So despite the hype surrounding them, cryptocurrencies have been left by the side of the road: investors love them, but banks are reluctant to use them, claiming that they expose them to money laundering and other dubious transactions.

Anti-crypto commentators argue it has no consumer protection, and the potential for dramatic price swings could even undermine central banks’ ability to control the money supply. Pro-cryptocurrency commentators assert that it could, in short, be a viable alternative solution to fiat money.


Cryptocurrencies are tokens represented by entries in databases that allow direct payment between parties. They have a value that emerges from what people will pay for them in the marketplace (compared with a legislated value); that value is, for this reason, unpredictably but wildly volatile (Bitcoin passed through US$70,000 in 2021). The price of other cryptocurrencies has similarly soared and plunged.

TradFi relies on intermediary institutions (banks, brokers, etc) for us to store our money, open an account and buy and sell financial assets (such as company shares or bonds). These institutions, in order to protect themselves (and us) from fraud or other problems, must meet KYC regulations.

Worth billions of transactions today, cryptocurrencies have ushered millions of users into the world of decentralisation, thereby raising issues of security, regulation and consumer protection. They override the monetary policy managed by central banks that control the volume of currency supply, so mining is costly as large amounts of electrical energy are required to run the powerful computers. This makes it impossible for small businesses to start up such operations.


Current cryptocurrencies set money free from the bureaucracy of centralised intermediaries, while also freeing people to buy and sell without bank accounts. At the same time, they impose new risks on their investors through large swings in price and exploitable technical security holes. Our research will explore both how they impact the financial markets in the UK and the US, and how traditional banking might adapt to this new economy.

Cryptocurrency marketplaces, unlike established and well-regulated finance systems, are largely unregulated, and have raised numerous concerns about fraud, tax evasion and cybercrimes. Cryptocurrency can be used for illegal purposes such as money laundering, financing terror groups; and its value is difficult to estimate, as a complicated formula calculates both the number of coins that exist, and also their price.


Cryptocurrencies are digital assets that you can buy and sell in exchange for practically any type of good, making them an appealing investment. However, the tendency of cryptocurrencies to swing wildly in value, as well as the lack of regulation surrounding them, has led some to bemoan their use as grounds for fraud, money-laundering, subversion of tax laws, and other forms of cybercrime. Despite their growing popularity as an investment vehicle, the majority of cryptocurrencies tend not to facilitate payments; instead they help traders speculate on possible price movements because of their tendency to spike wildly in value.

Possibly in response to the new technology of cryptocurrency, banking institutions, including those in the UK and and USA, have had to change their business models. This has lead to the evolution and adaptation of systems by conventional banks in different countries to changes brought on by emerging technology and to take advantage of opportunities it presents. Also, the paper discusses the relationship between cryptocurrency, blockchain, and banking, particularly in relation to government regulations, particularly in UK and USA. The clarity of the regulations is extremely important as far as encouragement of potential adopters for cryptocurrency investments goes.


These are digital tokens for online payments on computer networks that are decentralised – that is, not controlled by a central authority. The network is maintained via blockchain, which makes it virtually impossible to replicate transactions and forge new ones without others on the network knowing about it. Bitcoin is the most famous incarnation of the technology, but not the only one, and there have been a rapidly growing number of viable payment options over recent years.

But regulators have had an uphill struggle here, because virtual currencies operate internationally, and the implications of balancing consumer protection and systemic risk vary greatly from jurisdiction to jurisdiction. In any event, these regulators are suspicious about the system’s anonymity, as there are already reports of their use for illicit purposes, money laundering and, worst of all, they could even be considered a means for terrorists to bypass sanctions.

Through cryptocurrencies, we have seen wild speculation and the sometimes absurd suggestion that they can act as a new form of money, yet also we have witnessed a democratisation of access to financial markets, making it easier to gain entry into global banking services – a true advance on the requirement to hold a bank account that, until now, has prevented many from full participation in global markets.

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