The cryptocurrencies and blockchain have become a “real threat” to the traditional banking as it is currently known. The phrase is repeated ad nauseam in the lies that surround this emerging sector, plagued by new fintech (technology firms in the financial sector), ‘start-ups’ and risky investors. Decentralized finance, the so-called Defi or the possibility of making bank deposits or requesting credits in cryptocurrencies, are one of the most disruptive aspects for the current financial sector and will be the center of much of the debates of the European Blockchain Convention (EBC) held this week in Barcelona.
Victoria Gago, co-founder of this now virtual meeting, describes a string of changes that affected the known world until a couple of years ago and envisions fewer intermediaries than ever at the hand of the mobile phone. The EBC has already achieved 2,500 registrations, cryptocurrencies have settled in the collective imagination and many face investment risks in the hope of double-digit revaluations in a short time. A total of 130 speakers will discuss the top hot topics around Blockchain technology.
Faced with this, Spanish banks remain relatively on the sidelines. Spanish financial institutions are waiting for a European regulation to clarify the legal framework around cryptocurrencies, but they have been working for years on their roadmaps to adapt quickly to customer demand. Banks are seriously studying the implementation of cryptocurrency trading services as a more highly profitable financial instrument, but aimed only at clients open to higher risk investments.
“The Blockchain sector is currently in an incredible boom,” says Gago, who gives as an example the commitment of investment firms: “In the first nine months of 2021, venture capital investment in Blockchain and crypto reached 15,000 million of dollars, 384% more than the total of 3,100 million dollars of the whole year 2020 “, explains Gago. Remember how large companies have included investment in cryptocurrencies in their balance sheet as one more way to reinforce their financial policy. One of the emblematic cases is that of Tesla.
But in the context of this euphoria for cryptocurrencies, especially among the youngest and those eager for high returns, the price of bitcoin has faltered. The most important cryptocurrency, a third of the world capitalization with about 800,000 million dollars, has devalued around 38% since the beginning of November and slightly more since the all-time high of 60,748.18 euros. Experts attribute this collapse to the limitations on mining (creation of cryptocurrencies through a computerized process) imposed in China, which controlled 70% of the generation of cryptocurrencies in the world.
Despite the ups and downs in prices, cryptocurrencies are here to stay and current financial instruments will quickly adapt to their complementary use among riskier investors. Banco Santander is one of the most advanced entities in this field. Where appropriate, they make available to customers listed products linked to fluctuations in the price of cryptocurrencies (ETP: Exchange Traded Products). ETPs allow exposure to the price of the main cryptocurrencies, among many other assets. As they are complex and highly volatile products, their contracting requires the client to strictly comply with the conditions required by current regulations. Banco Santander does not issue recommendations on these products, which are only offered at the customer’s request.
The accelerated disintermediation of the financial sector is a fact. The consulting firm McKinsey ensures that fintech and financial service providers specialized in payments, consumer financing or wealth management are concentrating the profitability of the sector. These firms account for 50% of the increase in market capitalization. According to McKinsey, in just 18-24 months “who will be the leading institutions in the next economic cycle” will be defined.
As part of this boom in digital currencies, Visa this week announced the launch of a specific cryptocurrency advisory service. Digital currencies are, according to Visa, “fundamental” both for financial institutions that want to attract or retain customers with crypto solutions and for ‘retailers’ who seek to delve into these new means of payment. ”
Change bank
According to Visa, “consumers are willing to switch banks to one that offers cryptocurrency-related products.” According to their surveys, 40% of cryptocurrency owners say that next year they are likely or very likely to change their main bank for one that offers products related to digital currencies. After surveying 6,000 financial decision makers in companies, Visa determined that the boom in the use of cryptocurrencies has been consolidated and that there is an idea that cryptocurrencies will shape the financial system of the future.
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Support for cryptocurrencies is greater in emerging countries, but in Spain the impact of cryptocurrencies is more relevant than is thought. According to Coinbase, a leading digital currency trading platform, 80% of Spaniards are already familiar with the concept of cryptocurrency. Almost half of the Spanish who admit to being familiar with cryptocurrencies have owned or are owners of digital currencies. Coinbase sources assure that there is a “generalized knowledge” of the cryptocurrency in Europe “that materializes in daily conversations and in plans to increase investment in this asset class.”
Participants at this week’s convention of Blockchain experts include Algorand Foundation CEO Sean Lee; the author of the bestseller ‘The Bitcoin Standard’, Saifedean Ammous; the CEO of Bitstamp, Jean-Baptiste Graftieaux; the Deputy Governor of the Central Bank of Israel, Andrew Abir; the Secretary of State of the German Ministry of Finance, Jörg Kukies; Circle strategy director Dante Disparte; Distrikt co-founder Andra Georgescu; Fireblocks CEO Michael Shaulov; the executive director of Hyperledger, Daniela Barbosa, and the deputy of the European Parliament, Eva Kaili.
Reference-www.elperiodico.com