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Are banks missing out on Bitcoin?

This week I attended the annual ACAMS conference in Kuala Lumpur. It was interesting to notice my colleagues’ reaction, when I told them I had moved to the uncharted frontier of finance called Bitcoin. Personally almost everyone was positively intrigued. From a professional point of view, there was a lot less understanding. It is easier to open a bank account for an adult film company than for a Bitcoin exchange.

It feels a lot like the early internet days. Most banks were convinced that there was no money to be made online and that the web would soon be history. Customers would realize how much safer and convenient brick and mortar branch offices were and everything would remain the same. I guess the talks in the Motorola board room about those new fangled smart phones were similar.

Of course ever since the financial crisis, banks have been skittish about anything unfamiliar. The bad press about faltering exchanges, volatile rates and the knee jerk reactions of regulators has done little to endear virtual currencies to the banking industry. A lot of the fear seems to be fear of the unknown. So it’s up to the Bitcoin industry to provide answers as long as banks are willing to listen.

There is a lot more that Bitcoin start-ups can do to gain trust. Transparency, regulation and accountability are key. Proper policies and procedures and prudent risk management as well as an open dialogue on how to improve will be key. Bitcoin is a disruptive technology that banks can’t afford to miss out on. It offers new ways of payment and transactions at an unprecedented low cost. It is safe to say that virtual currency is here to stay, in whatever form or shape. However, banks are key connectors to the financial infrastructure of the real world. Rejecting accounts just because you don’t understand what you’re dealing with is not just bad for business, it is bad business. Without connections to reputable international banks, only the dodgy companies dealing with dodgy banks will remain. This will not only hurt the Bitcoin community but the financial industry at large. In the end the average law abiding customer that will suffer and that hand feeds us all, doesn’t it?

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