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What Is a Crypto-Friendly Bank?

Because cryptocurrencies have already started to cause disruptions in the financial industry, it is only a matter of time before financial institutions and service providers make the change toward being more crypto-friendly.

Because it is impossible to deny the enormous revolutionary power that is promised by cryptocurrencies and the technology behind blockchains, many forward-thinking companies have come to the realisation that in order to survive, they must embrace change.

As a result of this, we have started to see the creation of crypto-friendly banks, which may be defined as establishments that accept services linked to cryptocurrency finance.

However, first things first, let’s examine how we got into this mess in the first place.

Why are more banks choosing to accept crypto?

Banks are able to better adapt to changing times thanks to decentralised finance (DeFi). From smart contracts to automated loan evaluation, DeFi is a true game-changer for financial institutions all around the world.

The use of cryptocurrencies is only going to continue to grow. Cryptocurrency adoption rates are on the rise as individuals want to move beyond governments and financial institutions. This trend can be attributed to citizens’ mistrust in the government as well as their worries about inflation.

The cryptocurrency market is a potential unmined treasure trove. Despite the decentralised nature of cryptocurrencies, there are still a lot of ways for traditional financial institutions to profit from trading in them. For instance, individuals still need to exchange fiat cash for cryptocurrencies if they want to convert their funds, which enables banks to capitalise on this by facilitating transfers and charging fees for their services. Cryptocurrency exchanges are not yet widely available.

Cryptos are a good investment. Because of the cryptocurrency bull market that has been developing over the past several years, it is reasonable to state that cryptocurrencies have evolved into legitimate investments at this point. As a result, it shouldn’t come as much of a surprise to discover how banks have started investing substantially in blockchain technology and cryptocurrency assets.

Now that we’ve gotten that out of the way, let’s have a look at the qualities that make a bank crypto-friendly.

How to determine if your bank is crypto-friendly?

There is support for cryptocurrency deposits.
It should come as no surprise that if a financial institution accepts cryptocurrency deposits, it is probably reasonable to claim that it is crypto-friendly. One good illustration of this can be found in the United States, where customers of some institutions are given the option of putting cryptocurrency into their accounts.

Paying a visit to your neighbourhood bank and inquiring with any of the tellers or teller supervisors who are working is one technique to obtain this information. You can also find additional information by going to their website, which is another option.

They offer financial services that are associated with cryptocurrency.
Even if some banks may be willing to accept deposits in cryptocurrencies, not all of them are yet comfortable providing financial services related to cryptocurrencies. These services include things like loans, savings accounts, money transfers, and currency exchange, but they are not restricted to just those things.

Given that cryptocurrency is already widely recognised as a valid asset for investment, there is a good likelihood that financial institutions all over the world will soon start to provide cryptocurrency-related services.

Despite this, various compliance-related issues will need to be resolved, as cryptocurrencies have a decentralised character. Among these are the anti-money laundering policies and know your customer requirements that banks are required to adhere to.

The financial institution operates its own cryptocurrency exchange or has a partnership with an external exchange.

If you want to buy bitcoin, you will need to use a cryptocurrency exchange. There is no other way to buy it. However, due to the fact that the cryptocurrency market is completely unregulated and decentralised, you will need to be prepared to face a number of serious dangers.

As a result of this, traditional investors are typically hesitant to put their money into cryptocurrency. In light of this, several banks that are open to cryptocurrency have formed strategic alliances with reputable cryptocurrency exchanges in order to better serve their customers.

For instance, Bankera, a firm based in Lithuania, did exactly that by forming a partnership with SpectroCoin to provide brokerage services. This gave Bankera’s customers the ability to purchase and sell coins directly on the company’s website.

Although cryptocurrencies make it possible for individuals to sidestep the conventional financial systems, there are still many advantages to being part of the established financial system. One of them is the excellent reputation and demonstrated history of success that the majority of banks have.

If you do decide to dabble with cryptocurrency, you should always be prepared to lose all of your money, as is the case with any investment related to cryptocurrencies.

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Evangeline Christina is a Cyber Security Enthusiast, Security Blogger, Technical Editor, Certified Ethical Hacker, Author at Previously, he worked as a security news reporter in a reputed news agency.