When the value of Bitcoin hit sky-high value in the year 2017, it gathered a lot of global curiosity. However, still, the financial institutions have maintained a slow pace to add any operational value to the cryptocurrency market.
The lack of transparency and control in the exchanges that take place in the online world is one of the common denominators among places where governments, as well as banks, have restrained digital markets. While several research initiates taken by some of the renowned global leaders remain to be in the development stages, government and financial officials are yet trying to overcome or deal with the new technology.
Security risks related to unregulated exchanges such as scam operators, money laundering, etc. and the debt liability from customers who have zero protection from the market volatility are the two big cryptocurrency concerns of global banks.
Market observers believe that the haphazard restrictions put forth by the ill-equipped bodies on virtual transactions to be an attribute to the severe fluctuations in the market price. To gain more of transparency and control in the digital transactions since the disruption of cryptocurrency in the financial markets, the governments, as well as the banking executives, have issued Know Your Customer (KYC) requirements, Anti-Money Laundering (AML) laws among the other existing regulations.
Instead of restricting cryptocurrency exchanges, the financial institutes have now welcomed the revolutionary potential that Blockchain gets with it. More than 90 central banks across the world have started to get involved in research and development of this technology. Moreover, banks have co-opted several platforms as an effort to make the operations more successful, safe and efficient. The Blockchain networks have the potential to eliminate the high structural costs related to financial services, strengthen the regulatory reporting of the banking activity and provide a shared ledger which can minimise the risks for the banks.
Also Read: How to Buy Cryptocurrency with Credit Card
Whether voluntarily or involuntarily, all the tax securities, authorities and exchange creditors, agencies as well as national governments have a stake in the unregulated cryptocurrency market. As a response, financial leaders from all the sectors have made an effort to address this new industry and have also promised that they will come up with forwarding and well-informed strategies to create regulations as the crypto market involves.
It is still unknown or undetermined as to what role the financial institutions play in the technology marketplace, but examining the evolving relationship between the two may give an idea of what the banking and fintech future could be.