The Impact of Cryptocurrency on Traditional Banking


With technology reaching new heights, Cryptocurrency is on its way to becoming a popular financial asset throughout the world. Being a popular cryptocurrency, Bitcoin has reached its maximum value with time. Such an expansion in Cryptocurrency accounts for the economic digitization movement. Certain countries have also created their digital currency for achieving this target. provides you with the perfect platform to know about bitcoin evolution and cryptocurrency trading.

On the other hand, traditional banking systems, which have persisted for a long time, are uncertain about implementing the concept of digital assets. Latest reports show that about 63% of people in the banking sector view Cryptocurrency with a negative approach due to its risks. According to them, the risk factors associated with cryptos are much more than their advantages. Therefore, the question arises, what is the impact of cryptocurrencies on the usual banking system?


According to many studies, it can be summarized that some of the significant inherent risks posed by digital assets prevent the banks from associating with them. Many regulatory bodies like the OCC are putting efforts to change the viewpoint of banks when it comes to digital assets, reasoning that these assets could optimize the financial realm and trigger a new wave of efficient and revolutionary systems.

The OCC has issued multiple guidelines about how financial bodies can indulge in digital transactions in the recent past. This measure is a hope for the body that external guidelines will assist the banks in becoming more convenient with handling digital assets. The OCC had stated that national and federal financial institutions can now implement mass blockchain technologies for transactions since the process would be rapid without an external agency’s involvement.

Risks involved with Cryptocurrencies

  1. Decentralized Nature – Cryptocurrencies were made as a second option to the traditional banking approach, which doesn’t require a third party and is not limited to the restrictions of a centralized government, bank, or agency. It is centralized intermediaries; the dependence is on the blockchain code and the widespread aspect. This decentralized approach to cryptos is viewed to downplay the banking control in the financial domain and that they will have no control over the oversupply of financial assets.
  2. Issues related to AML/KYC – Cryptos enable direct transactions without intermediary agencies, omitting the prospect of additional transaction service charges. Validating the process with a particular bank account, the trades are related to the transaction number on the blockchain. This aspect concerns many financial bodies regarding the absence of anti-money laundering (AML) and knowing your customer (KYC) guidelines in digital currency transactions. It is the perception of banks that crypto transactions are without AML and KYC regulations, which can lead to illegal business.
  3. Volatility with Cryptos – The value of cryptocurrencies always keeps fluctuating. This is seen as a significant risk as in their short history, the price has not been stable, and would the investment be with time. There are several reasons like market size, liquidity, and market involvement that affect the price of cryptos.

How do Banks indulge themselves with Cryptocurrency?


The implementation of Cryptocurrency in banks can develop and upgrade the financial world. Banks have to find methods to adopt this digital currency and use it for their benefit to function together. The latest findings provide for many effective ways which could alleviate the banks’ concerns.

  1. Custody Services – The OCC has announced that financial institutions can offer unique services like holding unique cryptographic keys. This would let the banks securely and properly implement the crypto technology and have the asset under their control.
  2. Easy Onboarding and Expert Guidance – Banks could facilitate new, less experienced investors to help in crypto adoption. This would be a gradual process. The rookie investors, who are not financially capable enough to secure their crypto, would find it safer to hold their assets with a reliable financial body. Banks could also offer interests in crypto, where the account holders can invest the crypto through different financial means.
  3. Govt rules Administration – The proper enforcement of AML/KYC regulations will help curb malicious business, illegal transactions, and scams. Such prescribed guidelines could provide adequate diligence on crypto customers, significantly mitigating these transactions’ risk factors. Blockchain technology can also make the AML and KYC regulations a default process. It could enable data on the customers with financial institutions, which could be used by many different financial bodies to keep a check on their customers’ activity.
  4. Security Issues – Banks can ease the security problems associated with crypto holders. Renowned banks with robust security setup can prevent the theft of digital currencies. Introducing Cryptocurrency to bank vigilance could drastically cut down malicious influence on cryptocurrency transactions.
  5. Transactions – Banks can make use of blockchain technologies for expenditures to provide a quicker and cheaper solution for processing transactions.
  6. Smart Contracts – They lack trust between the parties, completion of the crypto transfer process depends on the coding rather than some person. This is where many financial bodies become essential third-party agencies by using this technology for bank lending and other such transactions.


The main objective of Cryptocurrency is their easy accessibility, unlike the hassle associated with the traditional banking system. Due to its growing advantages, there are many options to carry out the transactions. The process is simple, quick, and cheap with the involvement of the internet. Reducing dependence on the conventional banking system is another objective that digital currencies have achieved.

However, the security and stability associated with digital assets is a point that concerns many financial institutions. Banks should stop being cautious of this new system and come forward for its potential advantages. Their involvement would provide the necessary control and security to Cryptocurrency. Traditional banks need to customize their services for the account holders in digital provisions and the amount charged.

The banks regarding crypto as a contender should also change their perception and look at it as a partner. Banks can have a vital role in crypto and make them a bit regulated. Getting on board with cryptocurrencies and blockchain technology can smoothen the entire process and upgrade the process of banking.