Adopting the Bitcoin Money Perspective20 / 20 – Bitcoin Magazine: Bitcoin News, Articles, Charts & Guides

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If you can’t beat them, join them. This is the Federal Deposit Insurance Corporation’s (FDIC) recent position of acquiescence after Board Chair Jelena McWilliams expressed a few weeks ago: “If we don’t train this activity [Bitcoin] inside the banks, it will develop outside the banks. … Federal regulators will not be able to regulate it. We are at an inflection point where the thousands of banks with billions of dollars in deposits will begin to play a role in Bitcoin’s dominance. The FDIC and the Office of the Comptroller of the Currency (OCC) are under pressure to find solutions to accommodate Bitcoin’s global influence. Political leaders are pushing for regulatory reform, and independent private companies are rushing to respond with innovative technological solutions for a new financial framework.

I have worked in international finance and banking consulting for over a decade. For years, Bitcoin has been deliberately ignored and rejected by the industry. It was unprofessional to mention its viability or usefulness in the traditional environment. Now, traditional regulators and bankers are capitulating and looking for how Bitcoin can fit into the existing financial structure. Regulators would rather find a home for Bitcoin within legacy institutions than allow Bitcoin to create a parallel financial system. This initiative is accelerating the development of Bitcoin-enabled financial technology for banks and businesses looking for Bitcoin-related products and services. But before we can walk, we have to crawl.

An illustrative example is when New York City Mayor-elect Eric Adams announced that he wanted his first three months of salary to be paid in bitcoin. The Adams spokesperson was to clarify that New York City did not have the mechanism to pay salaries in bitcoin. It would be up to Adams to independently convert his salary on an exchange if he wanted to keep his salary in bitcoin. Despite consumer demands and support from regulators, the technological infrastructure is catching up.

The good news is that this Bitcoin infrastructure is funded and developed by the private sector. I attended Money20 / 20 in Las Vegas, Nevada, in October to take a closer look at how the private sector is responding to demands. Money20 / 20 is a premier financial technology conference where businesses and industry leaders from around the world come together to discuss the future of money. This year, Bitcoin stood out. But it wasn’t just fireside talk about Bitcoin’s promise. These were the many vendors marketing their products to support a Bitcoin-enabled financial ecosystem. Among those vendors were companies developing payroll options to allow employees to select the percentage of their salary they wanted to automatically convert to bitcoin, thereby resolving the friction faced by mayor-elect Adams.

Bitcoin payroll options are part of the dream these companies are helping businesses and banks to achieve. Asset lending for bitcoin has been around for years, but only through private lenders. This service will become more accessible and likely offered at lower interest rates in thousands of banks nationwide for institutions and retail clients due to increased liquidity.

As banks include Bitcoin in their line of services, retail customers and businesses alike need to prepare for yet another unknown test that historically goes against the ethics of digital assets. Bitcoin’s signature anonymity could deteriorate as banks have stricter Know Your Customer (KYC), Anti-Money Laundering (AML) and Compliance policies than customers who choose to hold bitcoin in a bank must follow. Another distinguishing feature of Bitcoin, auto-custody, will be lost if a customer chooses to use a bank as a custodian. Finally, much more clearly defined tax laws will be developed and applied. These laws will create more transparency on reporting capital gains or exchanging bitcoin to pay for goods or services that could be a taxable event for federal income tax purposes.

So what will the future look like? All of these developments will make holding, taxing and transferring bitcoin safer, easier and smoother. There will be more options for using bitcoin where you work, shop, and bank. Some repeat the mantra “Bitcoin is ahead”, but we are beyond that now. The venture capitalists, institutional investors, and vendors building the tools of a Bitcoin-enabled financial system that flew to Vegas for Money20 / 20 all agree. Expect Bitcoin to come to a community bank near you.

Michael Jaycee is a Bitcoin investor and the author of “Goodnight Moonlambo”, a Bitcoin parody of the famous children’s classic “Goodnight Moon”. His books are available for sale against Bitcoin.

This is a guest article by Michael Jaycee. The opinions expressed are entirely theirs and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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