Why don't banks work with cryptocurrency?

[Vishnu.Reang]

Strange people. Are you going to give out loans to yourself in the place of the bank, charge yourself interest for storing in your wallet?

You get interest on your fiat deposits on banks, because fiat currency is susceptible to inflation. So the interest revenues partially offset the loss that you incur, while holding fiat currency. It is not applicable to currencies such as Bitcoin, which are protected against inflation. So you will never receive an interest on your Bitcoin holdings. There are websites such as Nexo and BlockFi which offer an interest, but I would warn you against moving your coins to these schemes. Their business model doesn't look viable for me.

And for loans, obviously you need to depend on banks. There is no other alternative. 

[XUNing]

Banks are controlled by the government,  and unregulated systems like Bitcoin and other cryptocurrencies are a threat.  There is a big difference between traditional currencies and cryptocurrencies. Banks use conventional currencies in various ways to meet various needs of themselves and the government, and print additional currencies when necessary. Cryptocurrency is decentralized and the government cannot control it, its number is fixed and limited. If the bank uses cryptocurrency, which will result in the loss of their profits.

[Robinson66]

Because the bank is dependent on the government, if the bank uses the fiat currency system, we will have some details of the transaction information for payment. If the money in your bank card is stolen, the bank will help you get it back. If your funds on the chain are stolen because cryptocurrency transactions are more confidential, then the money on the chain will not be able to be retrieved. Moreover, the money used by the state for printing money will be deposited in banks. If cryptocurrency is used, the country does not need to print it, and the bank's profits will be reduced. When a bank uses cryptocurrency, it proves that cryptocurrency is no longer confidential. Our information may be leaked.

[Princejebs]

10,000 Financial Institutions Can Now Let Customers Buy, Sell, Hold Bitcoin Through Their Bank Accounts
https://news.bitcoin.com/10000-financial-institutions-customers-buy-sell-hold-bitcoin-bank-accounts/

That number should have reduced in number by now. Most of this banks followed directives and institutions from above and can't act on their own. The moment they decided to offer a service that isn't supported by central banks, they have to obey and disabled such services, this is what is exactly happening today in crypto.
Binance and UK regulators are good examples and look, other countries are already doing the same thing by canceling their crypto service to crypto exchanges.

[nelson4lov]

Banks did not accept any cryptocurrency because we all know that banks has a high standards about Money and cryptocurrency is a Volatile and they don't know if it is fake or not. But in reality Cryptocurrency is not fake you can buy any what you want using your cryptocurrency.

It's not about having high standards. Talking about standards, blockchain and crypto is a revolutionary tech on its own that has outmatched VISA/Mastercard - these are the payment processors and providers for majority of these banks. That said, it'd not really about their standards or the fact that their products are much more superior to those of crypto (its not!).

The reason is most likely linked to the unclear regulatory background that surrounds crypto for a long time. I think that if these regulatory issues become a thing of the past, banks would be eager to add crypto products and services to their portfolio list. Don't forget that there's no way of going against the government especially when you're in a direct relationship with them.

[arwin100]

Banks are controlled by the government,  and unregulated systems like Bitcoin and other cryptocurrencies are a threat.  There is a big difference between traditional currencies and cryptocurrencies. Banks use conventional currencies in various ways to meet various needs of themselves and the government, and print additional currencies when necessary. Cryptocurrency is decentralized and the government cannot control it, its number is fixed and limited. If the bank uses cryptocurrency, which will result in the loss of their profits.

Banks of course take safe steps by following government policies, moreover many governments have banned bitcoin so that if they accept bitcoins it will threaten the bank's business, now banks are comfortable with giving interest to investors and getting profits from creditors.

For sure they won't changed it for the sake of new system where they are still unsure to protect their business.

For they will not change the system but they will adopt the certaim changes on technology also we can't deny that crypto don't have protection and prone for manipulation so expect that financial institution will doubt to work with this since this could cause a financial losses to them or to their depositors if bear market happens. I know the volatility is the main problem here and traditional investors really doubt about its stability.

[ARTURVH]

The government do not allow banks to fully engage in such activities. Banks is centralized and is controled by the government.  But digital currency  is decentralized,these two are contradictory sides.

