Topic: New EU law: Banks allowed to hold and sell Bitcoin as of 2020 (Read 369 times)

Thanks for the clarification. I couldn't find reputable sources that confirm that the entire EU would be allowing banks to hold crypto, but that might be because the info has been mistranslated. This is apparently what actually happened:


So the EU as a whole didn't amend the clause, Germany did.

Firstly, I want to clarify that the article information was wrong because Germany was the only EU country planning to authorize their banks to hold and sell cryptocurrency in the year 2020 while the EU governments and new rules is to create their own national cryptocurrency.

The last time I check EU was among the top countries where crypto is consider as legal tender. Although, there are some governments from there which still detest cryptocurrency but that we change once the national crypto is implement.

Those are such good news as market will get more people to invest and buying so price can grow even faster.

Bitcoin and other digital assets must not originate from the same legal entity as other banking transactions

I agree that should be a thing as banks could specify their own prices and maybe boicote the market.
Still it's awesome that more countries will get this law active for their banks as more adoptation

Banks are allowed to hold and sell Bitcoin in 2020?

I hope that in my country banks accept bitcoin, it almost sounds convincing. but I feel something else is happening. because in my country it is said that bicoin is illegal.

I hope our government has a new policy

that almost sounds convincing, but I get the feeling something else is going on. I mean, they do check out the viability of any service before offering it, typical fractional reserve isn't possible, unless the banks intend either to denominate the BTC in fiat (!!!) or to eventually default on their deposit obligations. The chances that defaulting debtors can actually repay BTC is so unlikely in this kind of immature market that I just can't see how it could possibly work, the collateral for the loan would need to be so secure that barely anyone would be either eligible or willing to borrow.

Other derivatives could work, but what's the likelihood they get too greedy and screw it all up?


I second the call for more sources on this story. It seems the only reason they'd really do this is: desperation. I'm sure there are at least a few Bitcoiners who got into it as gambling addicts, looking for a way to boost their money pool (and possibly to pay off some lingering debts). That's also a pretty good description of modern banking as an institution, so maybe this could be true, and that they simply can't stand the sweet smell of hot profits any longer (and have a few little cash-flow issues that need handling at the same time )

Banks can work with bitcoin, but there is a risk they will be tempted to do fractional reserve. If they don't, then naturally custody fees would need to exist. Its probably not going to have much demand, but it might entice some people in Europe that were more skeptical before.

As i have said before, banks have the opportunity to be exchanges, they could even get into lending, but it would be highly unethical if they did following fractional reserve thinking, and it will surely lead to drama later (bubbles and crashes, bankruns, etc).

Since all bitcoins always have to be accounted for, they can't really pull this off as easily as they can with fiat. The blockchain can always tell you in what wallet a coin is, and unlike fiat they just can't make bitcoin out of thin air. With fiat they can work with a fraction, because you don't care what serial your banknotes have, and you don't follow the serials of the banknotes that you deposited.

It would be better if the law somehow blocked the banks from fractional reserve practices, which might be the reason some countries treat bitcoin as asset rather than "money". You are not supposed to have fractional reserve of your gold ingots, for example...

In the end the whole world needs to adopt Austrian school economics, there is simply no other way.

banks have no problem with bitcoin. to banks, bitcoin is just another financial asset to profit from. if people want to pervert bitcoin's purpose and deposit it at banks, they will be happy to lend it out at fractional reserve, collateralize it, securitize it, etc.

it's people who should be avoiding banks. bitcoin provides us a means to do that.

I don't understand. Why would a bank want anything to do with crypto? They make more with fiat. We all know crypto is against banks and viceversa. Crypto is freedom and decentralization and banks are you being controlled and centralized. They are natural enemies so why would a bank hold crypto for any reason? I can understand if the bank secretly holds crypto if they believe in it but don't want that present that message as what they are about. A bank can't make crypto since you hold it in your wallet so why would you need a bank? I am sorry if maybe I missed an answer to this in a comment here but I am not quite understanding this.


