Why Banks Don’t Like Your Crypto Earnings

By Mathilda Walters

Why Traditional Banks Don’t Like Your Crypto Earnings (And Why We Do)

Banks don’t like crypto, and there are a few reasons why.

The traditional banking system is directed by a complex framework governing its accounts and users: the cryptocurrency system doesn’t neatly fit into this framework, which is based on an outdated view of finance. Many banks have made active efforts to restrict crypto usage, and one of the key problems that new crypto users face is the time consuming process of setting up multiple accounts on exchanges and swaps to buy or sell crypto.

There’s fairly limited legislation in place around digital currencies, meaning banks are stuck in the past when it comes to accepting or facilitating transfers or payments involving cryptocurrency.

Crypto is a disruptive system for traditional banks. Its advantages are endless: transparency, quick payments, universal access are just some of the benefits. Banks have failed to sow doubt and to control the usage of digital currencies as it becomes clearer and clearer that this is no longer a niche area of finance, or a fad that’ll die out quickly.

Banks have to create their own regulatory framework around digital currencies: this is ultimately a costly and difficult process that they are not willing to go through. They’ve tried hard to present crypto as unreliable and dangerous, and attempted to shut down any usage of it by customers. The European Commission has called for more regulatory infrastructure surrounding crypto, but the European Banking Authority has rejected this recommendation.

Traditional banks have made it actively difficult for their users to explore the use of crypto. In 2018, Bank Of America, Citigroup, JP Morgan, Capital One and Discover all banned their users from buying cryptocurrencies with their credit cards. These bans occurred in many countries worldwide.

Why use crypto?

Fluid, on the other hand, believes that everyone should benefit from DeFi’s advantages without being deemed suspect by their bank, and is taking a proactive approach to managing the risks of the space rather than trying to dissuade our users from stepping into the world of DeFi. That’s why we’ve partnered with predictive blockchain analytics firm Merkle Science, who offer best-in-class crypto security and compliance, to assess all the transactions moving on- and off-chain.

220 million people worldwide (and counting) use cryptocurrencies, and it’s becoming increasingly hard for banks to ignore this. Both El Salvador, and the Central African Republic have recently authorised Bitcoin as legal tender (the only countries in the world to do this).

Cryptocurrency has several advantages:

  • Lower cost
  • More convenient
  • Fixed supply
  • Transparent, and independent

Banks make the integration of crypto into the traditional financial system difficult by preventing the easy day to day usage of your money and assets held in crypto. Going in and out of crypto, and reaping its rewards, is held back by high fees, complex transactions and slow processing times. They are two different financial ecosystems, and the traditional banking system is working against making them easy to use together.

How Fluid is changing the system

With Fluid’s revolutionary technology, we streamline your everyday use of crypto. We allow our users to seamlessly move in and out of crypto in seconds with its bridge to crypto. Our approach involves utilising the infrastructure of both traditional finance and decentralised finance.

With our in-house Digital currency, the Digital Dollar (DUSD), you can mint from your bank balance in seconds: it’s then easy to start using your crypto to get higher yields and wider investment opportunities.

Instead of banning users from investing in crypto, or making it difficult to benefit from crypto’s higher yields, the Fluid Account will make it easy to invest and spend, all in one seamless app.

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