Last updated on August 15th, 2016 at 06:45 pm
Jaron Lukasiewicz, the CEO and founder of the New York-based Bitcoin trading platform Coinsetter, recently wrote a message to the banks talking about cryptocurrency. The text was published by Bitcoin Magazine and creates a scenario that shows why banks will soon love virtual coins.
Let’s begin with a short thought experiment. Put yourself into a world in which banks charge $20 to $50 to manage an international wire transfer, but hardly make a profit on it. Conceptualize a world in which banks delay domestic ACH transfers up to three days, in a large part to reduce fraud risk. Imagine a world in which taking on just one new customer necessitates the hiring of another employee. If you’re a commercial bank, these problems are likely all too real and familiar to you. Your costs are continuously rising, but your clearing and compliance infrastructure hasn’t changed.
However, according to Jaron Lukasiewicz, Bitcoin could solve these problems, lowering the network and compliance costs by 90 percent. “And I guarantee you will be using it within ten years or less”, he adds.
“You’re probably wondering how this could be possible when Bitcoin is a non-dollar currency with a payment flow that you can’t trace. This widely publicized description doesn’t understand Bitcoin’s underlying potential, and the controversial headlines surrounding our industry don’t give light to the services that will make Bitcoin usable by institutions”, the entrepreneur writes. Coinsetter’s CEO explains that a lot of people wrongly consider Bitcoin as an anonymous currency, when in reality it’s a “traceable payment network”.
Although the infrastructure around it isn’t fully developed yet, there’s “an army of companies working to make Bitcoin the most suitable payment network in the world”. To start the process, “the leading companies in the space are placing huge importance on establishing credible AML programs that are in line with those of other financial services companies you currently bank”, Lukasiewicz says.
Bitcoin is a globalized clearing network that works exceptionally well. Right now, this network almost exclusively clears transactions for payments in bitcoins. However, companies are emerging that will enable people to send dollar-denominated payments to their friends and businesses via the Bitcoin network. You may look at this industry as low-cost competition, but you’d be wrong. You will soon be the primary beneficiary of Bitcoin, preferring it to the networks you currently use. What you don’t yet know is that in this process, we will help you save billions by lowering your AML compliance costs.
Despite the general belief, “Bitcoin isn’t being used for any sizeable criminal activities. Criminals realize that all transactions are public, left to be discovered at a later date. Alongside a robust AML program, Bitcoin is already far safer to accept than the cash you currently accept deposits of”.
But in a near future there will be technologies that will make “AML compliance for Bitcoin transfers more cost-effective and accurate than compliance methods associated with other networks”. Next, Jaron Lukasiewicz talks about the problems that banks are having with cryptocurrency platforms: “the Bitcoin exchanges that you are afraid to bank will become a key part of a system that enable you to automate 90% of your AML compliance work. You will love your Bitcoin exchange, and you will probably acquire one someday too”.
The founder of Coinsetter appeals to the idea of two industries moving forward together to attract banks into the Bitcoin world. “If you’re approached by a Bitcoin company with a solid AML program and a good reputation, meet with its founders. Consider banking it – many companies in the space have surprisingly low AML risk profiles despite the ‘Bitcoin stigma’ they receive”.
“We also understand that the opinion of regulators impacts your decision-making, and their viewpoints are evolving as they learn about Bitcoin. I haven’t come across any regulators who are opposed to Bitcoin, only ones who don’t yet understand it”, he concludes, adding that “by genuinely understanding our technology, you too can help move the world’s financial infrastructure forward”.