British Banking Association: Bitcoin is a Real Threat to Banks

AccessTimeIconMar 27, 2015 at 1:47 p.m. UTC
Updated Sep 14, 2021 at 2:01 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

As cryptocurrencies grow in popularity, they will continue to threaten revenue streams of the traditional banking system, according to a new report from the British Banking Association (BBA).

A section of The Digital Disruption: UK Banking Report looks specifically at cryptocurrencies and the impact they have already had, and will continue to have, on people's perceptions of monetary transfer.

"Cryptocurrencies increasingly look like becoming ubiquitous challengers to more familiar, established currencies. And, as they grow in popularity, so too will the risks for banks," the report reads.

It goes on to emphasise issues presented and faced by bitcoin, including its volatility, its perception as a haven for illegal payments activity and its relatively low market cap ($3.4bn at press time).

However, the report concedes that the risks presented to the banking system by bitcoin should not be ignored:

"Bitcoin users can handle many of their daily payments needs themselves, without the need for interaction with banks, and avoiding the need to incur bank fees. In the same way, value stored in PayPal accounts moves outside of the bank’s payment systems, depriving banks of valuable payments revenue."

The BBA believes it is important for banks to take action now, investing time and energy in understanding how best to use the technology behind bitcoin.

"Banks must accept that they are increasingly part of the broader ecosystems that customers are constructing around themselves. However, their place in these ecosystems is far from secure," the report concludes.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.