Fiat banks are always in crisis it seems and with constant bailouts needed to keep them afloat and their services are limited to only a small portion of the population. Now it is predicted by a Mark Binns, who is the CEO of BIGG Digital Assets Inc. that regular banks will become obsolete within three years and will be replaced by a new range of financial services offered by decentralized platforms.
Innovations Challenging Banks
The Decentralized Finance (DeFi) sector as well as regular centralized financing options offered by cryptocurrency exchanges are becoming popular at a rapid pace. According to Binns, the new services offered by cryptocurrency exchanges are eating into the share of regular banks while DeFi will have a challenging time ahead appealing to the average consumer. Now Kraken, one of the most popular US-based cryptocurrency exchanges has officially registered as a banking services provider and this approach is allowing the exchange to engage in conventional lending without the red tape and other limitations of the central fiat banks. This foray into the banking sector will define the nature of the cryptocurrency platforms’ evolution and will give tough competition to the banks according to Binns.
Cryptocurrency exchanges operating as financial institutions will also break their shackles that are associated with a cryptocurrency exchange especially that within the United States. Several states like New York and Hawaii are considered anti-crypto and such that they heavily regulate cryptocurrency related projects in the country. Once Kraken’s services are now federalized and approved by the banking regulators, they then don’t have to ask for permission from each individual state to start operations there. They can simply do so by offering their financial services that are often much more competitive than their regular fiat counterparts. Very soon, banks will need to partner with some of these innovative crypto projects, just to remain afloat. Silvergate bank with over $1.5 billion assets is partnering with Kraken to help the latter get FedWire and SWIFT banking transfer opportunities.
The banks and their obsolete operations will not go away in an instant though. As you know, banks like JP Morgan and others ridiculed Bitcoin in the past but are now partnering with crypto/blockchain platforms themselves. This will eventually lead to crypto gaining the upper hand in the proceedings and eventually, making the entire banking process completely obsolete.
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