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A New EU Report Suggests Banks Could Indulge in Financial Misconduct to Stay Away From Cryptos

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European Union flag in front of the Berlaymont building (European commission) in Brussels, Belgium. Source; shutterstock.com

A new report from an EU department shows that all is not well in the fintech sector as competition intensifies between traditional finance and crypto finance. The report prepared by the Police Department for Economic, Scientific, and Quality of Life Policies on the recommendation of the European Parliament Committee on Economic and Monetary Affairs (ECON). The ECON committee oversees the decisions made by the European Central Bank.

The Document Reveals Challenges in the Fintech Sector

The document reports on the entire financial sector in Europe, including banking, forex, and even cryptocurrencies. It suggests that the digital asset industry is based on five core pillars — mining, blockchain, wallets and exchanges, smart contracts, and banks and credit card processors.

The document likewise suggests that mining is divided into several sub-activities like cloud mining services, self-mining, hosting, etc. The competitive landscape in the mining industry, however, is poor as five mining pools control over 79% of the market. Though AntPool emerged as the largest of them all, with a 23% market share, none of the five top players can monopolize the market.

This is not all. The report suggests that the boundaries between exchanges and wallets are also blurring quickly. The barriers to entry in the wallets market are very low, because of which there are several players around. As far as exchanges are concerned that have higher barriers to entry and are more tightly regulated, 75% of the market share is held by just five companies with the top exchange holding over 30% of the market. Moreover, over 52% of the wallets are currently integrated with a crypto exchange, while exchanges themselves are now operating like wallets.

Banks Don’t Necessarily Like Digital Currencies

Banks and card processors will play a crucial role in maintaining communication between central banks and regulators. Eventually, the feud between traditional banking and digital, decentralized banking could rest on the cooperation of banks in creating crossroads between the two entire distinctive platforms. The fight for supremacy could likely be won through cooperation.

Though cryptos have to go a long way in creating an even market (right now Bitcoin holds the largest market share at 43%, even though it has nearly halved since last year), their biggest challenge will be traditional banking institutions. Banks may want to keep their stronghold in the finance sector. They may practice predatory pricing behavior to acquire smaller competitors and consolidate power in the hands of a few large banks.

They could also opt for denial of service by blocking access to wallet and exchange services. Banks could even launch their own digital currencies, which could be backed by the respective central banks of a country. The overall impact of these moves could lead to a changing crypto landscape.

A New EU Report Suggests Banks Could Indulge in Financial Misconduct to Stay Away From Cryptos was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.