http://prosh.info/smart_eng.html
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.

[andriarto]

Agree with 3 point your mention on thread, just summarize in my thought real bank is responsible of their customer account and if something worst in bank happen like hacked etc it would be big loss for them. and also every country had regulation for bank and most of those regulation are not match with crypto characteristic. its not that easy to just make a bank like creating an exchange.

between cryptocurrencies and banks have the opposite nature. between centralization and decentralization, and the most important thing is the role of the government in it which seems to be able to control it, while crypto cannot be treated like that. but there is an elsalvador country that will start using bitcoin legalized in their country

[VictorProsh]

I hope that on this forum there are those interested in the development of DeFi who can confirm or deny the idea of my project. I will be glad to any comments and suggestions that will help to reveal in the future the unlimited possibilities of decentralization of future finances.

[Tahsin Kabir Kollol]

Banks do not want to deal with cryptocurrency because of its unique features. There is a big difference between conventional currency and cryptocurrency. Banks use conventional currencies in various ways to meet their own and the government's various needs and print additional currencies if necessary. Cryptocurrency, on the other hand, is a decentralized currency and cannot be fully controlled by banks or the government. Moreover, since cryptocurrency is not known as the currency of a particular country, the government or banks of each country do not consider it appropriate to use it as it is not their own currency. So for all these reasons banks do not want to work with cryptocurrency.

[dezoel]

There is no "logical" explanation, banks do work with cryptocurrency, they do buy them, just indirectly. How? Hedge funds. Hedge funds do buy a ton of banks stocks, all the banks in the world usually owned by many different hedge funds that is why it is basically a full cycle, and hedge funds invest in cryptos as well, which means banks owners are technically buying up bitcoins. Is this enough? Of course not, but they do not have to deal with anything in fiat world, they are saved by governments anyway, they could just give mortgages to whoever they want and they would be still bailed out, in crypto nobody can bail you out.

They could still buy a hundred billion dollars worth of bitcoin, and if the price drops and they sell and make a huge loss, they could ask from government, but they are not ruining crypto that way just yet, which is why it is good that they are not around.

[Gaaara]

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.

Actually in my country bank already works with crypto or rather online wallets, so what happens is that they give features to the wallets to sell their bitcoin to cash it out using banks or atm, by doing this it solves the problem of fluctuation. This is the best way to approach cryptocurrencies as a bank since banks are too busy with stock markets already, and since everything can be accessed online with cryptocurrencies including exchanges going to banks isn't necessarily required so meaning banks has no way of working with cryptocurrencies unless they create projects of their own or create an exchange using their trademarks.

[bitgolden]

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.

There are many nations that did that, or still doing that. In my nation it was illegal for banks to work with crypto companies as well, now there are 10+ local exchanges working with every single bank, and even doing 7/24 wire transfer which I can't do from my bank to another banks account for example, so I could basically send someone money from my local crypto exchange if I want to but can't send them from my regular bank (out of work hours), so they are very supported.

Basically each nation has the same time line, they first do not care, then they care but ban it until they understand what it is, then they let it be once again to see how it works, then they study a way they could make money from it (taxing) then they support it a lot so that they could make money. Not only crypto is a good thing for you, it is a good thing for your nation, India for example would be one of the best examples of that, you see in the future India will support it a lot.

[sapnu]

I think it is mainly because of cryptocurrency's volatility and centralized nature. Bank are under the government's control and its volatility is not as great as bitcoin considering the fact that fiat currencies does not experience massive increases or decreases in value. It is solely based on a certain country's economy on how will the price move for fiat so if you are investing on banks and your country is under the threat of having a downfall in the economy, you shouldn't consider continuing anymore. Instead you should start diversifying your investment in crypto where it will be worth it later on.

[AndySt]

Banks do not want to deal with cryptocurrency because of its unique features. There is a big difference between conventional currency and cryptocurrency. Banks use conventional currencies in various ways to meet their own and the government's various needs and print additional currencies if necessary. Cryptocurrency, on the other hand, is a decentralized currency and cannot be fully controlled by banks or the government. Moreover, since cryptocurrency is not known as the currency of a particular country, the government or banks of each country do not consider it appropriate to use it as it is not their own currency. So for all these reasons banks do not want to work with cryptocurrency.

The main reason that banks do not work with cryptocurrencies is the position of government agencies that do not allow banks to fully engage in such activities. Banks in their activities are guided by the rules and instructions that are established by the financial regulator and in this area in different states the situation is different, from a complete ban on such activities in some states, to a cool and skeptical attitude in other states with rare exceptions. Even where it is not explicitly prohibited, there is no necessary regulatory framework for the activity, which for most banks is almost equivalent to a ban.

