What Makes Some Digital Currencies More Suited for Banking Use?
Do you remember when we were called crazy to think that cryptocurrencies could one day be suitable for mainstream banking use? Do you remember when crypto critics and non-believers would call it a fake currency? And now look, we’re writing articles discussing why digital currencies are suitable for banking use. Granted, not all of them are, but if you look at the XRP price today and how much Donald Trump is advocating for it with his crypto reserve, it won’t be long before more join the list.
But the question is, what makes some digital currencies more suitable for banking use? Read on to find out.
Financial Institutions Need Stability
This has to be number one. Banks rely on financial and currency stability. Typically, standard fiat currencies don’t wildly fluctuate like cryptocurrency. Nobody can sugarcoat it and say cryptocurrency is stable.
But, as it happens, crypto has stablecoins. As the name suggests, these coins act as a stable ledger between currencies and are pegged to another stable asset like the US dollar. Of all the cryptocurrencies banks would consider to be suitable, it would be stablecoins. They’re a predictable value that people can trust.
Some coins just don’t cut the mustard when it comes to banks trusting their stability. For example, Bitcoin, the biggest cryptocurrency with a current value of $103,697, plummeted to $75,000 in the days after Donald Trump started his trade tariff wars. Now, you can argue that, yes, it has recovered and recovered at an incredible rate to an almost record high, but the fact that it can plummet so hard in a matter of hours is something banks can’t rely on.
But stablecoins are still a good option. Three examples of the most popular stablecoins are
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USDT
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USDC
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EURS
Banks Rely on Regulations and Compliance
This one is a bit of a sensitive subject for some people. Cryptocurrency isn’t as closely regulated as banks. And, even recently, Donald Trump suggested regulation and compliance crackdowns should scale back, and he withdrew his Department of Justice from having any involvement in it. The major operations they were working on overnight disappeared. Still, the Securities and Exchange Commission is continuing its work to tighten crypto regulations and enforce compliance.
And don’t misunderstand us. Cryptocurrencies and exchanges are closely regulated and have a long list of regulations they need to follow. It’s simply that it’s not as tight as mainstream banking institutions. The issue is also that, as of April 2025, there were 17,134. That’s almost 4,000 more than April 2024. How do you regulate that? At least with fiat currencies and banking institutions, there’s typically one currency and far fewer financial institutions to manage.
So, for that reason, it’s easy to understand why banks might be hesitant to get involved with cryptocurrencies, unless, again, it’s the good ol’ reliable stablecoins that are tried, tested, approved, and closely regulated.
The Faster, the Cheaper, the Better
The issue with some digital currencies is that they’re slow and expensive (Ethereum, we’re talking about you).
Banks aren’t going to want to get involved with currencies that are slow to transact and expensive. There’s just no need for them to do it when they can rely on standard fiat currency transactions that are nowhere near as expensive to trade and, lately, are pretty much instant to transact with, depending on the method.
Ethereum really was astronomically expensive and slow before it switched to a proof-of-stake consensus. And, even with that, the network is still slower than other options.
Still, some cryptocurrencies and networks are fast, cheap, and accessible for banks. Some of the best include:
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Solana
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Stellar
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XRP
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TRON
Some Are More Scalable Than Others
Banks will want cryptocurrency applications that are scalable for their customers. There’s no way that a bank would consider using a digital currency that they can’t somehow integrate into their existing financial system and processes. For example, it would combine with existing systems and infrastructures like:
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Swift
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ISO 20022 standards
And some digital currencies were designed to be scalable and work with mainstream banks. Two of the biggest digital currencies that want to facilitate cross-border banking are XRP and Stellar, they were literally built for it.
Scalability in terms of the number of transactions a network can process is also essential. Can a network handle millions of transactions per minute? If not, it’s out the door. Estimates suggest the average global banking institution handles 1.34 million credit card transactions per minute.
Why Central Bank Digital Currencies Work
Central Bank Digital Currencies, or CBDCs, are made for the banking world. They take the concept of cryptocurrency and slap on all the stability, regulation, and compliance banks need to function. Plus, they are backed by governments, and that makes a massive difference to banks that have to answer to the highest financial authorities.
CBDCs basically work like a digital version of cash. They are designed to be stable, secure, and integrated seamlessly into existing banking systems. No volatility like Bitcoin. No crazy gas fees like Ethereum used to have. No issues with regulation, because the regulation is built into their very existence.
China is already pushing ahead with its digital yuan, and the European Central Bank is working overtime on the digital euro. And if the rumors are true, the US will not be far behind with a digital dollar. Banks want something they can rely on, and governments creating and backing digital currencies is about as reliable as it gets. It is the ultimate marriage between technology and tradition.
Not every digital currency will make the cut. Some will fade into obscurity while others rise to become the backbone of global finance. Banks do not care about meme coins or wild price swings. They care about stability, regulation, speed, scalability, and security.