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Now there are more than 101 million crypto users in the world. Over the past two years, their number has grown by 189%. And this is just the beginning. What is the current role of cryptobanks?
Switzerland, Liechtenstein and Luxembourg are ahead of the rest of the world and stubbornly do not want to lose the status of apologists for financial innovation and reliability of financial transactions in the world. So, DUKASCOIN became the first crypto project of a traditional bank with all the necessary licenses. Switzerland is currently in the process of adapting its financial legislation to cryptocurrency transactions and institutions.
Singapore and China also do not graze: in the first, cryptocurrencies have significantly strengthened their positions at the legislative level throughout 2020 - the largest bank DBS announced the launch of a platform for the sale of cryptocurrencies. The platform will also provide the ability to issue asset-backed digital tokens and a custodian service for storing digital assets, which indicates their course towards the creation of a full-fledged "cryptobank".
The situation in China is no less interesting: back in 2019, the authorities radically changed their anger at mercy regarding cryptocurrencies, and announced their full support. International experts see this as a strategic desire of the Celestial Empire to oust the international hegemons - the dollar and the US Federal Reserve System, as well as to resolve the long-sore issue of the internationalization of the yuan. Naturally, in both Asian countries, all such operations are subject to strict state control and compulsory licensing of market participants.
But does everyone adhere to such high standards today? Definitely not. Moreover, the very concept of "bank" is even an advance that serves as a "hook" for attracting new customers, since almost all existing crypto-banks are still very far from traditional financial institutions in all aspects: from a portfolio of services to legitimacy and regulatory mechanisms. “Bank” sounds solid and inspires more confidence, while a cryptobank is essentially an investment fund and an ordinary cryptocurrency platform that takes on only part of the traditional functions: currency conversion, storage of funds, cashing out, acquiring, etc. However, today any platform can call itself whatever it wants, if its jurisdiction allows it.
Let's move on to real examples: Sygnum and SEBA. Two companies to which the Swiss financial regulator Finma has issued temporary licenses for banking and securities transactions. Until now, the cryptoasset sector has failed to fully convince the local regulator that it can safely and reliably integrate the crypto sphere into the world of traditional finance. The Sygnum and SEBA groups, however, have proven that this is possible. Sygnum Bank even created its own Swiss Franc-backed digital payment token that can be used to transact on its platform.
The first cryptobank also appeared in the United States in the fall of 2020 - the Kraken exchange received a license from the State of Wyoming to create a bank to work with digital money. Clients will be able to use cryptocurrency as an investment, pay bills to it and receive a salary in it, so far only in the United States, but with further plans for global expansion. At the beginning of 2021, the first federal-level cryptocurrency bank, Anchorage, also appeared. It provides custody services for digital assets, including for institutional investors.
With regard to Ukraine and Russia, crypto banks are in no hurry to develop these markets, since the legal framework is still too damp for such activities. Although, a proposal was made to the President of Ukraine, Prime Minister and Minister of Digital Transformation to issue a national token.
My expert opinion is convincing: as of January 2021, all those companies that call themselves cryptobanks are rather quasi-institutions, not yet capable of taking on the full functions of fiat funds and traditional banks. And here's why I think so:
Optimization of financial relationships between companies and individuals, minimum commissions and security are what will attract the next generation of users. However, the last word here will be for government regulators: it will be possible to fully authorize the activities of cryptobanks only under the condition of strict regulation of operations and the institutions themselves. Therefore, easy transfers without compliance and a pile of documents that are possible today from a crypto wallet to a wallet by nickname and about other "goodies" of operations through the crypt can be forgotten ...
However, in the long term, crypto banking will become a conduit for financial services not only for crypto users, but also for people in general who live in very remote corners of the earth and do not have the opportunity to use the bank. Now there are more than 101 million crypto users in the world. Over the past two years, their number has grown by 189%. And this is just the beginning.
Switzerland, Liechtenstein and Luxembourg are ahead of the rest of the world and stubbornly do not want to lose the status of apologists for financial innovation and reliability of financial transactions in the world. So, DUKASCOIN became the first crypto project of a traditional bank with all the necessary licenses. Switzerland is currently in the process of adapting its financial legislation to cryptocurrency transactions and institutions.
