In December 2021, top banking executive magazine American Banker released its 2022 banking forecast. The forecast is based on a survey of 175 senior banking executives, including global, regional and departmental leaders of community financial institutions. American Banker magazine has a strong reputation in the industry for focusing on innovation, technology and regulation.
The report “Flexibility, Fear and Courage: Finance Facing the Future” by Lynnley Browning, reveals that only around 20% of banks worldwide currently offer crypto asset advisory services to their clients. However, from 2022 it is expected that cryptocurrencies will play a bigger role in the traditional banking industry. In this 22-page survey report, nearly 40% of banking sector respondents worldwide said they could start providing crypto-asset services to their retail customers in 2022. About 10% of customers of the global banking industry are currently managing their Bitcoin. or other digital currencies in their bank accounts.
According to respondents, approximately 4% of all customers currently own some type of cryptocurrency. Sixty percent of respondents expect customer ownership of cryptocurrency to increase from 2022, implying that cryptocurrency will gradually enter the mainstream, which is exciting news for the industry. entire cryptocurrency market. Even though only 2% of banking executives surveyed said their institutions already accept cryptocurrency transactions, more and more people are gearing up to take the historic leap into banking.
Currently, the report found that only two in ten financial advisors, who the report says are “extremely elderly white males,” currently provide crypto investing support to their clients. “Just over one in ten manage Bitcoin or other digital currencies in client accounts. Yet while only 4% of surveyed advisors’ clients are invested in crypto, six in ten advisors expect this may this increase in 2022,” the report confirmed. Part of the change to provide a more crypto-savvy service involves hiring a “more inclusive and representative workforce if they are to tap into their future customers. Waiting a decade to make these changes will impact the bottom line.
The survey report also found that with support from US lawmakers and regulators for cryptocurrency, around 66% of banking executives said more policy work could boost competition in products such as stablecoins. BigONE believes that if these banks and financial institutions can further clarify the rules governing the management of digital assets in 2022, the existing regulatory landscape will be significantly changed.
A related issue is the impact on the crypto market due to the number of central banks researching or launching new central bank digital currencies (CBDCs) this year. “Some countries have embarked on digital currency projects as a bulwark against the proliferation of private cryptocurrencies like Bitcoin. Others have decided to use CBDCs as a way to entice blockchain-savvy investors and companies to set up shop on their soil. This year will be a litmus test of which approach to CBDCs will prevail: force the use of one state digital currency at the expense of all others, or allow CBDCs to coexist within an ecosystem of other coins like a bridge between the monetary issues of the state. and those in the private sector,” observed a report in Forkast.
The Crypto Asset Industry Is Booming
Shortly after the publication of the American Banker report, some banking institutions confirmed the good news and their involvement in the field of crypto-assets. On December 30, 2021, Swedish cryptocurrency-enabled bank Mecro Bank announced that a pilot project to launch digital asset custody services in the future is currently underway. According to the report, Mecro Bank intends to launch its own NFT collection as well as a virtual banking service experience in a metaverse-based virtual world. Mecro Bank believes that the metaverse is obviously a home for banking and financial transactions, as well as personal and professional interactions. Effective financial and transaction management will be key to making the metaverse environment as immersive and realistic as possible.
Sygnum, a Swiss digital asset bank and trading platform, raised $90 million in a new funding round valued at $800 million on January 6, 2022. Sun Hung Kai led the funding, with the participation of Animoca Brands and Meta Investments. Sygnum, a Swiss digital asset bank, previously announced the launch of a series of DeFi token custody and transaction services, including Aave, Aragon, Curve, MKR, Synthetix, Uniswap, and 1inch Network. Sygnum has also extended its USDC-related banking services.
Traditional financial institutions drive crypto regulatory policies
There have been many changes in the area of cryptocurrency regulation over the past year. As the pace of traditional financial institutions entering the realm of crypto assets accelerates in 2022, it is certain that crypto regulatory policies will continue to improve. Crypto assets are unstoppable and many countries and regions around the world are adopting crypto regulatory legislation. Some actions have been taken by the United States at the state and local levels. The mayor of Miami, for example, accepts salaries in Bitcoin, and miners use cheaper, cleaner energy. Will they, however, follow the example of their South American ally, El Salvador, and treat Bitcoin and other tokens as legal tender? It will be interesting to see what happens.
The EU will continue to debate its proposed legislation, and if the Swiss cryptocurrency continues to heat up, the pace of legislation could pick up. As more and more institutions take an interest in cryptocurrency, the European Union must implement crypto asset regulation policies as soon as possible to avoid losing a significant portion of the modern digital economy. Simultaneously, as the lines between financial and technology companies become increasingly blurred, mitigating potential risks in the financial system will become increasingly important.
Also in Europe, the UK may see Brexit as a key opportunity to lead many EU countries, but based on past evidence, interest from regulators does not appear to have met expectations. The UK Treasury recently discussed the regulation of certain stablecoins, especially those tied to the base currency or assets. As these talks progress, the UK could move away from volatile cryptocurrencies and towards state-backed CBDCs, forever changing the relationship between the UK and cryptocurrencies. . Indeed, the UK is leading the way across Europe in preparing for the adoption of an interbank digital currency and is currently fifth in the world. However, a consumer offering is still a long way off, according to recent PwC analysis from December 2020.
In short, the future development of the cryptocurrency market is still full of uncertainties, but there will be a more orderly market environment governed by regulations. This is an indisputable industry consensus, and regulation will further support the growth of the cryptocurrency industry. “It’s only right that traditional banks take their customers’ crypto investment needs seriously, otherwise they’ll go after crypto-first startups. The interesting question is whether they will fight for more choice for their customers in the face of CBDCs or align with central bank policy and reduce consumer choice,” suggested BigONE President Anndy Lian. .