It’s 2018, and the last year has been a crazy roller coaster of innovation, awareness, hype, regulation, and uncertainty in the whelm of cryptocurrencies. Digital currencies saw their highest peak in prices in the latter part of 2017, and have since been on a long and slow drag since the beginning of this year. Bans and regulations have swept across the globe as governments and central banks began realizing the potential of cryptocurrency in the wake of much hype, and yet at the same time some of these same institutions have started looking into the possibility of creating centralized and/or national cryptocurrency tokens. And further still, in the midst of all this, some digital tokens have been created specifically for integration with banks, and some banks have even been proposed that would be designed to operate on Bitcoin.  

All in all, the last year for blockchain-based cryptocurrencies has been crazy, with both positive and negative news coming through the wires. One positive trend in all this (at least in our opinion) has been various developments relating to banks and cryptocurrencies.

Let’s take a look at some of these trends:  

Existing Banks Adopting Outside Cryptocurrencies

Ripple takes center stage in this category. Ripple (XRP) is a cryptocurrency specifically designed for integration with banks, to enable faster and cheaper (and perhaps more secure) international transfers, and has since risen to the third largest cryptocurrency by market cap (as of at least March 19th, 2018). Ripple has already had several banks and companies testing their technology. These include (or have included), but are not limited to: IDT (telecom provider) & Mercury (international payments service group), the central bank of Saudi Arabia, American Express & Banco Santander (in a joint test – huge names in America and Europe), MoneyGram International, Deloitte (global accounting firm), SBI Holdings (huge in Japan, and would like to try XRP for bank transfers between Japan and South Korea), Woori Bank (of Seoul), Western Union, and BBVA Compass (a bank)… again, this is not an exhaustive list, but it is already quite impressive. In recent news, Ripple believes that this could be the year that it goes live on the Chinese markets.  

In an article by CNBC in December of 2017, Peter Smith, the CEO of Blockchain, revealed that he believed 2018 would be the year that Central Banks accepted cryptocurrencies (mainly Bitcoin and Ethereum) as parts of their reserves. He made mention of how [at least back then] Bitcoin was “… a top 30 currency by supply…” – this was of course, before the big drop.

This category may continue to grow as time progresses.

Central Banks Creating Or Discussing Creating their Own Cryptocurrencies

With the rise in value, adoption, and craze of cryptocurrencies, especially Bitcoin, a number of Central Banks and governments have decided to jump on the bandwagon… their own bandwagon that is… enter national cryptocurrencies. Now some would oppose such an idea, arguing that it takes away from the original intent of cryptocurrencies and their (mostly) decentralized blockchains. But you can’t really blame central banks and governments for wanting to hop on board with the cryptocurrency concept. In addition to other reasons, blockchains, smart contracts, and cryptocurrencies could really help banks and governments be more efficient and transparent.

In another article posted by CNBC on November 30th, 2017, the author made note that central banks around the world were developing their own cryptocurrencies, including Japan, Sweden, and [communist mainland] China. Peter Smith, of Blockchain, was noted in the article as revealing that

we are 24 months away from a major government issuing a sovereign digital currency”.

The article also said that the Federal Reserve was thinking about its own digital currency (apparently years away), which was reiterated by another article posted on the same day by Futurism.com, with the title: Federal Reserve Confirms US Central Bank Is Thinking About Their Own Digital Currency.

NEWSBTC.com wrote on February 21st, 2018, that Iran’s central bank isn’t recognizing cryptocurrencies currently, but that it is thinking of creating its own cryptocurrency.

Among this new movement, a few other notable mentions include: Japan’s J-Coin, Communist Venezuela’s Petro, Estonia’s Estcoin, Russia’s CryptoRuble, Dubai’s emCash, and even Israel is looking into the future possibility of creating their own national cryptocurrency. Some of the above have taken effect, but most are still in talks or planning.

In other news, Japan’s largest bank, Mitsubishi UFJ Financial Group (MUFG), stated in mid-January that it would have its own cryptocurrency by this month (March, 2018), called the MUFG Coin. The Bank of England is also considering the creation of its own cryptocurrency, likely called the RS Coin, which could be used to help Central Banks settle payments. And finally, news hit the Financial Times’ website (you need to subscribe to view content) that six of the world’s largest banks are collaborating on a digital token created by UBS of Switzerland. The token is called the “utility settlement coin” and it’s designed to help the financial markets be more efficient. The six banks involved in collaborating on the project are: Credit Suisse, Canadian Imperial Bank of Commerce, Barclays, MUFG, State Street, and HSBC.

New Banks Made For Bitcoin And/Or Other Cryptocurrencies

This category may be less common than the others, but there is at least one man planning to create a bank specifically to function with cryptocurrencies. Back in January of this year, an article came out that revealed that Wall Street trader and billionaire, Michael Novogratz, planned to launch a Bitcoin investment bank that could become ‘the Goldman Sachs of cryptocurrency’. It would be a merchant bank called Galaxy Digital, specifically made for cryptocurrency ventures.

According to Mr. Novogratz, it will be a full service, best in class, institutional quality type of business. According to the article by express.co.uk,

It will trade and invest in cryptocurrencies, as well as having asset management and financial advisory and consultancy wings.

Banks Ban Cryptocurrency Purchases On Credit

Another recent development in the relationship between banks and cryptocurrencies, has been the news last month that many banks have started to ban cryptocurrency purchases with credit. Why anyone would buy highly volatile digital currencies with debt is anyone’s guess. An article by Forbes, posted on February 5th, goes into greater detail and speculation as to the possible reasons for this move. This news came within close proximity of China, Google, Facebook, Twitter, and Snapchat putting bans on ICO ads.  

In Closing

In an increasingly digital age, the ability to financially operate without a bank keeps increasing (cryptocurrencies, tokenized assets, digital wallets, online payments, decentralized P2P lending, etc). And yet, we expect that banks and governments will likely want to move in this direction as well.

Again, banks and governments can certainly benefit from cryptocurrencies and blockchain technology, this should not be something to be shunned or stopped, but rather embraced and worked with.

At DinarDirham, we focus on providing quality gold-backed & gold price-backed cryptocurrencies and related products. Our DinarCoins are worth 4.25g of 999.9% pure gold, and are pegged to the worldwide gold spot price, whereas our Gold Smart Contracts are backed by particular gold bullion pieces. We also have our very own multi-asset Universal Bitcoin Wallet, which accepts DinarCoins, as well as the advanced & secure, multi-asset, BCMY digital wallet app, which also accepts them.


References:
https://www.coindesk.com/two-companies-sign-test-ripples-xrp-xrapid-pilots/
https://www.coindesk.com/saudi-central-bank-test-ripple-payments-tech/
https://www.fool.com/investing/2018/02/06/5-brand-name-companies-testing-ripples-technology.aspx
https://www.financemagnates.com/cryptocurrency/news/cryptocurrencynewswoori-bank-seoul-reports-successful-test-ripple-remittance/
https://futurism.com/federal-reserve-confirms-us-central-bank-thinking-about-digital-currency/
https://www.newsbtc.com/2018/02/21/iran-central-bank-doesnt-recognize-cryptocurrencies-like-bitcoin-yet-country-plans-to-create-its-own/
https://cointelegraph.com/news/israel-government-considering-national-cryptocurrency
https://medium.com/@nkmlombardi/japans-largest-bank-will-have-its-own-cryptocurrency-by-march-b0ffb80955b6