Singapore and China also do not graze: in the first, cryptocurrencies have significantly strengthened their positions at the legislative level throughout 2020 - the largest bank DBS announced the launch of a platform for the sale of cryptocurrencies. The platform will also provide the ability to issue asset-backed digital tokens and a custodian service for storing digital assets, which indicates their course towards the creation of a full-fledged "cryptobank".
The situation in China is no less interesting: back in 2019, the authorities radically changed their anger at mercy regarding cryptocurrencies, and announced their full support. International experts see this as a strategic desire of the Celestial Empire to oust the international hegemons - the dollar and the US Federal Reserve System, as well as to resolve the long-sore issue of the internationalization of the yuan. Naturally, in both Asian countries, all such operations are subject to strict state control and compulsory licensing of market participants.
But does everyone adhere to such high standards today? Definitely not. Moreover, the very concept of "bank" is even an advance that serves as a "hook" for attracting new customers, since almost all existing crypto-banks are still very far from traditional financial institutions in all aspects: from a portfolio of services to legitimacy and regulatory mechanisms. “Bank” sounds solid and inspires more confidence, while a cryptobank is essentially an investment fund and an ordinary cryptocurrency platform that takes on only part of the traditional functions: currency conversion, storage of funds, cashing out, acquiring, etc. However, today any platform can call itself whatever it wants, if its jurisdiction allows it.
Let's move on to real examples: Sygnum and SEBA. Two companies to which the Swiss financial regulator Finma has issued temporary licenses for banking and securities transactions. Until now, the cryptoasset sector has failed to fully convince the local regulator that it can safely and reliably integrate the crypto sphere into the world of traditional finance. The Sygnum and SEBA groups, however, have proven that this is possible. Sygnum Bank even created its own Swiss Franc-backed digital payment token that can be used to transact on its platform.
The first cryptobank also appeared in the United States in the fall of 2020 - the Kraken exchange received a license from the State of Wyoming to create a bank to work with digital money. Clients will be able to use cryptocurrency as an investment, pay bills to it and receive a salary in it, so far only in the United States, but with further plans for global expansion. At the beginning of 2021, the first federal-level cryptocurrency bank, Anchorage, also appeared. It provides custody services for digital assets, including for institutional investors.
With regard to Ukraine and Russia, crypto banks are in no hurry to develop these markets, since the legal framework is still too damp for such activities. Although, a proposal was made to the President of Ukraine, Prime Minister and Minister of Digital Transformation to issue a national token.
My expert opinion is convincing: as of January 2021, all those companies that call themselves cryptobanks are rather quasi-institutions, not yet capable of taking on the full functions of fiat funds and traditional banks. And here's why I think so:
- for settlements in cryptocurrency, a wallet and its functionality are enough, and you can exchange money on the exchange, the status of a "bank" without the need for these actions
- The settlement functions of banks will gradually wither away, yes, they will not disappear altogether, but they will retain only the functions of accumulating funds and issuing loans: then what is the point of chasing after the receding status?
- few people want to deal with cryptocurrency projects, largely due to the lack of a regulatory framework
- Cryptobanks will not solve problems with payments, since payment systems are the same banks with large restrictions on activities and AML / CFT
- today it is completely legal to work under a special cryptocurrency license only in Japan, where such a license costs $ 300 thousand, and obtaining it is not an easy process.
Optimization of financial relationships between companies and individuals, minimum commissions and security are what will attract the next generation of users. However, the last word here will be for government regulators: it will be possible to fully authorize the activities of cryptobanks only under the condition of strict regulation of operations and the institutions themselves. Therefore, easy transfers without compliance and a pile of documents that are possible today from a crypto wallet to a wallet by nickname and about other "goodies" of operations through the crypt can be forgotten ...
However, in the long term, crypto banking will become a conduit for financial services not only for crypto users, but also for people in general who live in very remote corners of the earth and do not have the opportunity to use the bank. Now there are more than 101 million crypto users in the world. Over the past two years, their number has grown by 189%. And this is just the beginning.
