Real Money is Here to Stay

All this hype about Bitcoin and cryptocurrency schemes that even Donald Trump is hailing to be and quote, “America will be the crypto capital of the world” have surfaced through pure speculation. As Trump has created his own meme coin (token) $Trump and Emperor Trump it’s no wonder speculators around him have welcomed the move, and triggered a gold rush movement that many are following.

As speculative assets, Cryptocurrencies are far from becoming viable economic instruments. The notion that cryptocurrencies could supplant sovereign currencies is unlikely and incompatible with the principles of monetary sovereignty. Governments will not relinquish control over national currencies or economic prerogatives. (PolicyCircle.org)

Advocates suggest blockchain could help emerging economies by reducing corruption, lowering the cost of cross-border payments, and providing financial services to unbanked populations. However, implementation would require significant investment in technology and training. (Investopedia.com)

The point to note is that ordinary people around the world can opt for or against believing in this new miracle formula for success. Of course, those who are 100% in will create followers. Those invested stand a good chance of increasing the market value of their investment. Nowadays, even bank managers who are believers recommend that their clients include perhaps a 2% risk into their portfolio.

Yes, it’s a bit like a cult that are betting their funds into an investment that could pay off. There are no guarantees, but then there are no guarantees in life, sort of thing. The fact of the matter is there is risk. Although the market is getting stronger, more believers have got onto the bandwagon; it’s important to note that when speculation is high then cattle herders gather their herd. However, we’ve seen the volatility for example back in late 2021 when Bitcoin reached 67k, and then the next year dipped to 15k.

Since Trump’s speculative betting pose the banking authorities in the USA have had to lower their guard:

The U.S. banking system's acceptance of cryptocurrency has advanced significantly, with banking regulators (OCC, FDIC, Federal Reserve) withdrawing restrictive past guidance and now permitting federally chartered banks to engage in activities like crypto custody, and some stablecoin and distributed ledger network participation, provided they manage risks effectively. While banks can now more easily offer crypto-related services, such as banking for crypto firms and managing digital assets for customers, they must still navigate evolving regulations and risk management requirements. 

Key Developments in Banking and Crypto Acceptance

Regulatory Easing: Regulators have removed prior requirements for banks to seek pre-approval for crypto activities, allowing for more streamlined engagement with digital assets. 

Crypto Custody and Management: Banks are now permitted to hold digital assets for their customers and provide custody services, which is a major step in incorporating crypto into traditional banking. 

Stablecoin and Ledger Participation: Federally chartered banks can engage in certain stablecoin activities and participate in distributed ledger networks, indicating a broader acceptance of the underlying technology. 

Banking for Crypto Businesses: The revised guidance allows banks to provide banking services to crypto businesses, facilitating the crypto industry's integration with the traditional financial system. 

What This Means for Banks and Customers

Increased Opportunities: Banks have more freedom to offer a range of crypto-related services and support the growing crypto economy. 

Stronger Risk Management: Despite regulatory shifts, banks are still expected to implement robust risk management practices to address market, operational, and consumer protection risks associated with crypto assets. 

Customer Access: Customers can expect their traditional banks to offer more services related to crypto, including ways to interact with digital assets securely. 

Ongoing Areas of Uncertainty 

Balance Sheet Holdings and Lending: Questions remain about whether U.S. banks can directly hold crypto assets on their balance sheets or engage in crypto lending activities, with further regulatory clarity anticipated.

Global Coordination: Banks with international operations must still consider global standards, such as those from the Basel Committee, in addition to U.S. regulations.

Supposedly as a side bet comparable with spread betting or gambling like the lottery people, they will risk their money hoping that their lives will change. Yes, for a few that might be true, but the majority are barking up the wrong tree.

Take care!

Prof. Carl Boniface

Vocabulary builder:

Supplant (v) displace, oust, succeed, replace, unseat, supersede

Herd (n) people, sheep, masses, group, flock, drove, pack

Barking up the wrong tree (idiom) means to mistake one's object, or to pursue the wrong course to obtain it. In other words, "if you are barking up the wrong tree, it means that you have completely misunderstood something or are totally wrong."