Crypto banks are platforms that position themselves as crypto currency banks. They enable users to save digital assets and open deposit accounts, as well as issue loans in digital currency and allow users to pay for purchases with crypto currency cards. If you want to become the owner of such a structure and start making profit, then ready crypto banking structures will be the great option for the fastest commercial development and realization of your potential. Below, we are going to talk about internal mechanism of crypto banks and their significance.
Internal organization of crypto banks
Crypto banks are decentralized platforms that carry out a certain list of banking functions. For example, they allow you to save and exchange crypto currencies, open deposit accounts in this currency, support P2P lending, help cash out, and the like. The purpose of the functioning of such banks is to use the service and payment infrastructure actively, which will unite the crypto currency sector with the sphere of finance.
If you look at the formalities, in order to have the status of a bank, this platform needs a certain license to carry out some banking operations, for example, granting loans or making settlements. However, only a few crypto currency banking institutions have these licenses – many operate without them, calling their institution a “bank” more for status than for right. Such platforms mimic banking operations, but have a completely different internal organization. In other words, these are either investment funds or simple crypto currency trading platforms.
Thus, many structures from crypto banking industry are only trying to repeat the functions of exchangers and crypto currency exchanges: they make it possible to make payments in crypto currencies, make transfers and exchange of digital money, and withdraw cash. Their competitive advantage over conventional exchanges lies in the fact that all services are located in one place, the commissions are also quite small (1-2%) and there are also “banking” functions in the form of deposits, P2P lending, crypto currency cards and even sometimes cashback for using a crypto card.
It was considered fashionable to have the status of a crypto banks a few years ago. At that time, in the emerging market, this name evoked confidence among users. However, now only certain platforms can assign such a status to themselves, as this then provokes problems with regulators. For this reason, this is often done exclusively by structures that have received the necessary licenses from local financial regulators.
Are crypto banks necessary for the digital currency industry?
The main goal of crypto currencies is to eliminate intermediaries between participants in transactions. However, the crypto bank is also an intermediary. In order to carry out settlements in crypto currency, you only need a wallet, you can easily exchange coins for money on the exchange, and a smart contract easily helps to make complex calculations. So what is a crypto bank for then?
There are many obstacles on the way to the adoption of crypto currencies by the whole world. For an ordinary person accustomed to traditional money, it is not always easy to switch to decentralized payments. For such people, crypto banks allow the use of crypto currencies as usual fiat funds. However, for more understanding owners of digital money, crypto banks can also come in handy: they help to connect all crypto services under one roof, which makes it possible to pay bills and receive wages in crypto currency. Crypto currency banks help the owners of digital money, for example, stablecoins, to pay with them in reality, and it is profitable to transfer them to fiat and vice versa.
Crypto banks would also be convenient for retailers wishing to accept payments in crypto currency. The crypto currency market requires a good payment infrastructure that provides services such as crypto acquiring and terminal software.
For details: Julia.z@eternitylaw.com / Telegram @juliazhil
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