Now that cryptocurrency is here to stay, financial institutions and banks are taking steps to make a change. Crypto adoption by central banks and countries is a given by early to mid-2020s. There is interest in this vehicle from retail and institutional investors as well as the underlying distributed ledger technology. Why? Because of innovations like blockchain which has been helpful in speeding up multiple banking processes.
There is a growing commitment as crypto is going to be money of the future and those who ignore such opportunities will lose out. The approach is cautious as many leaders in the financial industry are still skeptical of crypto and its value as an asset class. Volatility during the pandemic and other world events are causes for concerns.
Many observers have been watching opportunities for a while now and have proposed crypto adoption. The reasons to do so are quick payment processing, offering escrow services, giving loans with crypto and making international cash transaction much easier. Only in the last 3 years has there been some movement towards doing so. JP Morgan introduced its Crypto Coin (JPM) in 2019 and uses it for transferring funds and transaction settlements. Morgan Stanley has been offering investment products as of 2018.
Many central banks have run test pilots to see if digital currency payments would work and have adopted their own versions. Technology companies are looking at crypto use to gain a foothold in the markets. Despite the interest and slow adoption, several banking heads are still unsure of how to approach crypto, the associated challenges etc. It definitely looks like the way forward is to learn from industry practices and the challenges that have been overcome in the learning process. Eventually, banking institutions and regulators will be able to come up with the right legislative framework to make crypto adoption and use easier.