Big Banks Losing the War with Bitcoin?
The decentralised nature of cryptocurrencies posed a major issue for big banks, but the evidence is that the old-style financial institutions are slowly entering the crypto-market
It was Halloween, 2008, when someone identifying themselves as Satoshi Nakamoto released the Bitcoin white paper – an analysis of the viability of digital currencies in the world’s existing financial ecosystems.
The release of the report touched off a powder keg that exploded into a trillion-dollar market. The wild success of Bitcoin has given way to a constellation of new digital currencies with applications in virtually every market across the globe.
However, there is one founding principle of Bitcoin that has always rankled the brain trust of the traditional banking system. Cryptocurrencies would be a decentralised market, and through their application individuals would be able to transfer money without a middleman or intermediary. This decentralisation posed a serious threat capable of eliminating the central, and very powerful, role that banks have traditionally played if Bitcoin ever became popular.
Has it ever?
As the adoption of Bitcoin and other cryptocurrencies accelerated, regulator scrambled to come up with measures to control it, but these regulatory efforts served to legitimise Bitcoin in the eyes of the public. The logic being that if the government wants to regulate it, then it must be legit and that would do much to encourage the mainstream adoption of cryptocurrencies.
Up until recently, the biggest banks have made disparaging comments about Bitcoin hoping to discredit the digital assets in the minds of regulators, government officials, and pretty much anyone who was willing to listen.
Most notable of all, the CEO of JPMorgan. The leader of the nation’s largest bank has been leading the attempts to torpedo Bitcoin’s momentum by calling it “a terrible store of value” and warning of its potential role in financing criminal activity. Even back in 2018, Bank of America’s wealth managers were told they were being barred from putting any client money into investments considered cryptocurrency related.
A Change of Heart for Bitcoin
Their attempts seem to have been in vain. Now, the world’s most powerful banks are realising their efforts would be more wisely invested trying to profit from crypto rather than continuing to lead ineffectual campaigns to slow its adoption. Still, this sudden change of heart will come at a price. While the bigger banks were busy slandering anything crypto, a new financial ecosystem evolved without them.
New cryptocurrency businesses and exchanges have begun to offer incentives one would expect to see only from a traditional banking system, like credit cards and loans. Investors and businesses are widely embracing the world of digital currencies, and mainstream adoption is proceeding at a frenetic pace.
Changing Regulatory Approach
Now that the pendulum is swinging to pro-Bitcoin, the traditional banks have decided they want “in” on the profits. Major banks are making serious attempts at figuring how cryptocurrency can translate into new offerings and services for their clients. Banks have also changed their approach with regulators, lobbying them to create rules that work in their favour and criticising them for not moving quickly enough on cryptocurrency regulation issues.
Even JPMorgan, formerly the most vocal adversary of Bitcoin, launched its own digital currency in 2019.
Now that there are more than 220 million global users of Bitcoin it is becoming more apparent that digitally formatted assets are here to stay. If traditional banks now believe in cryptocurrencies deeply enough to throw their support behind their ownership, the best days for cryptocurrency are yet to come.
Author: Greyson Kelly
Greyson Kelly is a business writer living in Milwaukee, Wisconsin. He writes extensively on technological trends, cryptocurrency, and ‘cutting edge’ industry topics. He has an MBA in Business and has over a decade of experience in communications and public relations.