Given how cryptocurrencies have begun disrupting the financial sector, it will only be a matter of time before financial institutions and service providers shift towards becoming more crypto-friendly.
As the sheer transformative power promised by cryptocurrencies and blockchain technology cannot be denied, these forward-thinking companies have come to realize that they must embrace change to survive.
Due to this, we have begun to see the emergence of crypto-friendly banks, i.e., institutions that accept crypto finance-related services.
Nonetheless, first, we need to see why this situation has come about.
Why are more banks choosing to accept crypto?
Decentralized finance (DeFi) allows banks to embrace the future. DeFi is a true game-changer for banks everywhere, from smart contracts to automated loan analysis.
Cryptocurrencies will only become more popular. Whether it’s fears of inflation or distrust for the government, cryptocurrency adoption rates are on the rise as individuals seek to move beyond governments and financial institutions.
The crypto sector is a potential untapped goldmine. While cryptos may be decentralized, financial institutions still have plenty of opportunities to make money from them. For example, individuals still need to exchange fiat currency for cryptos if they’re looking to convert their funds, thus allowing banks to capitalize on this by facilitating transfers and charging fees for their services.
Cryptos are an excellent investment. As we’ve seen from the crypto bull market that bloomed over the past few years, it is safe to say then that cryptos have become bonafide investments. Hence, it should be no surprise to see how banks have begun heavily investing in crypto assets and blockchain technology.
With that out of the way, let’s check out the characteristics of a crypto-friendly bank.
How to determine if your bank is crypto-friendly?
- Crypto deposits are accepted
Obviously, if a bank accepts crypto deposits, it’s probably safe to say that it’s a crypto-friendly institution. An example of this can be seen in the United States, where banks allow customers to deposit cryptocurrencies in their accounts.
One way to find out is to pay a visit to your local bank and ask any of the officers on duty. Alternatively, you can also check out their website for more information.
- They provide crypto-related financial services
While some banks may accept crypto deposits, not all are comfortable providing crypto-related financial services. These services include but are not limited to, loans, savings accounts, money transfers, and exchange services.
Given crypto’s acceptance as a legitimate investment asset, chances are banks around the world may soon begin to offer crypto financial services.
However, given the decentralized nature of cryptocurrencies, numerous compliance-related issues will have to be addressed. These include anti-money laundering procedures and KYC standards that banks must comply with.
- The bank has an in-house crypto exchange or is partnered with one
If you’re looking to purchase cryptocurrency, you’ll have to make use of a crypto exchange. However, as the crypto market is entirely unregulated and decentralized, there are significant risks that you have to contend with.
Because of this, mainstream investors are usually reluctant to invest in cryptos. Recognizing this, some crypto-friendly banks have entered into partnerships with reputable crypto exchanges to support their customers.
For example, Lithuania-based Bankera did just that by partnering with SpectroCoin to offer brokerage services, thus allowing Bankera’s clients to buy and sell coins on the company’s platform.
While cryptos allow individuals to circumvent the traditional finance structures, there are still plenty of benefits to operating within the system. Among them are the reputation and proven track record that most banks have.
Though, like all crypto-related investments, always be prepared to lose your entire capital when you choose to dip your toes.
You can check here some of the most popular crypto friendly banks: blog.tezro.com/best-crypto-friendly-banks/