What Now for Crypto Banking?

But although payment and custody services are important banking functions, they are peripheral to the business model of a traditional bank. The business model of a traditional bank is to borrow at a low interest rate, lend at a higher interest rate and pocket the difference. Traditional banks are important liquidity creators and distributors, not only in financial markets but in the wider economy. As the U.S. discovered after the failure of Lehman Brothers in 2008, when banks stop lending the economy grinds to a halt. Crypto originally eschewed lending, but quickly discovered that without it the ecosystem was about as liquid as the surface of Mars. When there is much HODLing and little lending, liquidity is gold.

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• Source: https://www.coindesk.com/consensus-magazine/2023/03/02/what-now-for-crypto-banking/?utm_medium=referral&utm_source=rss&utm_campaign=headlines