Banks Want to Be a Bridge to Bitcoin. How to Invest?

These days, investors buy cryptos such as Bitcoin via exchanges such as Coinbase or some apps such as PayPal. However, this may change because banks have started to enter into cryptocurrency trading. Almost 300 banks have plans of rolling out the trading of Bitcoin on mobile applications in 2022’s first half. Many such banks work with a Bitcoin financial service firm named NYDIG. In addition, Fintechs or cryptocurrency native companies are starting to connect retail clients to cryptocurrency. However, few banks who think of the future are becoming fast followers with the assistance of some companies such as NYDIG. If you’re interested in learning more about bitcoin trading, go to bitlq.net for a complete guide.

Cryptocurrency and the Banking Industry

The best way of getting cryptocurrency investment exposure without buying it is by purchasing stock in a firm with a financial stake in the crypto future or blockchain technology. However, individual stock investments can cause the same risks as crypto investments. So instead of selecting or making personal stock investments, it is recommended that investors place their money in ETFs as they have a proven long-term value growth record.

• According to Synovus, NYDIG, they have entered the cryptocurrency space.
• Thus they evaluated the movement of money on the blockchain.
• For them, cryptocurrency payments will be the main focus this year, apart from digital banking.
• But they are not the first bank to move into this industry.
• A bank named Vast Bank located in Oklahoma is the first US bank that is nationally chartered for offering cryptocurrency via a mobile application.
• They allow traders to buy tokens like Ether, Chainlink, Cardano, and Aave other than Bitcoin.
• Large U.S. banks and financial institutes are also entering into the crypto field but are doing this a lot with some institutional custody and trading services.
• Some states like Wyoming passed the rule of bank licensing for digital currencies.
• They have also chartered some firms as SPDIs, such as Kraken, the large crypto brokerage, and Avanti Bank, based in Wyoming.
• All rules of federal banks are not cryptocurrency-friendly.
• They do not insure deposits of cryptocurrency or Bitcoin.
• Banks make use of a master account for settling any transactions at the regional federal bank and then get access to the payment system directly.
• The administration of Biden also signaled that cryptocurrency banking bespeaks enormous challenges.
• The fast introduction of many cryptocurrency assets into the financial system may pose excellent safety and security risks to the financial system.
• This year these digital assets will appear to be a priority policy.
• Agencies have to offer vital guidance to the banking sector to manage prudential and risks of consumer protection by activities of cryptocurrency assets.

Investors Increased the Prices for Banks Having Crypto Exposure

• Among the banks that are adopting Bitcoin is Synovus Financial, a regional bank having assets of $57.4 billion. They discussed plans of offering cryptocurrency trading to their retail customers.
• For example, Signature Bank is reported to develop a platform for digital asset payment.
• It is trading at 18 times its estimated earnings in 2022.
• It is a premium to the average of the industry is 14 times the earnings of regional banks or maybe 15 times for large banks shares such as Wells Fargo or Comerica.
• Synovus, which is at 12 times earnings, looks much cheap.
• The shares give in 2.6%.
• They are also up almost 10% in 2022 and are ahead of the bank named Invesco KBW.
• The banking sector is having a lift from the increasing rate of interest that will make lending highly profitable.
• However, Synovus may also benefit from investors’ enthusiasm for its plan related to Bitcoin.
• Profits related to cryptocurrency can be an excellent thing for its earnings within a year or so.

Conclusion

Big banks and some institutional investors have spent many years trying hard to flex blockchain for usage in conventional finance. However, they did not enjoy the rise in cryptocurrency prices and all income from DeFi. Now, as they became alert to some stretched valuations and no yield in the traditional market, they want to move in. They are racing to construct a strong infrastructure for supporting the flow of old money into digital currencies. If cryptocurrency is unable to draw in enormous revenues for the banks, it may be a new way of generating fees and retaining clients for their other services or products.