I don’t understand how or why any digital currency is converted to bank currency. I thought the entire point of crypto was to operate autonomously from the global banking system. Why are banks paying out so much to crypto valuation?
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Crypto only has value because people believe it does. It only has value when people are willing to exchange it for real-world goods and services. ANY money only has value when people are willing to exchange it for goods and services. Why is BTC worth $22.8k CDN? because some idiot is willing to part with 22 thousand bucks worth of goods and services in exchange for one. As soon as people find they can’t exchange these cryptos for anything of worth, their value will plummet (more than it already has).
Crypto was supposed to be cool and fluid and autonomous of the global banking system. But as the FTX/Alamada collapse has shown, perhaps a complete lack of regulation isn’t the cool beans that crypto bros would have you believe.
Im not super plugged into the crypto space anymore, but I highly doubt that any real world legitimate bank has any significant crypto holdings – or if they do, its purely in a speculative fashion – i.e. its a bet, just like derivatives trading – could blow up big and make lots of money, or it could go poof and its all lost. Like, if you bought 1000 BTC back when it was only $100 USD and you didn’t cash out when it was like, $48k USD two years ago at its peak, you might as well just hold onto it to see if it will recover at all. But I doubt we’ll ever see BTC ever get back to $48k USD again. Not until you can rock into a Safeway and buy your groceries with BTC or ETH. Crypto still needs to reach market availability saturation. Yeah, some 7-11s have BTC ATMs but it needs to be universally ubiquitous.
If a real brick and mortar bank offers any crypto services like a wallet to fiat currency exchange, its purely as a product/feature differentiator to lure and keep customers. Easy to sign up the young cryptobros to buy a car loan or a house mortgage when you already host their BTC wallet.
I think perhaps maybe you’re reading on all these other exchanges trying to inject money into Alamada/FTX to prevent its collapse? Those aren’t real banks, those simply crypto exchanges. They don’t hold any real assets, all of their own wealth (i.e. the transaction costs) is itself held in crypto and if the value of crypto tanks tomorrow, they’re basically kaput. Whenever they want to pay the hosting bills or their employees they have to either convince those people to take crypto as payment (which if I were Amazon Web Services I’d be like “absolutely not – we can’t use Doge or ETH to pay our electricity and computer providers”) or convert crypto to real USD or CDN or whatever.
But there will come a time, and that right sooneth I think, where any exchange that handles USD/$real$ to crypto transactions will simply run out of $real$ cash holdings to exchange crypto FOR as everyone seeks to find an exit from the crypto space.
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