A new report from the British Banking Association reveals that the increasing popularity of digital currencies, especially bitcoin will continue to threaten the traditional banking system.
UK Banking Report considers Bitcoin as a Threat
The latest UK Banking Report – A section of The Digital Disruption, is dedicated to digital currencies, specifically about its implications on the perception of value transfer and the impact on the traditional banking system.
The section on cryptocurrencies reports that digital currency is increasingly becoming a ubiquitous challenge to the established currencies, and its popularity could be presenting a real menace to banks. The Report goes on to engage in issues faced by bitcoin: its volatility and its use for illegal payments activity along with its fragile and low market cap.
Bitcoin users can perform their financial activity without having to rely on banks. This is having serious implications to bank institutions. The value stored in online payment processors accounts moves outside of the bank’s payment systems. This is depriving banks of taking profit. The report states that. Even though the British Banking Association highlights the negative downside of digital currencies, it also believes that Banks need to dedicate some time and effort to try and understand how this technology works and how Bitcoin can be of some benefit for the Banking system.
The Report concludes that:
“Banks must accept that they are increasingly part of the broader ecosystems that customers are constructing around themselves. However, their place in these ecosystems is far from secure.”
The British Bank Associationrealizesfinds that this issue is too important and finds that banks need to take immediate action. Aside this Report other news have revealed that Britain will be regulating digital currencies.