[Sithara007]

The government do not allow banks to fully engage in such activities. Banks is centralized and is controled by the government.  But digital currency  is decentralized,these two are contradictory sides.

As far as I know, banks can deal with Bitcoin (in most of the countries) only if it is declared as legal tender in that country. Here in India, the banks are allowed to deal only in the national currency (Indian Rupee). We can't open our bank deposits in US Dollar or Euro, because they are not recognized as legal tender inside India. But all that said, it is not right to say that the banks are "controlled" by the government. Banks just need to follow the regulations that are set by the government. That is it. As such, they are not controlled by the government.

[ROSERTY]

Banks are centralized, and it is an area of ​​government supervision. The cryptocurrency is decentralized, free from anyone's monitoring and restriction, and cannot provide guarantees like the National Bank in case of transaction errors.
Due to its volatility and unstable prices, cryptocurrencies are prone to economic losses for investors and are risky. The legal currency will not appreciate or depreciate sharply and is relatively stable.

[Text]

I think that's why other banks don't want to work with cryptocurrency because maybe they are afraid that the products and services they offer will be ignored.  They may lose a customer who will store money with them that they use to lend to others to make money.  But they are also thinking about the cons of using cryptocurrency like the ones mentioned in the post above.  Fortunately, here in our country, the central bank is open, friendly, and supports the use of cryptocurrency.

[Obito]

This is just my theory it has something to do with how banks work, they operate on fractional banking reserve, meaning that they can borrow money without some sort of collateral. So in relation to that system, it also means that banks don't have a lot of money all the time, that's why some people suggested that anyone bankrupt a bank if a lot of people withdraw a lot of money from one branch, I think that's probably the reason why they didn't have crypto in their system because they want to prevent something like that from happening.

[Ngewex Yuk]

The government do not allow banks to fully engage in such activities. Banks is centralized and is controled by the government.  But digital currency  is decentralized,these two are contradictory sides.

Exactly, if banks go into crypto then the government cannot control money and of course this is very risky for the country's economy, the government does not want to take risks by making crypto as fiat for fear of being rivaled.

[tygeade]

Banks are centralized and if they are going to be handling any cryptocurrency, it’s going to be centralized digital currencies that are being issued out by the central banks of that country, and not the decentralized cryptocurrencies we both know. So, don’t expect them to be dealing with cryptocurrencies.

I cannot even imagine myself going to the bank to exchange my bitcoin, lol there is no way I can imagine that. I would prefer that I just login to exchanges such as Binance and coinbase and exchange my bitcoins there and then transfer the money that I have gotten to my bank account and that’s just it for me.

[South Park]

Strange people. Are you going to give out loans to yourself in the place of the bank, charge yourself interest for storing in your wallet?

You get interest on your fiat deposits on banks, because fiat currency is susceptible to inflation. So the interest revenues partially offset the loss that you incur, while holding fiat currency. It is not applicable to currencies such as Bitcoin, which are protected against inflation. So you will never receive an interest on your Bitcoin holdings. There are websites such as Nexo and BlockFi which offer an interest, but I would warn you against moving your coins to these schemes. Their business model doesn't look viable for me.

And for loans, obviously you need to depend on banks. There is no other alternative. 

Another reason banks offer interest rates is that they are competing against other banks and they want to get your money on their coffers so they can lend it and play with it so they offer those interest rates, however bitcoin does not need to do this as people come on their own to exchange their fiat for bitcoin while banks have to literally bribe customers to staying with them, and when it comes to loans peer to peer loans are a thing so even banks are unnecessary on that front too.

[Xampeuu]

Banks are centralized and if they are going to be handling any cryptocurrency, it’s going to be centralized digital currencies that are being issued out by the central banks of that country, and not the decentralized cryptocurrencies we both know. So, don’t expect them to be dealing with cryptocurrencies.

