People who hold cryptocurrencies would choose to place their money in banks rather than crypto exchanges, according to a survey by the professional services company, EY.
Eighty percent of the crypto consumers polled reported that they would prefer the bank option, though most holdings are currently with crypto exchanges. They cite a high level of protection and trust with banks, the survey reports. Those who would choose crypto exchanges over banks also said they believed that banks had less access to technology.
Banks, according to the research, are looking to meet the preference, aiming to become more active in the digital assets space, EY partner/principal Aaron Byrne told LendIt Fintech. Traditional institutions, he said, are exploring ways to do that, whether by providing investments and products or other ancillary services.
One way to begin would be to develop custodial services, designating a third party to provide the technology or set it up in-house, said EY Senior Director Jochen Kaempfer, though what a bank chooses to do depends on a variety of factors.
“Some banks are more interested in taking on certain risk profiles, others less so where the board shuts these things down,” Kaempfer told LendIt Fintech. “So yes, you have a variety of all banks think(ing) about the risk, how they want to handle it, and the sorts of risks that they take on themselves.”
About 80 percent of the banks surveyed showed interest in getting involved.
Crypto customers are typically within the 18 to 29 age range and include many people in the lower income demographic, according to EY. A small portion of people account for most of the trading. Fewer people use it for purchases or remittances, and many are comfortable with having outside entities hold their digital wealth.
Meantime, regulators will continue to evaluate the landscape. “The regulatory process is going through…where and how will they cover this, how they think about managing risks, and what are the expectations and what is the necessary governance,” Byrne told LendIt Fintech. “All of those things are going to shape some elements of the crypto environment and space.”