Cryptocurrencies have grown in popularity over the past few years. With this rise, so has the use of these digital assets by major retail financial institutions and investment firms to store value or trade. And it isn’t just small credit unions that are getting involved either. Big name institutions such as Citibank and J.P. Morgan Chase have announced plans to offer their own cryptocurrency services offerings to customers, which gives us a better look at how cryptocurrencies might become more accepted in the future. Cryptocurrencies are generally seen as a faster and more secure way to store value than traditional bank accounts or government-backed fiat currency. The main appeal is anonymity – your money is stored in an online wallet which cannot be accessed by anyone other than you without permission from the company itself, so they can’t be used for criminal activity or tax evasion like traditional banking services can be. But because of this anonymity, it also means there is no regulation on cryptocurrencies similar to that imposed on banks and other financial institutions by governments around the world for security and anti-money laundering (AML) purposes. Until now, most cryptos have been relatively niche but with growing interest from mainstream financial institutions, there’s every chance that we could soon see more widespread adoption of cryptocurrencies by banks to make them more accessible to their customers while also offering them some additional benefits not available through standard banking services – including lower transaction fees and greater levels of protection against fraud and theft than regular bank accounts.
Why is Banks’ interest in Cryptocurrencies growing?
Cryptocurrencies are becoming more and more popular, and now major banks are getting involved. Cryptocurrency adoption is still very new, with only a few institutions offering bank-like services for this new form of money. But with the growing interest and utility of blockchains and cryptocurrencies, it’s likely we will see more and more financial institutions offering this type of service. One of the biggest reasons banks are interested in cryptocurrencies is to increase their customer base and attract new customers. Many banks are seeing a decline in customers due to increased competition from online and mobile banking services and more people are now looking for a better way to store value and manage their finances. Digital assets such as cryptocurrencies may provide a solution and banks are now looking to embrace them as part of their overall financial services offerings.
Citibank to offer cryptocurrency exchange and custody service
Citibank has announced plans to offer a cryptocurrency exchange service as well as custody and clearing services for legally compliant investors. This will allow customers to buy and sell bitcoin, ethereum and other digital assets like stocks, commodities and other investment vehicles. It’s not the first time that Citibank has been in the cryptocurrency game. The company received a BitLicense from the New York Department of Financial Services in January 2017, but the company discontinued its Bitcoin product that same month citing “market conditions and customer preferences.” Citibank customers will be able to open an account with the company and use this account to access the new service. Customers will then be able to link their existing bank account to the new service with the help of a Citicoin-enabled application.
Banks launches CBDC, the first licensed cryptocurrency product near future
Banks are set to launch a new security token product in collaboration with blockchain startup Digital Asset or on their own. The product, called CBDC, is a security token that will be used to provide a variety of financial services including custody, settlement and trading. Unlike many companies that launch blockchain products without much thought as to how they will actually operate, CBDC is designed to connect to the existing financial services infrastructure of Banks. The platform is designed to be compliant with regulations such as the Bank Secrecy Act (BSA). These regulations require financial institutions to report suspicious activities as well as deposit and withdrawal limits for customers. Because Banks know better, the weaker fiat currency becomes, the more likely the fragile the infrastructure will be harder to prevent the dollar from losing its domination in the coming years.
In general, cryptocurrencies are becoming more and more popular and are used for payments and trading. However, only a few financial institutions offer cryptocurrencies as a service. Major banks such as Citibank and J.P. Morgan Chase will announce plans to offer their own cryptocurrency services. With growing interest from mainstream financial institutions, there’s every chance that we could soon see more widespread adoption of cryptocurrencies by banks in order to make them more accessible to their customers while also offering them some additional benefits not available through standard banking services.
Reminder: I am not your financial advisor.
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The Future of Machine War II
In late 2021, I wrote an article about A.I. vs. Blockchain. I realized it was closer than I expected.
Web2 is leading a future of technological centralism.
The way we see the world in ancient is what we saw became what we believed. Later, the enlightenment process helped humans realize what they had seen was disguised by the nature principle. Once we tested our assumption and received accurate results, we thought we had mastered the nature principles. Yet, we did not make the world better than we thought we could.
We are living in a world in which companies know more than you than yourself. Companies can likely tell you what you should believe without letting you know.
The secret weapon that companies like Google invented is A.I. or Artificial Intelligence.
If A.I. can think like a person, it can easily replace you! Since companies got all your data, you freely offer them by using their free services, and they can replace you one day without you realizing it.
Without all conspiracy theories behind what Google may or will secretly develop, A.I. reaching consciousness is … impossible.
If it does, Google has successfully made a human – dumb!
The most advanced A.I. – Tesla Autopilot Program cannot distinguish objects between humans and other moving objects during driving.
Using technology makes people dumber than they think because it takes away your consciousness – the ability to think uniquely!
Blockchain is the future of decentralization.
We need a peer-to-peer system to regain consciousness and break the chain from Web2.
