Crypto News, The rise of cryptocurrencies has created a slew of new business options for both lenders and investors. While there are some hazards connected with the crypto realm, traders are drawn to it because of the fantastic profits when compared to traditional investing options. After some hesitancy, banks have begun to look into how they may profit from this mania.
Banks in India, like as Kotak Mahindra, have started collaborating with online exchanges to allow cryptocurrency payments. Banks in the United States have begun to explore into using Bitcoin, Ether, and other crypto currency as collateral for cash loans to institutions.
To put it another way, crypto-backed retail loans are just like any other secured loan. Borrowers secure a loan of equivalent value by using their digital assets as security. It works the same way that a car or a home can be used as collateral for car or mortgage loans.
While major banks are unlikely to get directly involved with crypto trading in the near future, there’s no stopping them from tapping the growing crypto investors.
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According to those acquainted with the situation, Goldman Sachs, an American global investment bank, is leading this endeavour, according to a CoinDesk investigation. Silvergate and Signature, like Goldman Sachs, announced Bitcoin-backed cash loans earlier this year. Banks are also figuring out tri-party repo arrangements, which involve a third-party agent and involve selling securities with a commitment to repurchase them.
The move by banks demonstrates that they are growing confidence in this new and volatile sector, as well as a willingness to take risks. More clarification from regulators on how cryptocurrencies may be used to promote the flow of money in the market – for businesses and individuals – and drive economic growth, on the other hand, will give banks confidence and speed up the process of accepting Bitcoin.