The huge popularity of Bitcoin in 2017 jumpstarted a whole new outlook on the crypto market. After Bitcoin’s price reached its all-time high mark of $19,891, cryptocurrencies became highly popular within the general public. However, the positive attention towards the new phenomena led to a spike in the numbers of crypto-skeptics within the banking system.
The negative attitude and skepticism of the banking industry is no surprise as cryptocurrencies are threatening the conservative banking system. One such instance is the struggle between Bits of Gold and Bank Leumi. Bank Leumi, an Israeli traditional banking corporation, closed the account of Bits of Gold in 2015, due to the latter making company deals in bitcoin. Bits of Gold had to appeal to the Israeli Supreme Court in order to be able to continue its activities and return their account. The Supreme Court ruled in favor of Bits of Gold, temporarily prohibiting Bank Leumi from limiting the company’s account.
The attitude towards the blockchain based system and cryptocurrencies varies from country to country, and even from bank to bank. While in the United Kingdom, people who make cryptocurrency transactions are expected to pay additional taxes and in some instances even get their accounts frozen. One of the biggest British banking corporations, Barclays, invested in the blockchain related patents.
Currently, with over 21 million Bitcoins, with an overall value of $180 billion, yet to be mined, it’s no surprise that banks are starting to show interest in the market. Investing in the cryptocurrency exchange sphere can prove to be a great advantage for the traditional banks in the highly competitive crypto market.
In Japan, the first country to accept bitcoin as a legal tender, banks have successfully broken into the crypto market. In 2018 Japan became the first country where a cryptocurrency exchange happened which was completely backed and financed by a bank. SBI Holdings, the bank behind the exchange, has since faced an incredible commercial success with the pretax earnings reaching $3.2 million.
More and more corporations are now seeing the potential of cryptocurrencies and slowly incorporating it into their own system. The sudden shift in the views of the banking corporations is understandable as at first, they expected digital currencies to have a short-lived presence in the larger world of finance. The true value of cryptocurrencies was revealed after the big explosion in popularity in 2017 and the gradual growth following it.
While the initial reaction of banks was to suppress the cryptocurrencies and to deem them as unsafe and flawed, the day to day growth in public interest burst the skeptical bubble helping them realize the potential that the market presents. Slowly, the expensive lawsuits are quitting the picture and are being replaced by investments into blockchain technology and cryptocurrencies owned by the banks.
The crypto industry continues to grow taking over the financial world and those who intend on remaining strong players within the field are forced to adapt and grow along with it. The largest financial corporations find it hard to ignore the role of digital currencies in the modern world. Even if the crypto market doesn’t take over the world of finance completely it’s important for banks to be able to provide the alternative payment options so highly demanded by the general public.