These days cryptocurrencies are not just a reserve for hodlers but also businesses, financial markets, and governments. They are decentralized, secure, private, and complete transactions faster compared to traditional money.
Maturing regulation and general acceptance of these digital assets, especially after the pandemic, made many realize why they are better than cash means several businesses, governments, and financial markets are opening up to the idea of cryptocurrencies.
Several governments are developing and planning to issue their own digital currencies, which will reduce the period spent when making transfers but increase their control over money. What is becoming clear with time is that cryptocurrencies are here
Cryptocurrencies in Business
Many in business, including individual investors, are less worried about the risks brought about by cryptocurrencies. Most investors only look for the risk to reward ratio, and most cryptocurrencies have shown the potential to gain more, thus increasing their returns. Cryptocurrencies such as Bitcoin, Ethereum, Ripple, and others have attracted millions of investors on platforms like PrimeXBT where they can profit from rising and falling prices. This has prompted more to invest in Litecoin and other digital currencies because they are hopeful about the future.
Overall, businesses are relatively optimistic about cryptocurrencies since it helps them diversify their payment options even though there are concerns due to slow processing times and usability. However, there are platforms that are working on helping merchants accept and convert cryptocurrencies to fiat easily.
Bank and Government Views About Cryptocurrencies
Banks and governments share divided opinions regarding the perceived risk of cryptocurrency. Some of the concerns lie in the anonymity of cryptocurrencies, which makes them easy to use even by people with not so good intentions.
However, it’s an issue that crypto businesses have tried to address over the past few years by following AML and KYC regulations introduced by financial regulators to ensure they are aware of who is using these digital assets. Some regulators like the SEC recognize the need to control this new technology that has plenty of potential benefits to the people in a manner they don’t stifle innovation. With the right regulations in place, governments seem to be ok with cryptocurrencies, and even many are working on their own projects.
As for banks, cryptocurrencies pose a risk to their business, but it will take many years before they can render these institutions obsolete. Some believe that this isn’t even possible, and ideally, the two can work in unison for the better services of the people. A project like Ripple realizes this and works towards helping these institutions deliver their services to the masses faster and even cheaply.
Cryptocurrencies in Financial Markets
Cryptocurrencies continue to pose a significant risk to financial institutions such as banks. These digital currencies are independent of central banks, and they have managed to infiltrate the conventional financial systems.
Currently, many people around the world do not have access to banking services. Such individuals are financially disadvantaged in most cases, and they tend to find alternative lending practices that are risky. Cryptocurrencies are playing a vital role in this case, as more applications and platforms bring this technology closer to the people.
Cryptocurrency in Governments
Recently, the European Union announced a significant step to regulate digital currencies within the region. This is expected to break the deadlock and lay the groundwork for the massive adoption of digital currencies by businesses and individual investors. The EU also looks to regulate ‘stablecoins’ such as Libra.
Trading platforms will be subject to capital requirements, and the EBA will supervise stablecoins.
These moves are meant to regulate cryptocurrencies and the industry. According to the survey, its clear governments are worried about potential risks brought about by cryptocurrencies. They fear that criminals may take advantage to launder funds, fund terrorist activities, and make illicit purchases using these digital assets.
But, it seems governments still see there is a place for cryptocurrencies as we move forward. This is why they have introduced regulations, checks, and balances to ensure that cryptocurrencies are not used for illegal activities.
Businesses, financial markets, and governments have different views regarding cryptocurrencies. Businesses see this as an opportunity to make more profits, while financial markets see cryptocurrencies as a threat to their business models and profit margins. And governments fear bad actors could use these assets. With better regulation, we are witnessing governments opening up to cryptocurrencies due to their many apparent benefits. Financial institutions are also open to the innovation and efficiency brought about by the technology behind these assets. It is clear that cryptocurrencies are here to stay, and regulations are being developed each day to ensure people enjoy them with minimal risks.