21 January 2017
visit http://www.wolterskluwerfs.com

Bitcoin not a threat to banking system...yet

20 May 2014  |  8437 views  |  0 bitcoin

Bitcoin is still more of a curiosity than a threat to the banking system but in the long term the crypto-currency could have a pronounced impact on payments, according to a group of advisers to the US Federal Reserve.

Bitcoin and its potential threat to the banking system, economic activity and financial stability came up at the most recent quarterly meeting between the Federal Advisory Council (FAC) and the Fed's board of governors, minutes (PDF) show.

When it comes to the banking system, the meeting concluded that bitcoin poses no near-term threat thanks to its tiny share of the global payments market and the challenges it faces - such as security concerns - in driving adoption.

In the longer term, however, the group say that the crypto-currency's low transaction fees, fast settlement and geographic flexibility could see it pose a real threat to traditional players, especially in developing markets.

Payment processors will need to adapt to bitcoin while banks could take advantage by becoming more involved in fund flows, especially as multicurrency accounts proliferate and reputational concerns subside.

The bankers also see potential benefits for merchants, which could ride the wave of a bitcoin boon. The currency should open new markets to sellers while capital flows will be driven from the developed to the developing world, increasing consumption.

As for bitcoin's impact on broader financial stability, the meeting concluded that while there are concerns over volatility and security, these do not pose a wider threat.

On regulation, bitcoin exchanges should be made to ensure that they protect customer funds and strong anti-money laundering rules should be in place. The meeting participants also warned of the dangers of balkanization, urging a consistent regulatory approach across geographic areas.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Circle bids to take bitcoin mainstream

Circle bids to take bitcoin mainstream

16 May 2014  |  7792 views  |  3 comments | 6 tweets | 3 linkedin
SEC issues alert on bitcoin risks

SEC issues alert on bitcoin risks

08 May 2014  |  5757 views  |  0 comments | 10 tweets | 4 linkedin
Brits wary of crypto-currency; Nakomoto outed?; bitcoin goes to pot

Brits wary of crypto-currency; Nakomoto outed?; bitcoin goes to pot

17 April 2014  |  5678 views  |  0 comments | 8 tweets | 2 linkedin
US tax man says bitcoin is property, not currency

US tax man says bitcoin is property, not currency

26 March 2014  |  4422 views  |  0 comments | 4 linkedin
Bitcoin not a currency but has tech potential - Goldman Sachs

Bitcoin not a currency but has tech potential - Goldman Sachs

13 March 2014  |  7880 views  |  7 comments | 10 tweets | 5 linkedin
New York regulator starts accepting bitcoin exchange applications

New York regulator starts accepting bitcoin exchange applications

12 March 2014  |  8545 views  |  0 comments | 6 tweets | 4 linkedin
US state regulators investigate virtual currencies; Mt. Gox chief quits Bitcoin Foundation

US state regulators investigate virtual currencies; Mt. Gox chief quits Bitcoin Foundation

24 February 2014  |  6327 views  |  1 comments | 7 tweets | 6 linkedin
Senate Committee sets date for bitcoin hearing

Senate Committee sets date for bitcoin hearing

11 November 2013  |  7151 views  |  0 comments | 6 tweets | 4 linkedin

Related company news

 

Related blogs

Create a blog about this story (membership required)
Visit capgemini.com http://www.financialcrimerisk.fiserv.com/aml?r=finextra

Who is commenting?

Top topics

Most viewed Most shared
Banks face big profit loss to digitisation - McKinseyBanks face big profit loss to digitisation...
16076 views comments | 92 tweets | 111 linkedin
Seven banks plan blockchain platform for SMEsSeven banks plan blockchain platform for S...
12750 views comments | 48 tweets | 44 linkedin
Accenture beats Brexit blues with largest-ever London startup programmeAccenture beats Brexit blues with largest-...
11000 views comments | 31 tweets | 20 linkedin
US fintech firms join forces to push data sharing via APIsUS fintech firms join forces to push data...
6652 views comments | 39 tweets | 39 linkedin
HSBC forms tech advisory boardHSBC forms tech advisory board
6359 views comments | 21 tweets | 23 linkedin

Featured job

to Six-Figure Base, Bonus, Benefits
London, UK

Find your next job