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Clear regulations essential for banks in crypto sector, says expert

Clear regulations essential for banks in crypto sector, says expert

GrafaGrafa2024/10/17 06:30
By:Mahathir Bayena

Erica Khalili, co-founder and chief legal officer at Lead Bank, emphasised the importance of regulatory clarity for banks entering the crypto sector. 

Speaking at Ripple Swell in Miami, she noted that while digital assets are appealing, success in the sector requires significant investment and maintaining strong regulatory relationships. 

Khalili pointed out that many banks are starting to explore digital assets, but entering the space is not as simple as it may seem. 

“This is not an easy time to be in the crypto banking sector,” she said, stressing the need for banks to be prepared to meet regulatory expectations, which can often be challenging. 

According to Khalili, Lead Bank has adopted a three-pronged approach to managing its regulatory relationships. 

First, education is key to addressing negative perceptions about crypto and showcasing its real-world applications. 

“People have negative perceptions of crypto that have to be assessed and countered with use cases,” she noted, citing examples of digital assets influencing capital markets

The second element involves using digital technology for efficient monitoring, which benefits both banks and regulators. 

Khalili remarked, “Regulators get that direct oversight where we’re not looking to like spurn regulation, we’re embracing it.” 

Lastly, patience is crucial. 

Khalili admitted that the constantly shifting regulatory landscape can be frustrating, but banks must adapt. 

“It’s incredibly frustrating, honestly, in my role, but the goalposts are going to move. That’s just the reality with this. And we have to keep pace and try to be that thought partner,” she explained. 

Khalili also mentioned that simply experimenting with digital asset banking is not practical due to the required investment in products, technology, and personnel. 

Lead Bank, which she and three other co-founders acquired in August 2022, is focused on providing banking services to the crypto sector, with its headquarters in Kansas City, Missouri.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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