Crypto Bank Architecture 💡

The infographic below neatly sets out the core components of a crypto bank. Not only will this have a strong technology core to underpin what it does, but it will also be highly customer-centric, as well as having the capacity to continually adapt to a changing marketplace.

Due to the current volatility of most cryptocurrencies and the ongoing legal situation surrounding them, crypto is potentially a high-risk area for banks that could certainly pose a risk to the stability of a financial institution. This means that banks must think carefully about where in this area they are going to play 👨💻

For instance, if they want to offer a crypto-trading service to their customers, they will have to perform due diligence checks on traded currencies, update their risk management framework accordingly, set up internal cryptocurrency governance protocols, and make sure that a robust, ongoing risk assessment is in place. Besides this, all banking processes will need to be reviewed and then changed if they are found wanting.

Measures to combat money laundering, terrorist financing, compliance, and consumer protection all become more complex because of the lack of transparency surrounding crypto assets. For instance, provision needs to be made to ensure no transactions are made using wallets blacklisted by regulatory authorities.

Though it’s a complex process, it is possible for banks to begin offering crypto services relatively quickly 🚀

Source: Nicolas Pintos LinkedIn post

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