Pub. 12 2021 Issue 4

wvbankers.org 12 West Virginia Banker I n June 2021, El Salvador’s Legislative Assembly voted to become the first country to accept Bitcoin as legal tender, with Cuba following suit in August 2021. While Bitcoin is widely regarded as the premier cryptocurrency, the rise in Bitcoin’s use over the past decade has paved the way for numerous other cryptocurrencies to come to fruition. The rise in the price of Bitcoin has helped legitimize cryptocurrency in the eyes of those who once thought it was nothing more than a financial fad. In May 2021, the Federal Deposit Insurance Corporation (FDIC) issued a press release announcing it is gathering information and soliciting comments from interested parties about the insured depository institution’s current and potential digital asset activities. The FDIC issued a request for information (RFI) to help inform its understanding of the industry’s and consumer’s interest in this area. In the release, FDIC Chairman Jelena McWilliams said, “At the FDIC, we are laying the foundation for the next chapter of banking by ensuring we have a regulatory framework that allows responsible innovation to flourish. Digital assets are one area in which we have seen rapid expansion and innovation in recent years. This RFI allows us to gain additional insight into the market and what role banks might play in the future.” The press release provides evidence that the FDIC is seriously beginning to consider what cryptocurrency’s role will be in the future of banking. Cryptocurrency and the Future of Banking By Patrick McGraw, Baker Tilly According to a December 2020 study survey performed by Cornerstone Advisors, 15% of U.S. consumers own some form of cryptocurrency, and 60% of those cryptocurrency owners said they would use their bank if it offered them the opportunity to invest in cryptocurrencies. Banks have been hesitant thus far to provide cryptocurrency investment services, in part because of its volatility and reputation of being associated with criminal acts. However, this chain of thought would infer that banks do not offer investments with significant volatility and that cash has never been used in criminal activities, which we know is not the case. The hesitancy of banks to offer cryptocurrency investment services has helped pave the way for platforms like Coinbase, whose initial public offering in April 2021 valued them at $85.8 billion, to offer these investment services directly to consumers. In addition to providing cryptocurrency consumers with an investment platform, Coinbase also offers its customers the use of a debit card that automatically converts cryptocurrency to U.S. dollars at the time of purchases and ATM withdrawals. While it is still only the minority of consumers who invest in cryptocurrency, the creation of companies like Coinbase should at least begin making banks wary of future competition. I’ve listed some pros and cons of using cryptocurrency from the perspective of users: Pros: • Twenty-four-hour instant access – cryptocurrency can be accessed 24 hours a day and managed on mobile devices, allowing for instant international transfers without the