It gives individuals the power to rethink information.
Think about today’s media; all information is filtered to offer readers without any surprise. News is data that Web2 selected specifically for you to read.
We need a decentralized system so that you can receive unfiltered information and gives you a surprise that sparks ideas of imagination.
Web2 is afraid of the blockchain because they are too big to fail.
They mimic the blockchain by creating a centralized node system – social media network.
It is a net growing outward through a single point. Only the problem is that connection is facilitated by technology. And the biggest failure is such technology has a single point of failure problem.
And they cannot escape the law of economics – the law of diminishing. So we will see Web2 grow slower due to the law of diminishing that they require more data with few increments of advancement through A.I. without any breakthrough because A.I. is a deterministic system that works with a lack of randomness.
In Web2, they assumed everyone was stupid, and they offered solutions to everyone.
In Web3, everyone is good and should anticipate solving a problem together.
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Financial sanction to mixers
Have you heard about financial sanctions from the US on virtual currency? At least, I have not yet. But the US Department of Treasury has issued sanctions on two crypto services: Blender.io and Tornado Cash.
To clarify, the US sanctions on tools but not target specific entities or groups of people.
So why bother to sanction something that the government probably won’t be able to sanction in the first place?
What is a mixer?
A cryptocurrency mixer, sometimes referred to as a tumbler, is a tool for money laundering. The sole purpose of the invention is to make transactions untraceable.
How to mix?
Even crypto is pseudo-anonymous, but it is traceable through your wallet address. A mixer is a black box service to filter your traceable wallet address into the untraceable wallet address.
How to wash your money clean in the traditional way?
The assumption is you will not get caught at each stage, and then you place your dirty money in a bank through companies and use the funds to purchase legal goods like houses or luxury goods.
There are mature regulations and rules to stop you from putting your dirty money into banks.
Digtial money landury
A Crypto mixer or tumbler is a service to pool dirty digital currency in their favor and redistribute it into designated wallet addresses or addresses randomly generated.
It is a challenge to stop transactions because there is no entry point for law enforcement to stop at each stage.
Tornado Cash is the king of the mixer. Unfortunately, there is just no way to trace transactions anymore. It is a smart contract with zk-SNARKs (zero-knowledge proofs) that does not require revealing a wallet address during transactions and ghostly distributed funds without leaving any traces.
This tool is the ultimate weapon that the government has to shut down, or there is no way to prevent transactions.
Let’s change the future – legally.
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Why there is not crypto banking exist
We have always heard about cryptocurrencies, crypto exchange, banking, and trading platforms, but we do not really grasp the idea of crypto banking. Crypto banking is a contradicted idea. If crypto is to replace banks and give users full control of digital money, why do you put your crypto into the bank? The new research paper argued that there are risks for banks to adopt crypto, but they did it anyway.
Banks want crypto
Cryptocurrency has a rough road at the beginning and continues to experience a bumpy road ahead. The institutional investors were watching its performance. In early 2017, institutional investors had opportunities to adopt crypto, but they found out the return of the investments was less than traditional financial assets. Regulations were not a concern for some individual institutional owners, but banks were conservative at the time. As a result, some investors adopted it in early 2018 than banks did. Then suddenly, the crypto market took off in 2020, leaving many banks to regret their decision in 2017. Many banks set up their digital investment group to rush into the market and increase prices. Of course, many of their investment positions are instead of shadow positions. It is unclear how much they have been invested in and what vehicles they took to invest in cryptos.
Crypto exchange is a bank-like platform for crypto. Banks offered a place to purchase fiat currency. Crypto exchange did the same duty as traditional banks did. Since there was a gap between the crypto and banks, the crypto exchange took responsibility and offered crypto services. The crypto exchange took off after 2020, and they left banks in the dust. Then, crypto winter came in early 2022, and banks again hesitated to enter the crypto and started denouncing crypto usage, particularly in the Defi area. But interestingly, they tried to find ways to get into crypto without being directly exposed to cryptocurrencies—hint: through hedge funds.
How much banks exposure to crypto
We do not know how much banks have been exposed to crypto. We learned that the big Wall Street players were exposed to the services of the digital asset through State Street of their $41.7 trillion assets. Some have been exposed due to Luna’s collapse and 3AC bankruptcy. But again, no specific dollar amount was provided.
Since the crypto winter, institutional investors have been cautious about crypto exposure. However, crypto exchanges are the winner again. They are exposed to crypto and take risks more than banks do. As a result, they likely will weather the uncertainty. Furthermore, there is no need for crypto banking to handle your crypto assets since many such services will not survive long in the crypto environment.
Crypto is resilience
Despite its fluctuating price and unsecured assets, crypto is resilient to phase out any bad business ideas and bad actors in the economy who wants to or try to dominate the market but who transfers risks to users to believe they are the one who should take responsibility for their carelessness. Unfortunately, those business models will not survive long.
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