Cryptocurrency’s anonymous and fast transactions have been the main attraction that has drawn people and industries to crypto. However, that attraction is finding its way into traditional finance, more so banking facilities.
It’s a no-brainer that blockchain technology has put industry players in the traditional banking systems on their toes. With the dynamic change in customer demands, conventional market players have no option but to adapt.
Cash Transactions Ranging From Seconds to Days
Existing bank transfers across platforms like the US’s FedNow and the UK’s FPS happen instantaneously. Across the SWIFT network, transactions can take days before they are settled.
A catch with networks like FedNow and FPS is that they are limited to particular countries and are usually accompanied by maximum transaction limits. Meanwhile, avenues such as Visa and Mastercard accept payments within seconds across a wide geographical base but funds still take days to reflect on the merchant’s side.
A market that immensely relies on bank transfers is the online casino industry. Also referred to as wire transfers, bank transfers are a favorite among casino players owing to their reliability, security, and hassle-free transactions. Bank payment methods may not be the quickest option compared to cryptos but different bank transfer casinos have taken advantage of banks’ top-tier security and widespread global acceptance.
Compare it with blockchain networks like Ethereum, Bitcoin, or Litecoin, where cash transactions in casinos are done within seconds. The blockchains are also available worldwide provided there is an internet connection and don’t come with transactional limits. Cryptos go beyond the casino market where in other ventures, one can seamlessly move $1 billion in USDC stablecoin (USDC-USD) within a minute.
Conventional financial institutions are trying innovative solutions to bridge the gap with their crypto-based peers. Visa has come up with a stablecoin for its users while JP Morgan has introduced Onyx, a blockchain platform for bulk payments.
The UK government isn’t lagging as it plans to supervise fiat-based stablecoins indicating a warm acceptance of crypto-inspired avenues for money transfers. Notable financial firms at the forefront of embracing blockchain tech in their operations include Visa, Société Générale with its Euro Stablecoin, and Paypal.
Blockchain Offers Banks Various Payment Options
In the context of instant payments, there are local cryptos like Litecoin and Bitcoin, stablecoins, and existing payment methods such as SEPA in Europe and FPS in the UK. To boot, blockchain operators are providing cross-border payment services, highlighted by none other than Ripple’s On-Demand Liquidity platform XPR.
Ripple’s blockchain technology through XPR-USD offers an effective value transfer as a potential item for banking institutions willing to engage in across-the-border transactions.
UK’s Target as a Worldwide Crypto Hub is at Stake
The UK was dragging its feet among its European Union (EU) peers in cryptocurrency regulation. However, there has been steady progress in creating better guidelines to provide certainty among market players.
Yet, concerns still linger on the slow progress of establishing a clear regulatory framework that may hinder the UK’s goal as a prime world crypto space. Without clarity, foreign investments in the UK’s blockchain and cryptocurrency market may be diverted to well-regulated jurisdictions in Europe.
Even as conventional financial entities leverage crypto-based innovations, regulation has become an emerging issue that may stifle the UK’s competitiveness in the global crypto space. The anonymous nature of cryptocurrencies raises concerns on aspects such as illegal activities and money laundering. By default, banks are subjected to strict guidelines like Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements.
With cryptos operating without a centralized authority, the polar opposite of traditional banks, an enormous challenge arises that will give the latter a lot to think about. It means achieving a balance between secure transactions and encouraging innovation will be no walk in the park.