So far, cryptocurrency exchanges are the primary (if not the only) way for people to transfer fiat currency to them CryptocurrencyOr vice versa, but with the advent of crypto-banking, this could change. The skills required to own and manage a crypto wallet burden many users with risks and liability, but crypto banks can solve this user experience problem. The biggest problem is that crypto regulations cannot be agreed upon as to which asset class the cryptocurrency belongs to.
The most aggressive was the US Securities and Exchange Commission (SEC), often asserting that most cryptocurrencies, including dollar-backed stablecoins, are in fact securities and need to be registered and sold on regulated stock exchanges. Meanwhile, the CFTC treats cryptocurrencies as commodities until proven otherwise, and has a more lenient approach. The ongoing war of regulatory uncertainty is widening the gap between the DeFi, CeFi and TradFi sectors, and crypto exchanges remain the only way to convert between fiat and cryptocurrencies. So far, established institutions have been reluctant to adopt blockchain and digital assets due to ambiguity.
This is where crypto banks can come in handy. as such Queen Telegraph It states that crypto banks are legally chartered banks that provide digital asset services. While banks (TradFi) are often hostile to cryptocurrencies, ‘crypto banks’ offer cryptocurrency custody, purchase and on-chain withdrawal/deposit services, combining a bank-controlled crypto wallet with a traditional bank account. Since customer accounts are tied to a crypto wallet, crypto banks are likely to offer decentralized finance (DeFi) services to their customers, providing an advantage over TradFi banks, but the regulations remain unclear. The ability to use blockchain assets within a banking application in conjunction with off-chain fiat currencies would bypass the need for a crypto-exchange account, improve the end-user experience and allow users to receive stable payments and currency transfers.
Blockchain is hard, but banking is easy
The biggest obstacle to mass adoption of Web3, aside from privacy issues, is the complex and fraught user experience. Currently, all users must have an account on a crypto exchange, and must know how to navigate the app to buy/sell cryptocurrencies. Withdrawing or moving cryptocurrency “on-chain” in any context is risky, as there is no protection for sending crypto to the wrong address. When creating a crypto wallet, users have to type in a randomly generated 12-24 English-word initial word, without which they cannot retrieve their wallet if anything happens to their devices. Users must also manage blockchain gas charges and timing of gas charges, or risk overpaying for a simple transaction, along with monitoring for signs of fraud, hacking, and phishing attempts. The responsibility is very high for users who want to be their own bank, and the complexity of using blockchain technology increases the risk of errors, making adoption unlikely for most people.
What a lot of people in the cryptocurrency space don’t understand is that most people don’t care about being their own bank enough to get around the learning curve of self-custodianship. Many Web3 decentralized applications (dApps) are useful and interesting, and you are likely to find a suitable Web2 user base if they can be accessed from a bank account, or from an application connected to one. At the moment, the ability to buy, sell, withdraw and deposit cryptocurrencies and stablecoins from one bank account is a huge step forward, and this is what crypto banks are bringing to the table. While it does not improve the experience of self-guarding, it removes cryptocurrency exchanges from the picture, which greatly reduces the complexity of sending money from a bank account to a personal crypto wallet, or vice versa.
Cryptocurrency Bank is a legally legal bank that offers cryptocurrency trading, withdrawals and deposits along with regulated banking services, which can significantly improve the overall user experience while offering the same protection and security as banks. While many TradFi banks are cold or openly hostile to cryptocurrency, crypto banks are founded on them Cryptocurrency And blockchain is carving a new path for the next generation of enterprises, and it will play a major role in the upcoming Web3 revolution.
source: Queen Telegraph