I cannot even imagine myself going to the bank to exchange my bitcoin, lol there is no way I can imagine that. I would prefer that I just login to exchanges such as Binance and coinbase and exchange my bitcoins there and then transfer the money that I have gotten to my bank account and that’s just it for me.

right, simple thought. for ourselves indeed with cryptocurrency, we can make money to meet the needs of life which can be paid for with fiat money. so from that we exchange it to fiat money first. on the other hand banks are under government agencies, so they may not dare to take steps without government regulations, so I don't think it's our authority to urge banks to immediately accept crypto, maybe it can happen, but maybe for generations after us

[capcaypro]

it is clear that banks are basically under the control of the government.
it's true it would be great if banks could work with crypto but politics isn't that easy my friend. when an agency is shaded by the government, they will automatically use the rules in accordance with what the government proposes regardless of whether it's good or not because of course the government also doesn't want to lose from this.
and if banks cooperate with crypto, automatic dominance and government monopoly will be a little more difficult because their control will not be strong anymore because crypto is very difficult to control

[shogun47]

Primary reason for this is the government regulation towards cryptocurrencies. Banks are fully aware of sanctions being thrown to institutions practicing unregulated form or medium of exchange. Unless they see concrete laws and guideline on how government would handle cryptocurrencies, Banks would not touch this.

It is just what you say. It is highly dependent on the country you are living in, but in many countries there are laws that prohibit banks from dealing with unregulated assets, whatever that may be. In several European countries banks even froze accounts during the early Bitcoin days just because someone received money from someone else for selling Bitcoin on an exchange. That is no problem anymore and the banks I know allow for Bitcoin trading and sending and receiving fiat via their accounts for Bitcoin related activities.

Banks holding crypto themselves and even transacting with it is becoming more and more popular. Although platforms like Corda show that banks are interested in co-developing the platform they are ultimately going to use. Ripple also always worked very closely with banks. Whether they ever will be using Bitcoin on a large scale, I don't know.

My wild mind says that they don't want to deal with assets that are easy to bubble just because of a pump, I myself said it would be very difficult for Crypto to be trusted to become a legal transaction tool in all countries because of the concept it has.  How can the government want to relinquish their authority in managing fiat while in crypto there is no centralization of currency in crypto.  All are free without interference from the central bank and any country.

Erm... Sorry, but I guess I would have to contradict here. Do you really think banks are not interesting in dealing with assets that are easy to bubble? Seriously, they are very interested in dealing with such assets. The reason is quite simple: if they facilitate credit to get the housing/real estate market to bubble, and then see the whole market crash and real estate owners can't supply sufficient collateral anymore because of the decreased real estate value, banks are in a perfect position to now get the collateral at lower prices back than they initially were willing to finance it for.

This procedure happens in cycles again and again, and following this pandemic and potentially crashing real estate prices, we might be going to see a scenario similar to 2008, one of the biggest bank made bubbles the world has ever seen.

[DrBeer]

"Why don't banks work with cryptocurrency?" Good question. But the answer is simple - for the same reason:
- you are against getting paid for your labor in cowrie shells
- you do not want cowrie to be spent only in a grocery store, but in order to refuel a car, you need to look for a job where fiat or squirrel tails are paid.
- the vacation can be paid only with beads, but they are sold only for euros.
- the euro is paid only in the EU, in other countries the euro is exchanged only for postage stamps with cities.

I hope the meaning is clear? To put it quite simply - fuck they need an asset that is not manageable, volatile, has no simple exchange mechanisms, and most importantly, it does not have an official status of a payment mechanism

[Wong Gendheng]

Banks are centralized, and it is an area of ​​government supervision. The cryptocurrency is decentralized, free from anyone's monitoring and restriction, and cannot provide guarantees like the National Bank in case of transaction errors.
Due to its volatility and unstable prices, cryptocurrencies are prone to economic losses for investors and are risky. The legal currency will not appreciate or depreciate sharply and is relatively stable.

Accepting crypto is of course very risky because of price fluctuations which are like a roller coaster, besides that banks must of course comply with state regulations to maintain fiat so that it is impossible to make crypto as a bank service product.

[Dragonfund]

The government do not allow banks to fully engage in such activities. Banks is centralized and is controled by the government.  But digital currency  is decentralized,these two are contradictory sides.

Government disallowed banks not just because of its decentralization, they afraid of the illicit actions of banks management that may follow.
60% of deposits in banks belong to customers and the affairs of banks are to manage them and accrue interests but what will happen when banks use all his customers money on crypto and the whole things crashes, that will be suicide to everyone especially now that it's not regulated and controlled by small groups of people.