Cryptocurrencies Could Make Banks Obsolete, Says Malta Bankers Association Head

As Malta cements its position as major cryptocurrency hub in the global landscape Marcel Cassar, the new Malta Bankers Association (MBA) Chairperson weighs in with his views on the sector.


Cassar points to new technologies presenting opportunities in his interview with The Malta Independent, noting that Malta faces important tests including the first International Monetary Fund (IMF) Financial Sector Assessment Programme for Malta since 2003. Malta’s financial services industry and supervisory framework are under increased scrutiny by EU and international institutions and governments.

It is not surprising that Malta finds itself in the spotlight. Prime Minister Joseph Muscat is encouraging the growth of the blockchain and cryptocurrency sector. The Maltese government passed bills in April 2018 which provide a clear-cut regulatory framework and the country is now home to Binance, one of the largest cryptocurrency exchanges in the world. It also boasts the largest cryptocurrency trading volume in the world, according to Morgan Stanley.

A Banker’s Dream

A Banker’s Dream

So what does the new MBA chair have to say about blockchain?

It sounds like a banker’s dream: having records of all transactions, documents and contracts that are always authentic and reliable.

Cassar says it’s “wonderful,” but that a blockchain revolution of business and government could still be years away because many “barriers would need to fall in.” He sees blockchain, or distributed ledger technology (DLT), as a foundational technology, the benefits of which are “undisputed.”

I read recently that the present environment in which the digital world is evolving is like a rush-hour gridlock trapping a Formula 1 car!

Cryptocurrencies – A Threat to Fiat Currencies or the Traditional Role Of Banks?

Cassar believes there is little evidence to suggest that cryptocurrencies are a threat to fiat currencies in the short or medium term however he does believe they are a threat to banks:

Their traditional role as main payment intermediary for funds and currency transmission will become challenged, if not obsolete.

He explains that many banks are steering clear of cryptocurrencies because of their “novelty”, as they are not conventional legal tender, or backed by a central bank and present the risk of money laundering.

Other banks he says, are taking advantage of the opportunity by advising on ICOs, providing crypto-tracker funds, custody services, and taking a more open stance. Though it will be a “risky road,” Cassar is optimistic about the future of cryptocurrency:

Cryptocurrencies are here to stay and, just like the early days of the internet which created a furore because of lack of regulation, once regulation and education improve and banks gain more confidence, some may reap first-mover advantages.

On the emergence of technology companies gaining banking licenses to operate in the sector and take advantage of new financial technologies Cassar quotes Walter B Wriston from 1981:

The belief that a market is yours by some divine right is an old dream. Companies that fail to change become tombstones in the corporate graveyard.

No Option but to Innovate

No Option but to Innovate

In the face of the new technologies that cryptocurrencies and blockchain represent, if banks want to stay relevant, they have no option but to innovate. However, current banking innovation is costly with no exclusivity, which is making way for fintech firms to lead innovation.

Considering Marcel Cassar’s new role at the forefront of Maltese banking, in a country that is showing significant strength in the advance of blockchain technology and cryptocurrencies, his views could prove influential.

Do you think cryptocurrencies are a threat to traditional banking services? Should banks embrace and adopt cryptocurrencies more fervently to survive?


Images courtesy of The Independent Malta, Shutterstock

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