Cryptocurrency banks are coming.

August 23, 2023

Cryptocurrency banks are coming.

Traditional banks can look forward to one more challenge on their already challenged landscape: the emergence of crypto banks to handle, hold and trade cryptocurrencies. Crypto is more like traditional currencies – fiat money – than the traditionalists would like to admit. Fiat money is also digitized, and bills and coins are really just entries on a bank’s ledger. Which sounds like crypto, doesn’t it? So why can’t the vast population successfully investing and trading and paying with crypto get a bank just for themselves. They aren’t even asking for free coffee.

One of the biggest differences is that deposits of traditional money are subject to the control of a central bank. Those deposits in the U.S. are insured by the FDIC, while cryptocurrency is not. So, there is a lack of security, which governments and institutions don’t like to foster, at least not overtly. Crypto is also still volatile. Regulated currencies aren’t allowed to fluctuate more than a few percentage points. That’s good for society. Due to its current tendency to fluctuate, some regulators think that cryptocurrencies are not a currency, but rather an asset. This is another perception slowing down the existence of banks devoted to crypto.

Banking vs. Crypto Banking. Different and the same.

Cash management, credit, checking, savings, loans, mortgages, CD’s, and more are the purview of traditional banks. Crypto banking is about a financial technology (fintech) firm, bank or exchange that allows users to hold and manage digital assets. Holding a balance, making payments, and earning interest from holding cryptocurrencies are the services of these banks, not to mention being able to participate in speedier, cheaper cross border payments. A big plus today! Crypto banks, different from a standalone wallet, are usually regulated.

If they don’t like crypto, why do they invest in it?

Some banks may be investing in crypto but don’t disclose that in their statements. What they are “banking” on is the new infrastructure and electronic platforms that permit utilization of crypto holdings. And they won’t be left behind. What’s ironic is that JP Morgan Chase – whose CEO, Jamie Dimon, has been an outspoken critic of cryptos – now has an entire unit devoted to blockchain projects.

Let’s go to our local, downtown crypto bank!

The Office of the Comptroller of the Currency (OCC), allows all U.S. banks to provide custody services for digital assets. The central banks of England, China and the U.S. have announced plans to explore launching of their own digital currencies. It’s about time.

But here’s what you need to know! These are just some of the banks in the U.S. that permit cryptocurrencies:

If you bank at any of the banks listed above, you can buy crypto here. If your bank is not on the list and you want to buy crypto through a bank, there are options.

You can even get crypto rewards!

Banks are beginning to offer rewards for customers holding crypto in their accounts. No, not toasters and silverware like in the days of yore, but Quontic Bank offers a bitcoin rewards checking account that gets you into bitcoin without risking capital. With Coinbase you can earn crypto by watching educational videos and taking quizzes about cryptos.

But the cryptos in your account are not FDIC insured. The value will change as your cryptos fluctuate. If you’re hacked, or money is stolen, it’s hard to recover. There are still risks, but the environment is changing, and many of these exchanges are subject to new regulations. Depositors may be adversely affected by SEC actions aimed at regulating crypto markets.

Word to the wise: Whatever platform you choose, carefully consider the volatility of cryptocurrency before you invest. Look at the fees charged and consider those banks that might let you earn free bitcoin via the use of their debit card (Quontic).

What’s the future of cryptocurrency banks and will there be parking?

As banks struggle for relevancy in a digital world, and as they shut down branches and actually offer customers LESS service, they’re going to be looking for an edge. To seek new customers and to expand their services and to stay relevant, more banks will let customers buy and sell cryptocurrency, especially in conjunction with third-party fintech firms.

Cryptocurrencies are here to stay. They’re going through the maturation cycle that our existing currencies went through when they went from silver and gold to paper and plastic. Right now, they might not be appropriate investments for a low risk portfolio, so before you invest, make sure they make sense for you.

And we’ll meet you at the new crypto bank around the corner.

We heard the coffee is strong.

Howard Davidson is the CMO at AlmondFinTech

Almond FinTech is a B2B technology company making financial services affordable and accessible to people around the world, regardless of income. Through our multi- blockchain cross-border transfer protocol, we remove financial barriers and deliver transfer and credit scoring tools that empower everyone, everywhere.