How Bitcoin And Cryptocurrencies Could Disrupt Banking


Even though the world of cryptocurrencies is expanding and getting more popular, traditional institutions are still unwilling to embrace these digital assets because they believe the risks outweigh the potential benefits. However, regulatory organizations such as the Office of Comptroller of Currency or OCC attempt to modify banks’ perceptions of digital currencies. They believe these assets will assist banks in entering a new era of efficiency and creativity.

Banks are apprehensive about bitcoin because they believe transactions involving these assets are riskier and take more time and money to verify. However, if banks and their clients are ready to take the risk, they can benefit greatly from digital currencies. They are skeptical because of the characteristics of these coins. In this article, we will discuss the ways in which these digital coins can disrupt banking.


How Can These Digital Currencies Affect Banking?

There are numerous reasons why banks fear that bitcoins and other digital coins can disrupt banking. Some of them are mentioned as follows:

Decentralized Nature

Crypto assets were created as a replacement for existing financial infrastructure. They are decentralized in nature, which means that they are not governed by any organization. As a result, they do not require an intermediary and are not dependent on the capability of a central government, bank, or agency. Instead of depending on centralized intermediaries, consumers place their trust in the blockchain’s technology and its distribution.

Some banks do not believe that these coins will be successful in this market because they believe a central bank controlling a cryptocurrency will make it less valuable. Some believe that because a central bank does not control the currency, they are less essential or that it will be unable to control the amount of money in circulation. All in all, they are afraid of giving them a chance to perform in the market.


Concerns About Aml/Kyc

People are unaware of a lot of things related to these digital coins. As a result, they are quite afraid to get started with it. Cryptocurrencies enable peer-to-peer transactions without using a regulated intermediary. This implies the user can send money quickly and conveniently without incurring fees. Instead of linking a transaction to a specific bank account via a financial institution, the transaction’s ID is linked.

Many banks are concerned about this type of anonymity because there are few standards governing anti-money laundering (AML) and getting to know your customer (KYC) in digital currency transactions. Banks frequently believe that bitcoin transactions cannot be traced for AML and KYC purposes, which could lead to criminal behavior and fraud on the network.


The prices of cryptocurrencies, particularly bitcoin, have been extremely volatile in their brief history. There are numerous causes, including the market’s size, liquidity, and number of participants. Banks consider them a risk because the price has not been consistent. As a result, they believe the currency may not be a smart long-term investment. If you wish to trade in bitcoins, check out


How Banks Can Enter The Bitcoin Market?

If banks do not want to fall behind, they must find a way to cooperate with this technology. The adoption of cryptocurrencies might expedite, improve, and modernize financial services. Recent market changes can make banks less concerned about the risks and more conscious of the benefits.

Custody Services

The OCC said in July that banks and savings and loan organizations might provide crypto custody services to their customers. One of these services would be the storage of the unique cryptographic keys used by consumers to access their private wallets. This indicates that the OCC believes banks may safely and effectively store bitcoin or the key to accessing cryptocurrencies on digital wallets for their customers.


Simple Sign-Up And Skilled Assistance

Banks could assist new, inexperienced investors by developing tools that make it easier for their consumers to use cryptocurrencies. For example, people who are new to cryptocurrency investing may not know how to set up their own wallets to hold their own cryptocurrency.

Banks might offer interest-bearing crypto accounts, and clients could invest the funds or utilize other financial tools. They can assist investors who are unfamiliar with cryptocurrency’s intricacies by acting as a trustworthy third party that is respected in the finance industry and can keep investors’ funds safe.

There’s even a chance that blockchain technology may automate AML and KYC checks. Blockchain technology could make it easier for banks, loan officers, and other institutions to communicate information about people more clearly. In other words, in the future, there may be a single blockchain that holds all consumer information. All financial institutions may then use blockchain data to swiftly check up on their consumers and spot any red lights that indicate bad or unlawful behavior.

Concerns Regarding Safety

Banks can assist cryptocurrency owners in feeling less concerned about their security. Many holders are concerned about the hacking of their wallets and exchanges. If digital currencies are stored at well-known banks, they may be less vulnerable to theft or hacking. This would put customers at ease. Putting cryptocurrencies under the supervision of banks could assist reduce crime or provide the appearance to outsiders that cryptocurrency transactions are unsafe.



According to the OCC’s most recent letter, banks can employ public blockchains and stablecoins to speed up payment processing. Processing transactions with blockchain technology is faster and less expensive than utilizing clearinghouses. Banks adopting blockchain technology could clear and settle transactions significantly faster.

Smart Contracts

When people use a smart contract to bargain, they don’t have to trust each other as much because the deal’s success is determined by computer code rather than how each acts. Banks might boost confidence by acting as dependable third parties for mortgages, business loans, letters of credit, and other transactions that employ smart contracts.


Banking institutions are hesitant to invest in cryptocurrencies due to concerns about their security and stability. Financial institutions should also stop viewing cryptocurrencies as a competitor and begin to view them as a partner. Banks can play an important role in crypto, providing the highly unregulated industry with much-needed stability and confidence. Banking can go to the next level of efficiency and creativity by utilizing cryptocurrencies and blockchain technology.