Cryptocurrency Industry Entices Banks to Accelerate Bitcoin Adoption | Financial markets

From insignificance to a new spring in just one year. Bitcoin’s rise since September, with a cumulative increase of 80% in less than three months, leaves no one indifferent. The technology sector is taking advantage of a tailwind to resume its plans to expand the cryptocurrency user base thanks to the strength of banks. The integration of already existing solutions, crypto companies promise, will allow entities…

From insignificance to a new spring in just one year. Bitcoin’s rise since September, with a cumulative increase of 80% in less than three months, leaves no one indifferent. The technology sector is taking advantage of a tailwind to resume its plans to expand the cryptocurrency user base thanks to the strength of banks. The integration of already existing solutions, crypto companies promise, will allow banking entities to quickly offer solutions for buying and selling digital assets, even before new European regulations come into force.

“We see a strong change in the market,” he says. Five days Anton Langbroek, Vice President of Business at Bitpanda Technology Solutions (BTS). In an unusual way, she launches a clear timetable: “In the first quarter of 2024, we will see the first banks in Spain to offer this service.” This would make it possible to raise the low penetration rate of these assets in the Spanish market, much lower than in Germany and Austria, which is of interest to this technology company.

The context and integration of third-party solutions allows banks to accelerate their plans before the implementation of the latest European regulation on crypto-asset markets (MiCA). Spain has decided to bring forward the implementation date of the regulation, but will still have to wait until December 2025. In any case, it will still have to wait for the technical standards to be developed by the European Securities and Markets Authority (ESMA) and the European Commission. The Banking Authority (EBA), which is still in the consultation stage.

“The goal is to introduce the product to the financial system by making all the necessary infrastructure available without having to set up the entire solution,” explains José Angel Fernández, Innovation Director at Prosegur Cash. Its “white label” solution allows its clients to reduce investment for banks, while solving specific knowledge gaps for banking entities.

Other companies have joined forces with Prosegur and Bitpanda already offering their own integrations. Luxembourg-based Bitstamp, as well as Spanish company Bit2Me, allow financial institutions and startups to integrate their solutions.

The trade attack comes in the context of strong flows into cryptocurrencies. In the past 10 weeks, total inflows into the cryptocurrency market have reached $1.76 billion globally, CoinShares highlighted. This is the highest number recorded since October 2021. One of the strongest arguments for the adoption of cryptocurrencies relates to the flow of funds from the bank to external ecosystems. “If you combine crypto exchange and custody solutions, that money stays within each bank’s ecosystem,” says Langbroek.

Spain is different

The Spanish market is one of the most elusive markets for hundreds of people fintechs and technology companies seeking to bring their cryptocurrency infrastructure to traditional banking services. Although the ghosts of the FTX and Binance crises have faded, local banks are still shy and resisting (for now) entering the space. “The Spanish market is a little different. We notice that many banking entities in the market are already working on digital assets, but they are still more cautious compared to some other countries,” says Langbroek.

In fact, Spanish banks have been experimenting for years to offer cryptocurrency services to their clients, either through their own developments or through third parties. Although entities, in general, have been downplaying their importance by ensuring that these “specific tests” have not come out of the laboratory, the banking sources consulted recognize that it is a business in which they see a market and interest from clients and are already preparing to enter regulations that It allows them to provide services with this type of asset into effect. They also show interest in blockchain technology.

“Banks have been experimenting for some time on how to transact with cryptocurrencies, and MiCA gives us peace of mind,” explains Santiago Fernandez de Liz, head of regulation at BBVA, in an interview with the BBC website. Five days. Although he cautions: “It is very important that users understand the risks and realize that this is not for every investor.”

Currently, Spanish banking is progressing at a steady pace on the financial education front. Local entities have developed various content, from web portals to explainer videos, to introduce the risks and opportunities of investing in cryptocurrencies. “Explanation and education undoubtedly contribute to the adoption of these solutions,” says Langbroek.

Contradictions

Spain’s slow progress contrasts with what is happening in other euro zone markets. Raiffeisenlandesbank, one of Austria’s largest banks, which is more than 125 years old, announced in April that it would offer cryptocurrencies to its customers through Bitpanda. A few weeks ago, the Austrian bank confirmed that it hopes to start offering the service in the first quarter of 2024.

DZ Bank, the second largest German bank by asset volume, also announced that it will launch a digital platform for its users to trade cryptocurrency assets. Italy, Estonia, Lithuania and Switzerland also have banking entities that offer solutions for buying and selling Bitcoin and other similar currencies.

For their part, N26 and Revolut neobanks are already integrating these solutions in several European markets. While N26 offers service in six countries, including Portugal, Revolut offers this option across Europe. In Spain, Revolut began providing this service at the beginning of 2022 and is registered in the Bank of Spain’s registry of cryptocurrency providers. This does not mean that the monetary authority supervises the company’s activity. However, it warns on its website that “cryptocurrencies are volatile and not regulated or protected.”

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