That makes sense. But then the bank will most like make its own coin and not use an existing one. One where the transactions can be reversed by them. Hopefully, it is a decentralized bank owned by believers in crypto and not the usual you find in the banking system trying to get people into debt and offering you loans when you can't even afford to buy anything extra beyond the basics.

yep, that's one of my fears with open-ended ETFs and physically settled markets like bakkt as well. if institutions become significantly exposed to BTC, wall street custodians could become the "richest" bitcoin holders in the world. that has some slightly scary implications for contentious forks.

if some dodgy exchange gets hacked (like binance last year), of course the idea of a rollback would be laughable. but how about if fidelity gets hacked for 15% of the entire bitcoin supply 10 years from now? not only will the "too big to fail" mentality of 2008 be applied from a top-down political perspective, but the economic incentives to coordinate with miners on a rollback would be massive!

so much for immutability.

Banks have a choice. They can continue to ignore cryptocurrency and work as before under the protection of the state. This cryptocurrency has no particular choice. It will develop further only if it cooperates with other payment systems, and in this case cryptocurrency can not do without cooperation with banks. Therefore, the appearance of such a law for the states of the European Union will be very useful for cryptocurrency.

If things start to roll, I think they'll mass-produce Bakkt. Get the service fee and make more money.

But the scenario of an average joe buy Bitcoin from a bank and ask them to hold it, while it looks weird, definitely could happen. Lots of people still love the convenience and push the risk to other parties.

Banks don't mostly do things that will benefit the people except it benefits them and from the way the government and some of the financial institutions have reacted towards crypto over the past few months it is a bit surprising to see this sudden change, although it is certainly good news as this will have a positive impact on crypto, from the look of things, 2020 is already looking promising i must say.

That simply means that exchanges will have a tough competition from the banking sector when they start handing out cards  . With the millions of dollars worth of hack we hear every few months it is better than a different financial sector who has some experience dealing with fiat hacks and the positive aspect i see is that they will be having insurance for the amount of money each customer lost rather than the rest of the hacks we saw in the market where the end user suffers the loss, the next five years is really interesting in this market space as we will see major changes.

My own curiosity about bank storing bitcoin is that I think is going to be a cumbersome exercise on how to identify individual wallet. Are the owners of crypto or bitcoin going to transfer to the bank store from being at home or they must go to the bank to ensure proper documents is taken. I don't know if I'm properly understood in my view.

I think it's the only way many will be tempted and reassured. Huge swathes of the population are not prepared to pay enough attention to secure their funds correctly or don't feel confident enough. They want their hand held. It's a long way from ideal but I can get why they feel that way.

why would someone store their coins in a bank?

them offering such services will be good that means they somehow wanna find a way to be relevant still in the crypto age. if there are people going to store the coins in the banks, these are the ones who wanna be fucked by the banks. these banks may appear crypto friendly but they really aren't. exchanges today that end being scam can get away too. banks are more powerful that these exchanges they can get away if they messup as they always do.

I really don't think the banks were actually waiting on this legislation before engaging in cryptocurrency trades. After all, if they were that interest in getting into the market, they would have just use a broker or a custodian to hold onto their crypto assets.

Realistically, banks are more interested in replicating the technology so that it can be applied to government-backed currencies. Why would they want to transfer power to the very same decentralized system that is poised to usurp the banks?

Only an idiot would invest in the technology that is designed to destroy you.

Yes I think governments along with banks will only allow crypto usage if they are regulated. Without regulations they wont accept crypto, its very simple.
In my view crypto system will work in parallel with banks at least in a decade or so.

The custody thing is what most intrigues/alarms me. Banks screw up all the time. If they do get into this area then someone someday is going to make a monumental mistake and I wonder how it's going to be resolved.

It'll be interesting to see how they frame the terms and what customers are actually getting themselves into. Will you be guaranteed crypto redemption no matter what?

Hardware and software wallets provide security when they are used correctly, but not everyone has the necessary knowledge to do it, and people also do mistakes by ignoring the instructions they were given. They buy hardware wallets with tampered security seals, install wallets without verifying signatures, use wallets in insecure environment and fall victim of clipboard malware and so on.

As for third parties that get hacked, I think it's much less likely for banks to get hacked than for cryptocurrency exchanges. And banks won't need to store a lot of coins in hot wallets, so they will be utilizing cold storages. And if they will be insured, there's even less risks for customers when it comes to security.

What people should really be worried when it comes to banks and crypto, is that banks could easily freeze your money if their algorithms or employees see your funds as suspicious.