Cryptocurrencies: Are some banks on the wrong side of history?

Banks and other financial institutions who are still not recognising major cryptocurrencies as a legitimate asset class are on the wrong side of history.

Over the last six months, Bitcoin and other digital currencies have had such an impressive run. So, when the crypto market shed over $1 trillion in a week after hitting record highs, a number of financial institutions have spoken out.

A period of consolidation and short-term correction isn’t surprising in such a hot market, which is what we’re seeing now.

This market turbulence can be expected to continue until it fully matures, and institutional investment increases further.

Yet if you look closer at the charts, the two largest cryptocurrencies, Bitcoin and Ethereum, have been on a consistent upward trajectory over the longer-term. Of course, no financial market moves up in a totally straight line, but the upside trajectory is evident.

Therefore, I find it inexplicable that certain banks have decided to refute the legitimacy of digital currencies.

By doing this, they are putting themselves on the wrong side of history, and stopping clients from accessing the potentially considerable opportunities of key digital assets that may define the future.

Naturally, cryptocurrencies aren’t for everyone. But no investment is. As such, refusing one particular asset class seems pretty strange.

When you look at the pace of the digitalisation of economies and our lives, the demand for digital, global, borderless money will only rise.

Even now, cryptocurrencies have altered the way the world handles money, makes transactions, does business, and manages assets.

They are becoming ever more integrated into the mainstream financial system, as we can see with an increasing number of Wall Street giants, social media platforms and multinational firms becoming more pro-crypto.

In addition, the U.S. Treasury Department’s new, stricter cryptocurrency rules also highlight how Bitcoin and other major cryptocurrencies are moving more mainstream.

This is, I believe, recognition by those running the world’s largest economy that cryptocurrencies are the future of money.

This could be the first major step towards global regulation.

This is inevitable as the market grows and matures.  Proportionate regulation should be welcomed with open arms. It would help protect investors, shore-up the market, fight criminality, and reduce the potential possibility of disrupting global financial stability, not to mention offering a potential long-term economic boost to those countries that introduce it.

Therefore, disregarding cryptocurrencies in such a fast-paced digital area is, in my view, outdated and old-fashioned.

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