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Banks starting to seriously consider entering crypto

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@santigs
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Today, Commonwealth Bank CEO (CBA), the biggest bank in Australia, commented “We see risks in participating, but we see bigger risks in not participating,” when asked about entering the crypto space. You can read about it here

Every day we feel how crypto mass-market adoption is getting closer and closer and at the same time, traditional banks are starting to struggle to try to keep their business with an old-style revenue model. It is similar to what happened when the first low-cost flying companies disrupted the whole market, some of the big ones took too long to change their business model or create smaller branches to adapt and ended up out of business.

Crypto is not an easy cristal clear matter for many, and although it brings financial freedom for those who directly take care of their assets, many individuals do not feel comfortable doing so. This is where I believe banks will end up jumping in.

Consider for a moment the almost 20% APR Anchor protocol gives you for lending UST, the Terra Blockchain US stablecoin. To get that, right now, a regular Joe jumping into crypto for the first time needs to:

1.- Set up a Terra Blockchain wallet 2.- Purchase Luna from a fiat ramp or one of the CEX exchanges. 3.- Exchange Luna to UST using a Terra DEX or terra station wallet. 4.- Lend your UST to Anchor Protocol. 5.- Every once in a while, claim your yield in ANC and swap it to UST.

Nothing too complicated for someone used to deal with crypto, but do you see a kid or an older grandma/grandpa doing that? Here's where traditional banks and other financial institutions have a business opportunity, taking care of all that, adding insurance, and taking a chunk of that 20% APR.

That is just a simple example. A more sophisticated product would be a tokenized fund where fund managers (the banks or financial institutions) would use the assets to deposit in several DEFI farming products and share part of the income with the fund investors.

To me, this is the only way some of the big financial institutions have to survive, their actual business model can not survive anymore, especially considering the amount of workforce and space investments (offices) they need to deal with, there is no margin for that anymore.

It will be interesting to see how they will have to reinvent their business models and adapt, those who take too long to do so will not survive.

Posted Using LeoFinance Beta