Despite the challenges in the crypto market, crypto remains relevant for banks. Banks need to understand digital assets and the underlying blockchain technology to advise their clients, comply with KYC/AML obligations, and evaluate their own strategic options.
The crypto market has been challenged anew in 2022. Firstly, the most valuable cryptocurrencies Bitcoin (BTC) and Ether (ETH) dropped heavily in value. These declining prices notably lowered the price of Bitcoin below USD 20,000 several times. Secondly, the algorithmic stablecoin TerraUSD (UST) collapsed and lost its peg to the US Dollar in early May 2022.
Due to these “extreme market conditions”, the centralised lending platform Celsius Network justified a halt in withdrawals, swaps, and transfers between accounts, and Three Arrows Capital (also known as 3AC) , a major crypto hedge fund, filed for bankruptcy.
However, the opportunities of the technology behind cryptocurrencies go far beyond peer-to-peer payments. According to CoinMarketCap , the total cryptocurrency market is still worth more than USD 1 trillion as of August 2022.
There are still new investors entering the market, seeking the opportunity to diversify their portfolios or protect their wealth from the impact of inflation . They do so via new pure play entrants, such as for instance Coinbase. Some even avoid financial service institutions and manage their custody on their own by means of a wallet.
However, crypto remains relevant for banks, and the high margins for crypto transactions and asset management allow them to do it in an even more profitable way. But this means that banks must be able to perform know your customer (KYC) and anti-money laundering (AML) on their crypto-exposed clients.
Therefore, banks need to understand not only their clients, but also cryptocurrencies and the underlying blockchain technology itself to holistically advise their clients, comply with KYC/AML obligations, and evaluate the strategic options that the technology and market offer to the bank.
We are convinced that to understand how Bitcoin and other cryptocurrencies work, one needs to understand the underlying technology – the blockchain – to some degree first. With this as a foundation, more and more terms and current market trends can be conquered, evaluated, and encountered, such as NFTs (non-fungible tokens), tokenisation, or DeFi (Decentralised Finance) use cases (e.g., staking, lending, etc.)
To capitalise on those disrupting applications, we at Synpulse offer tailormade blockchain and digital assets training. Mining or creating your own tokens in these training sessions provides hands-on learning and expertise building.
With our expertise in implementing digital asset solutions for banks, conducting market research, and providing analysis and design for digital asset setups, we have built modular training on blockchain and digital assets. This training has allowed our clients to keep up with the changes and developments in blockchain technology and its market for many years. It also provides the foundation to further expand digital asset offerings in a bank and be aware of the risks and challenges that they bring.
Interested in educating your employees on this topic, too? Reach out to us.
 CMC Research, According to CMC: Crypto Market Analysis August 2022 (CoinMarketCap, 2022).