[Kez1817]

Banks is centralized and a partner of the government  who doesn't have any control over digital currency which is decentralized.  So, I don't think if one day banks will work with cryptocurrency. If ever it will happen , then it's good for us. It's more likely that government will also legalize the digital currency.

[Darker45]

Banks is centralized and a partner of the government  who doesn't have any control over digital currency which is decentralized.  So, I don't think if one day banks will work with cryptocurrency. If ever it will happen , then it's good for us. It's more likely that government will also legalize the digital currency.

Centralized over decentralized, I don't think that there are people  who really engage with crypto will embrace this fact,
if banks start to accept crypto and ask for KYC,

I think there are a lot of people in cryptocurrency who are not really after the decentralized feature. Even in Bitcoin, how many people who are actually joining Bitcoin for decentralization's sake? They're probable lesser than those who got into Bitcoin for different reasons. For example, one may prefer to store his/her wealth in Bitcoin primarily because of the fact that fiat is always depreciating.

Anyway, banks are actually already in the game. They're into crypto already. It's just a matter of time before the huge majority of them are already part of the bigger crypto community. Even crypto custody products offered by banks might sound a lot safer to many people who feel that they cannot properly function as individual banks.

[Reid]

Fourth, pride. It's like admitting defeat.
If ever this happens it will be a whole new world. Yes, just like the song.
Kidding aside, it's really the volatility but there are already stable coins that were created, and yet they won't use it still.
Transparency will also be an issue. They don't want anyone to just peek at every movement they will make. It's not about privacy but secrecy.

[Argoo]

Banks is centralized and a partner of the government  who doesn't have any control over digital currency which is decentralized.  So, I don't think if one day banks will work with cryptocurrency. If ever it will happen , then it's good for us. It's more likely that government will also legalize the digital currency.

Even commercial banks operate on the basis of strict instructions from regulatory authorities. Banks cannot decide on their own whether to work with cryptocurrency or not. First of all, cryptocurrency must be legalized by the state. Then, after the adoption of the relevant laws, by-laws should be created that would detail the work with cryptocurrency, including detailed instructions for banks. Only after that banks will be able to work with cryptocurrency within the framework of the rights granted to them.

[Sithara007]

No need to generalize all the banks here. One issue may be with the regulations. In countries such as India, the laws regarding cryptocurrency are very unclear and the banks may chose to stay away from this sector in order to avoid crippling fines in the future. But I agree that there may be a few banks that may be concerned that at least some of the cryptocurrency transactions may be linked to illegal businesses. Still, they have nothing to worry in case they are processing transactions for some well reputed exchange with KYC requirements.

[Xinarae*]

Banks do not work with cryptocurrencies because cryptocurrencies are decentralized and have no government control. If banks start using crypto then they have to convert like fiat blockchain uses a technology called cryptocurrencies which is in fact a database that records all transactions performed on it blockchain is decentralized which means it is not located in a specific location and therefore cannot be easily hacked. All cryptocurrencies are decentralized meaning their values ​​generally do not adversely affect a country's position or any international conflict.

[davis196]

The banks don't want to work with cryptocurrencies,because the benefit is questionable and the risk is big.
Why would the banks adopt cryptocurrencies?To please 4-5 million crypto users world wide?
How many new customers will be acquired by a bank,that adopted cryptocurrencies?100?1000?
Is it worth it?If I was a banker,I wouldn't bother with adopting cryptocurrency payments.
I don't want to mention all the headaches the bankers will have with central banks,regulators and the government,if they decide to adopt cryptocurrencies.

[Nunoluck]

There are so many reasons for that. It's depend on the government, and when we talk about it then it's not just a matter of economy but also ministry of defense and etc. Some government afraid to accept bitcoin because it is volatile, it can make amateur investors suffer financial loss. Not all of people are smart, there is some people who enter cryptocurrency market when it is bullish then they loss when it is bearish and decided to leave cryptocurrency investment which is the worst decision that can be made. If they will loss they should not sell, just hold and trust bitcoin. Unfortunately many people who came isn't really trust bitcoin and blockchain technology but just for speculative investment so they can easily suffer financial loss. That's my opinion.

[swiftbits]

The bank works by circulating their money. I think it would be hard for Cryptocurrency to do that.
The price is volatile, so investors, lenders, and borrowers would have difficulty adjusting to the system.

[danherbias07]

I think when you sum it up, everything will still end up with the volatility problem. But if they can use it for their own profit then why not.
Local wallets and exchanges can survive it up until now and bankruptcy had never been an issue. So why can't a bank just take the risk of using the same method like those exchanges does?
Maybe they are doubting that their investors will find it hard to understand how it will work. Just a good explanation may suffice but I think its also the traditional way that stops them.