German banks are the first to take action and try to really adapt their «know how» to cryptocurrencies industry. They do not do it with enthusiasm, but with resignation since they know that this new trend will make you a leader or get you out of the business.
But why did the Germans started and not the Chinese or the Americans? Why was this your first measure? This and more we will see next:
A new bill in Germany could enable banks to support the sale and custody of Bitcoin (BTC) and other cryptocurrencies by 2020. German news agency Handelsblatt reported on Nov. 27 that the bill now requires Consensus from the countrys 16 states, having successfully passed through the Bundestag, the German federal parliament.
At present, German banks and financial institutions are prohibited from facilitating the sale of cryptocurrencies for clients. If passed, the proposed bill will transform the status quo.
News of the bill has been met with enthusiasm from the domestic industry, with Sven Hildebrandt- Head of Distributed Ledger Consulting- cited as saying that:
Notably, the Association of German Banks -a major lobbying group representing Over 200 financial institutions- is reported to be supporting the bill, arguing that supervised financial institutions have the experience and risk mechanisms in place to safeguard client assets. (Source: Cointelegraph)
As you can see, German banks have decided to start working with cryptocurrencies to take the bull by the antlers.
They know very well that the role of the banking industry has changed with the arrival of cryptocurrencies and blockchain technology, where they need to add them to their investment portfolio and strengthen their financial services to:
1) Renew their decayed image, giving themselves the opportunity to adapt to the market.
2) Not making the industry plummet, which would have an incalculable negative effect on the world economy.
3) Mantein the economic / political status quo. There is a lot of money, and therefore interests strategically placed in various industries.
There are some things that German are doing right now that are getting people really mad, which will make them have a very sweet rematch using cryptocurrencies, let’s take a look at some:
Did you know that 58% of German Banks Charge Negative Interest Rates?
Yes, believe it or not, a growing number of German banks are passing on the burden of negative interest rates to their customers as the European Central Bank (ECB) continues to maintain a negative interest rate policy (NIRP). The current ECB deposit rate is -0.5%, the lowest on record.
Deutsche Bank in a huge trouble.
Deutsche is fined $2.5bn (£1.7bn) by US and UK regulators for rigging the key Libor interest rate. The bank was also ordered to fire seven employees and accused of being obstructive towards regulators in their investigations into the global manipulation of the benchmark rate. The fine is a record for Libor transgressions.
The bank is fined a further $258m in the US for doing business with US-sanctioned countries like Iran and Syria.
As regulators continue to sift through the wreckage of the banking crash, Deutsche takes a large slice of the blame. In September 2016, its shares slump on news that the institution faces a $14bn charge over mis-selling mortgage securities in the US. It eventually reaches a $7.2bn settlement with the US Department of Justice.
In 2017 UK and US regulators fine Deutsche more than $630m after finding that the lender failed to prevent $10bn of Russian money laundering via “mirror trades”, which had no economic purpose and served only to transfer money covertly.
Last year New York financial regulators hand down a fresh fine, $205m this time, for “lax oversight” in the bank’s foreign exchange business between 2007 and 2013, when it was the world’s largest dealer in foreign currency.
The US Congress issues subpoenas to Deutsche for documents related to the bank’s dealings with Donald Trump. The New York Times reports that senior Deutsche executives blocked employees from alerting the federal government about suspicious activity alerts linked to Trump and Jared Kusher in 2016 and 2017. (Source: theguardian.com)
Commerzbank is also in big trouble.
The financial woes for Germany’s third-largest bank, Commerzbank, continued on Tuesday with news that it is planning to shed up to 3,000 jobs in the next two years.
A rise in bad loans and a writedown in the value of its equity investments mean that 300 jobs in the investment banking sector alone will be cut, bank chairman Klaus-Peter Müller confirmed at a Frankfurt press conference. There’s even talk of closing down entire offices in New York, Singapore and Tokyo.
Reporting a pre-tax third-quarter loss of 133 million euros, Commerzbank joined two other major German players, Deutsche Bank and HypoVereinsbank, who both posted substantial losses in the third quarter.
In an interview with DW-WORLD, Commerzbank chief economist Peter Pietsch painted a bleak short and mid-term picture: «The situation is the worst the banking sector’s been in in the last 50 years, and there’s nothing on the horizon to make me confident of a recovery anytime soon,» he said. (Source: dw.com).
Considering all these problems that have been the result of obscure and doubtful business efforts, the Germans this time will not remain with their hands crossed. Times have changed and now banks do have competition.
For decades, the banking industry has been one of the most profitable of all because they are simply were the only safe way we all had to manage our money, and therefore they have abused of customers with their monopoly and totalitarian status by putting different ridiculous concepts of commissions that have been harassing us without any mercy.
But everything has its end, which began when Satoshi Nakamoto brought to light bitcoin. The rest is history.
Now let’s see if german citizens are willing to use crypto:
More than a Quarter of Young Germans are Interested in Crypto Investing.
The findings of the survey probably don’t surprise anyone: younger people were more receptive to the idea of Bitcoin and other cryptocurrencies, with 28% of people aged 18 to 29 saying that purchasing them is “conceivable.”
It surely is not surprising that a demographic whose lives have been characterized by the internet, smartphones and social media, see the attractive functionality crypto provides as an instant and decentralized means of transferring value.
But curiosity does not stop with the simple interest from the young Germans towards crypto. For example, Berlin, the capital of Germany, is a tech hub that’s home to 170 startups that is researching blockchain technology.
Germans know well what benefits the latest FinTech innovations can bring. The country always had a leading role in EU in most of the industries and technologies are no exception.
Here are two reasons:
1) National Strategy on Blockchain and Crypto
Europe’s largest economy joined the hype over cryptocurrencies a while ago as it deployed blockchain in many industries. Currently, the government is launching a process that will make up a comprehensive blockchain strategy in the near future.
Germany is looking for help and asks their own innovative youth for it. Many companies, among them FinTech startups, have been invited to offer recommendations for consolidating blockchain to reinforce the German economy.
2) No Taxing on Bitcoin.
The German Ministry of Finance announced that it has no plans to tax its users.
The German government will regard bitcoin as the equivalent to legal tender for tax purposes when used as a means of payment, according to an official document.
This ruling created a precedent for other EU countries on how to tax cryptocurrencies while providing exemptions for some types of transactions.
Seeing these trends of German citizens, if the banks did not adapt to their new needs, I was going to see a giant problem in the global financial system.
Germany is the economic and political leader of the European Union and they feel the need to lead these changes so that the negative effect in the region is as small as possible.
Having seen the trends in the use of their citizens’ money, they see that reality very close and want to anticipate not to fail.
Picture source: Cointelegraph
Source: Crypto New Media