So Your Bank Wants to Talk Crypto…
Breaking news today (not so breaking if you’ve been following BitBoy Crypto) that banks want to get into the crypto game. No shit? It’s like they realized they’re missing out on making money. Hot take- I trust a traditional bank to hold my crypto like I trust a two year old with a potato gun.
I do believe this is going to be great for the overall crypto market cap and for mainstream adoption. However, and boy do I mean a big MF’ing however, I may have been born at night but not last night. Let me break it down- The primary function of any bank is to make money. They do this by accepting your deposits, and then lending your money out to the next guy. They profit on the difference between their cost of funds (the cost of holding your deposit- FDIC insurance, operational costs, the poor bank teller’s measly hourly wage, etc.) and how much they make off of the interest on the next guy’s loan (the spread).
If you haven’t walked into the bank lately (and why the hell would you? The coffee sucks these days), you haven’t noticed how pathetic the interest rates are on deposits. Banks are looking for new revenue streams. And crypto is the greatest opportunity since sliced bread.
Here’s what will happen: Banks are going to launch crypto trading platforms and entice (lure) you in with welcome bonuses. $200, $300, $1,000 or whatever makes sense based on how much fiat or crypto you deposit and maintain. And you’ll do it because hey- free money! But here’s what will be going on in the background, behind the curtain, behind the “Employees Only” door. They will take your new “deposits” and leverage them to make even more money for themselves. Or even worse- use your trading data to target other offers your way. For example, if you have your credit pulled by a lender for a mortgage application, do you think it is any coincidence that your bank calls you or emails you that same week? Banks aren’t just in the finance game anymore. Like everybody else they are in the data business and I don’t plan on giving them anymore than I have to. This is why I use multiple centralized exchanges and decentralized exchanges and wallets, and have accounts at different banks. But that’s another story.
It is also important to understand that banks are regulated at a level that mere mortals could never understand. Banks are obligated to protect and uphold the sanctity of Anti Money Laundering (AML) laws as well as the Bank Secrecy Act. Combined, these laws are designed to detect and prevent criminal activity through bank accounts. Essentially- if the bank thinks you’re up to something, they’re obligated to report it to Johnny Law. And what do Johnny Law and DC think of crypto at the moment- that it is used almost exclusively for illicit activity.
So what’s my point? Banks want to get into crypto to make money. Johnny Law and the silver fox club of DC are going to let them because this will help get a handle on monitoring crypto transactions within the US. Wait and see. This situation will continue to evolve and more and more of the motivation will become clear. I’m willing to bet you $599 on it. No more though- wouldn’t want to be obligated to report it.