FinTech and cryptocurrency expert Jason Simon discusses why big banks are embracing cryptocurrency

For years, most large financial institutions and banks kept cryptocurrencies at arm’s length. Several introduced strict policies that prevented their employees from interacting with the cryptocurrency ecosystem, even away from work. However, the sentiment has changed rapidly over the past 12 months and more financial institutions are getting involved. Jason Simon, a FinTech and cryptocurrency expert, is fascinated by the changes and explains what they mean to the overall perception of digital currency.

Citibank was one of the first to make a trepid entrance into the world of cryptocurrency. It believes that Bitcoin is at a turning point and that one day it could become the currency of choice for international trade as companies such as Tesla and PayPal approach digital currencies and central banks around the world explore the possibility of issuing their own digital currencies.

However, Citi also recognizes that there are a number of risks and obstacles that stand in the way of Bitcoin’s progress and asserts that the future of digital currency is still uncertain. This is likely to change, though, and Simon asserts, “Short-term developments are likely to prove to be decisive factors as the currency balances on the turning point of widespread acceptance. The once-held belief that an implosion was imminent is rapidly being erased, which is leading to more financial institutions becoming involved.”

There are several obstacles Bitcoin would have to overcome before seeing widespread adoption, according to Citi. It is already known to investors that the sector has some volatility, but not as much now as seen previously . “BTC has experienced this volatility several times over the years. However, it continues to rise more than 60% in the year and 460% in the last 12 months,” points out Simon.

The entry of institutional investors has awakened confidence in cryptocurrencies, but there are still persistent problems that could limit widespread adoption. For these investors, the problems include concerns about capital efficiency, insurance and custody, security and other considerations from Bitcoin mining. There are security issues with cryptocurrencies, but compared to traditional payments, it works best.

The skyrocketing rise of Bitcoin (BTC) in recent months has forced Wall Street entities to re-evaluate their cryptocurrency strategies. For example, BNY Mellon, the oldest bank in the US, said recently that it would offer custody services for BTC and other digital currencies. Goldman Sachs, another banking giant that has long supported cryptocurrency, recently started trading Bitcoin futures. This new strategy is part of the company’s activities within the fast-growing digital asset sector, which also includes projects involving blockchain technology and digital currencies from the US central bank. As part of this, the company is also exploring the potential of a fund traded on a BTC exchange and has issued a request for information to explore the custody of digital assets.

At the heart of the concerns over digital currency is the lack of regulatory guidance US financial regulators have been willing to implement. Attempts have been made to provide some type of structure on various levels, but there have not been widespread regulations that would make big business and Wall Street investors comfortable enough to explore major adoption. Adds Simon, “This negativity is waning now as the US watches other countries develop cryptocurrency regulations. It has fallen behind in blockchain innovation and now has to try to catch up, and government leaders and regulators are now actively pursuing expanded legislation to support digital currency as a legitimate currency.”

There is still more work to be done before cryptocurrency is able to realize its full potential. However, the progress that has been made over the past 12 months has been significant. Cryptocurrency continues to mature at a rapid rate and, within only a few short years, will receive the recognition it deserves as a true form of currency.