In a response that is against the policies of industry, one of the oldest banks in the United States has lately decided to provide loans in US Dollar to institutions, which can deposit Ethereum. This move towards the use of digital currencies has finally granted same rights and access to traditional finance or financial subsidies instruments, like any other business legally practiced in America.
Crypto Currencies in US Banks
To get Dollar loans, Anchorage Digital Bank has recently partnered with BankProv to enable institutions with Ethereum balance elsewhere to open accounts in Anchorage. The banks will hold these Ethereum accounts in case of any failure to pay back loans. This in fact has become the first credit service in which digital currencies support traditional currencies, not the other way around.
Prior to the launching of this service, digital currency owners had to sell these currencies in order to liquidate them into real currencies. Transforming their holdings of crypto-currencies in USD might lessen running great risks that the crypto world is these days going through.
In exchange for dollar loans, the bank holds digital asset, Ethereum in this case, as a guarantee if the customer fails to repay the loan in dollars. Digital currencies can be very profitable through so-called "bookkeeping" strategy giving the Bank an additional means to increase profits. In this way, the banks provides the owners of the digital currencies held by the Bank, to ensure the continuation of this process, to enable them to obtain additional returns from depositing them in the Bank.
Another important if not vital feature in this process is that receiving loans in exchange of Ethereum will not pass through risk assessments on the part of the bank the fact that makes it very alluring for institutions and companies. The bank also provides another service, using Bitcoin, but the holders of bank accounts should be different.
Raising the Bar for Digital Assets Finance
Anchorage is one the tenth oldest banks in the United States. It has worked for more than 200 years as Prudence Bank before changing its brand in 2020. In late March, Anchorage partnered with the crypto-currency trading platform Prometheum to launch a fully regulated alternative trading system (ATS) designed mainly for professional crypto-currency investors.
In this regard, some specialists in digital currency trading have stated:
"ProvBank alone has assets of $1.5 billion. This initiative has not come from one or two banks that are friendly to crypto-currencies, such as Silver Bank."
Banks over the world are trying to adopt crypto-currencies among their services.
"The number of banks that adopt digital currency transactions increases almost monthly, and if Anchorage manages to conclude partnerships with other banks, it will be able to expand the scope of lending services in crypto-currencies, which might increase the price of digital currencies again."
You May also Like:
Disclaimer:
This piece of writing is the product of several readings on a couple of blogs, and it is for informational purposes only as it doesn't encourage any sort of support to Ethereum or its value.
