Kraken becomes a US Bank: WILL IT BRING an awaited MASS ADOPTION to the crypto industry?

crypto.piotr (70) in hive-175254 • 4 years ago

INTRODUCTION

Within the past several weeks, I've been extremely busy managing our PH community and I didn't really have much time to publish my own content. However, today I would like to share some news with all of you, which may be a turning point when it comes to achieving mass adoption within the crypto industry. News, which seem to be huge and could potentially bring enormous (and positive) consequences in the future. At the same time, it's one of those news, which not many people seem to talk about:

Kraken is the first cryptocurrency firm in the U.S. to become a bank.

Please allow me to quote Coindesk:

On Wednesday, the Wyoming Banking Board voted to approve the San Francisco-based crypto exchange’s application for a special purpose depository institution (SPDI) charter. Kraken is now the first SPDI bank in Wyoming. According to the Wyoming Division of Banking’s general counsel, Chris Land, Kraken will also be the first newly chartered (de novo) bank in the state since 2006.

“By becoming a bank we get direct access to federal payments infrastructure, and we can more seamlessly integrate banking and funding options for customers,” said David Kinitsky, a managing director at Kraken and the CEO of the newly formed Kraken Financial. (Kinitsky has run Grayscale Investments, was the first digital assets hire at Fidelity and was most recently head of business development at payments startup Circle.)

Mark Moss further explains:

There are a number of professional youtube channels out there which focus on financial education, and one of my favourites is managed by Mark Moss (since I discovered it - I didn't miss one video and I absolutely recommend checking this guy out)

In his recently published video, (link below) Mark shares his thoughts on that particular topic and he also seems to share his excitement about the future of Bitcoin as a store of value. I would like to recommend to each one of you, to invest several minutes of your time to go through that particular video:
The First Massive Change To Banking in 100 Years | What You Must Do Now

HOW IMPORTANT IS THIS ANNOUNCEMENT?

I've watched several youtube channels run by reputable "influencers" and they all seem to agree that the consequences behind this announcement will be enormous.

Please correct me if I'm wrong: Based on my understanding, it will be possible to have your bank account and crypto wallets in one place. So I could have my funds in FIAT currency and also BTC (or other crypto) on one account - in the same bank. Did I understand it well?

I spoke about it with my partner and she asked me a good question: why is it such a big deal? What would that change?

I replied asking her: let's assume that you would like to invest some of your savings into bitcoin. How would you do that, without technical skills and knowledge? Would you spend hours learning about ways of buying bitcoin, creating a wallet and storying it somewhere? Or would you end up frustrated and give up halfway?

What if one day we could have our account in the bank, and on this account we could store our FIAT as well as BTC (and other crypto)? What if changing your FIAT to crypto (and other way around) would be as simple as transferring money from one sub-account to another (within the same bank)?

Mass adoption requires SIMPLICITY and convenience.

SHARE YOUR VIEW

More than anything, I would like to learn from you (dear readers) what you think of this announcement. Did I interpret it well?

Would you consider this news to be a positive one? Or negative?

Is it more of an opportunity for the crypto industry, or a threat of falling under more regulations?

Share your thoughts with me. I read and reply to all valuable comments.

RESTEEM if you can

I would naturally appreciate every RESTEEM, as it would allow me to reach out to a wider audience.

Yours, Piotr

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4 years ago by crypto.piotr (70)

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fijimermaid (70) · 4 years ago (edited)

"Based on my understanding, it will be possible to have your bank account and crypto wallets in one place."

According to Kraken, they will offer these services in the first year of operations:

Digital asset custody
Demand/deposit accounts (DDAs)
Wire transfer and funding services.

Another exciting part to all of this is the insurance side. The US FDIC insures depositor’s money up to $250,000. However, BTC is a little different because it significantly fluctuates in value, unlike the dollar. So a more sustainable way to insure BTC custody, is to buy BTC, and hold BTC on their books, essentially matching bitcoin for bitcoin.

Lloyd's of London announced a new product this year:

“It is a new type of liability insurance policy with a dynamic limit that increases or decreases in line with the price changes of crypto assets. This means that the insured will always be indemnified for the underlying value of their managed asset even if this fluctuates over the policy period.”

Now they do not say whether they hold BTC on their balance sheet, but global insurers are in the business of protecting from risk and exposure, and to have an insurance policy with a dynamic limit, needs to have an asset that dynamically mirrors bitcoin, hence bitcoin. And that is a lot of buying pressure on BTC. The same could be said for insuring any other digital asset. Stablecoins could also play a role.

Nothing exists in a vacuum, and I know that I'm leaving out a great deal of possibilities. But there is a notable feedback loop effect to insuring crypto. For every BTC held in custody, there will be a BTC bought and held on institution's balance sheets. And with any asset, the more demand, the higher the price, everything else being equal.

Fantastic post @crypto.piotr!