Traditional financial institutions have begun to notice how cryptocurrencies are disrupting their market. Salvador Casquero, former JPMorgan Head of Scandinavian Interest Rates Trading and Head of FX Sales at BBVA, two of the largest banks in the world, has said that banks have officially lost the race of finance to crypto and rapidly emerging fintech companies.

For decades, banks like JP Morgan, Goldman Sachs, BBVA, and Citibank have had absolute control over the global financial system. After all, banks were the only way both individuals and banks could process transactions internationally. But in the last years, we have seen a very fast growth of new startups in the fintech sector and the surge of cryptocurrencies. This is clearly re-shaping the way in which we know the financial world.

Earlier, JP Morgan had released a special report exploring the key considerations for central banks in adopting cryptocurrency. As per the report, due to the anonymity of cryptocurrency transactions and the increased volatility around technology and regulation, cryptocurrencies, in their current state, generally do not function as money under economists’ definition of money, which is: (i) a unit of account, (ii) a medium of exchange, or (iii) a store of value.

The fundamental problem seems to be the limited supply of cryptocurrencies because of which the value of cryptocurrencies tends to fluctuate massively. Hence, existing cryptocurrencies are unlikely to compete with established conventional currencies.

When asked about the situation, Casquero commented:“From the ‘-tech’ suffix I witnessed how fintechs, unexpected technology competitors with financial flavor, started to unbundle the banks. Banks were doing a lot of things at a single given time and they found themselves competing with small, fast and flexible companies which were optimized in terms of flow, resources, business models and technology and are tailored towards very specific products.”

Casquero stated that crypto has rendered the presence of banks useless with its ability to create consensus-based currencies that do not require central banks, authorities, and governments, echoing the stance of former Goldman Sachs CEO Lloyd Blankfein, who previously emphasized that if governments have the power to issue centralized currencies, consensus currencies such as bitcoin have a chance to survive in a rapidly changing financial industry.

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