From Bitcoin to decentralized finance, the world of cryptocurrency is evolving, and banks and financial institutions are jumping in to give consumers what they want. But just how far does a bank’s responsibility go?

“Crypto has developed into a really robust ecosystem that mirrors a lot of the ways that banking works, and it’s not as simple as a currency or as an investment,” said Rob Morgan, senior vice president of innovation and strategy at the American Bankers Association, during a panel last week at the association’s annual convention.

As more people invest and trade in crypto, they’re looking to banks and other trusted partners for assistance, Morgan said.

There are inherent risks in cryptocurrencies, including that they’re a volatile asset type, said Jim Reuter, president and chief executive officer at $26.8 billion FirstBank. Yet, as more banks and other financial institutions begin facilitating crypto custody and transactions, another risk is more reputational: “We’re legitimizing [crypto] by helping that happen,” he pointed out.

“People come to us because they trust us,” Reuter added.

‘A better form of money’

The gravitation toward cryptocurrency by consumers and financial institutions makes logical sense, New York Digital Investment Group (NYDIG) Chief Innovation Officer Patrick Sells said during the discussion.

NYDIG, which sprang up in 2017, has been helping banks and others offer Bitcoin custody solutions to their clients. Sells broke the crypto conversation down into fundamental characteristics of money: it’s a store of value, a mode of accounting and a means of exchange.

Gold has been used throughout history as a form of money but becomes problematic as a form of exchange as payments become global, Sells noted. Fiat and paper-based currencies work better as a means of exchange, “but from a supply standpoint, it can be changed with a ‘Ctrl-P’ of a button … I can just go print more dollars,” he said.

“What we see happening with pensions and endowments and institutions and retail individuals is, as they begin to really come to understand Bitcoin, they go, ‘Wow, that’s just a better form of money,'” said Sells.

That’s why more individuals are looking to banks for crypto trading, he added: They want access to crypto in a way that’s similar to what they already know and trust.

Crypto and FOMO

Even so, consumers may be rushing toward cryptocurrency without understanding it, panelists pointed out.

“What do you do when you are meeting with someone and they’re buying Bitcoin and they have no idea what they’re buying, but it’s fear of missing out?” Reuter said. “I think that’s a lot of what’s going on. Do you think there’s any fiduciary responsibility or concerns banks should have as they enable that?”

To that, Sells replied, “Absolutely,” and suggested that banks could treat crypto custody and trading as they do other financial products.

“I think there should be a massive emphasis — and even a requirement — to start with education before providing access [to cryptocurrencies], much like there’s education … to get a mortgage,” Sells said. “You have to learn a lot about, ‘What am I signing up for here?'”

If consumers want to invest or trade in crypto, he noted, they’ll find a way to do so; better that they do it in a safer, regulated, manageable way that banks and financial institutions can provide.

That way, “almost, I can abdicate myself from, ‘Do I think it’s the right decision’ ― I can simply provide you a better path,” Sells said. “But I do think it starts with education.”